Don’t Just Pick a Number
Most new hosts set their rate one of two ways: they look at what nearby Airbnbs charge and pick something similar, or they pick a number that feels right and see what happens. Neither approach is wrong exactly, but both skip a step that matters: knowing your floor.
Your floor is the minimum rate at which you’re actually profitable. If you price below it, you’re losing money on every booking. If you don’t know it, you might be doing exactly that without realizing it.
Start there.
Step 1: Calculate Your Monthly Operating Costs
Add up everything the property costs you when it’s being used as a rental:
- Mortgage or rent (if applicable)
- Property taxes (monthly equivalent)
- Insurance (STR policy, not homeowner’s policy)
- Utilities (average monthly)
- Cleaning costs per turnover (multiply by expected monthly turnovers)
- Platform fees or Futurestay subscription
- Supplies (linens, toiletries, replacements)
- Any property management or software fees
That total is your break-even number for the month. Divide it by the number of nights you expect to rent (a conservative estimate, say 15-20 nights for most markets) to get your absolute floor per night.
Add a 20-30% margin on top of that floor. The margin covers unexpected repairs, vacancy you didn’t plan for, and your actual return on the investment. That margin number is your pricing floor. You should rarely, if ever, go below it.
Step 2: Research Comparable Properties
Now check the market. You’re looking for properties that are genuinely similar to yours in terms of:
- Location (same neighborhood or comparable area)
- Size (similar bedroom and bathroom count)
- Amenities (pool, no pool; updated kitchen or not; hot tub or basic setup)
- Quality (photos and review scores are a reasonable proxy)
Use Airbnb, Vrbo, and AirDNA’s market data to see what those comparable properties are actually charging, not just their listed rate but what they’re getting booked at. A listed rate of $250 that sits vacant is not the same as a listed rate of $200 that books consistently.
If your property is better than your comps in meaningful ways (newer renovation, better view, more outdoor space), you can price above the midpoint. If you’re entering the market with few reviews, you should price at or slightly below the midpoint to drive initial bookings.
Step 3: Position for Your Review Count
Reviews matter more in the short-term rental market than in almost any other category. A property with 100 strong reviews can charge a premium over a property with 10 reviews, even if they’re identical. This is not irrational behavior from guests. It’s risk reduction.
When you’re new, your rate should reflect your review count. Price modestly in the first season to drive bookings, accumulate reviews, and build your ranking on the platforms. Once you have 20-30 solid reviews, revisit your rate and consider moving it up.
This is a deliberate investment. You’re trading some short-term revenue for the ratings that will let you charge more permanently. Hosts who price too aggressively at launch often struggle to get bookings, get fewer reviews, and end up stuck at lower rates longer.
Step 4: Build in a Review Cadence
Your base rate should not be permanent. Schedule a quarterly review, ideally at the start of each season:
- Am I at above 75% occupancy? Rates may be too low.
- Am I sitting below 50% occupancy? Rates may be too high, or photos and listing quality need attention.
- Did a new competitor open nearby? Reassess your positioning.
- Did I add a significant amenity? Consider a rate increase.
The base rate you set today should evolve. It’s a starting point, not a permanent stake in the ground. Pair it with a dynamic pricing tool once you have a few months of data, and your system will do most of the ongoing rate management for you.