Pricing your short-term rental (STR) is one of the most important factors in your success as a host. Set your price too high, and you’ll struggle with low occupancy. But if you set it too low, and you’ll lose money even with fully booked nights.
So, how do you price your STR for maximum profit while staying competitive in your market? The key is understanding your costs, tracking your financials, and optimizing your pricing strategy.
In this article, I’ll walk you through a step-by-step approach to pricing your STR the right way.
1. Understand Your True Costs Before Setting Your Base Rate Price
One of the biggest mistakes STR owners make is setting their nightly rate without first calculating and understanding their true costs to operate. If you’re not tracking these costs in a bookkeeping system, then you may be underpricing your rental without realizing it.
💰Key Costs to Consider
- Mortgage – This is a fixed monthly cost and the largest you’ll have to take into account.
- Utilities & Wifi – Electricity, water, gas, internet, and streaming services.
- Cleaning & Maintenance – Housekeeping and cleaning fees, repairs, lawn care, pest control.
- Listing & Marketing Fees – Airbnb/Vrbo host fees, paid ads, and direct website costs.
- Dues & Subscriptions – Property management software (PMS), pricing softwares, listing analytics softwares, guidebook softwares.
- Insurance & Taxes – STR insurance, liability coverage, and occupancy taxes.
- Supplies & Guest Amenities – Linens, toiletries, kitchen essentials, coffee, snacks.
🚀 Pro Tip: It is SO important to do your due diligence up front while in underwriting to research and estimate these costs, vet your lenders, mortgage rates, and have an idea if the rental rates in the market could exceed the operating costs before you purchase the property.
💡 Solution: Once you’ve purchased your property, use QuickBooks Online to categorize all STR expenses so you know exactly how much you need to charge to be profitable.
2. Research Competitor Pricing (But Don’t Just Copy Them!)
It’s tempting to set your price based on what other STRs in your area charge, but that can be a costly mistake. In fact, you need to understand what they offer and why they charge what they do compared to what you offer and determine what you can charge. They may have a lower mortgage amount than you do and be able to charge less but that doesn’t mean that you should. And vice versa, they may also have a higher mortgage or higher operating costs and must charge more. That’s why it’s so important to know your own numbers.
📌 How to Research STR Pricing Effectively
- First, use tools such as AirDNA, STR Insights, and PriceLabs to analyze market rates.
- Compare listings with similar amenities, locations, and guest capacities.
- Look at occupancy trends for seasonal fluctuations.
- Check what competitors charge for weekdays vs. weekends.
- Lastly, consider demand surges (events, festivals, peak tourist seasons).
🚀 Pro Tip: Just because another host is charging a certain rate doesn’t mean they’re profitable. Track your own numbers!
💡 Solution: Make sure to regularly review your own STR financial reports (Profit & Loss, Balance Sheet, Cash Flow Statement) in order to make data-driven pricing decisions.
3. Optimize Your STR Pricing Strategy for Maximum Profit
Now that you know your costs and have researched the market, it’s time to set an optimized pricing strategy. There are lots of levers you can pull with your pricing and revenue management to ensure you are making the most you can for your property.
📌 Key Pricing Strategies for STR Owners
- Dynamic Pricing – Adjust rates based on demand, using tools like PriceLabs or Beyond Pricing.
- Seasonal Pricing – Increase rates for high seasons, holidays, and local events.
- Weekend vs Weeknight Rates – Adjust rates up for the weekends and down for the weeknights to reflect demand for these days.
- Last-Minute Discounts – Lower prices slightly for upcoming vacant nights.
- Length of Stay Discounts – Offer discounts for weekly or monthly stays to boost occupancy.
- Cleaning Fee Adjustments – If your cleaning fee is high, consider adjusting both the cleaning fee and nightly rate accordingly. Remember, your cleaning fee is rolled into your top line revenue. Then the actual operating cost of the cleaning fee is paid as an expense to your cleaner separately.
🚀 Pro Tip: A well-balanced pricing strategy includes both competitive rates and cost coverage to ensure sustainable profits.
💡 Solution: Use a pricing tool like PriceLabs AND track your financial reports in QuickBooks Online to ensure your rates align with your bottom line.
4. Track Your Financial Performance to Fine-Tune Pricing
Once your pricing strategy is set, it’s important to regularly review your finances to ensure you’re hitting your profit goals. This is not just a set it and forget it kind of business. You’ll want to analyze your reports every month to ensure things stay on track or make any adjustments as needed.
📊 Financial Reports That Help You Optimize Pricing
- Profit & Loss Statement – Shows whether or not your current pricing strategy is profitable or if you need to adjust your income and expenses.
- Cash Flow Statement – Ensures you have enough income to cover recurring expenses.
- Balance Sheet – Shows if pricing is sustainable or if you are taking on too much debt and over leveraged for your property value.
- Budget vs. Actuals – This will show your actual income and expenses compared to your budgeted amounts.
🚀 Pro Tip: Be sure to analyze your occupancy vs. revenue trends and how pricing adjustments impact bookings. For example, if your STR has high occupancy but low profits, you may need to raise your rates or adjust expenses.
💡 Solution: QuickBooks Setup Course for STR Owners walks you through setting up financial tracking & reporting so you can make smarter pricing decisions.
Final Thoughts: Smart Pricing = Higher Profits & Better Bookings
Pricing your STR isn’t about guessing or copying competitors – instead it’s about understanding your costs, tracking your revenue, and continuously adjusting your rates for maximum profit.
📌 Next Steps: Master Your STR Finances with My QuickBooks Course! Want to ensure your pricing strategy is profitable? Join my QuickBooks Setup Course for STR Owners and get your finances organized in just 2 days!
👉 Enroll Now and take control of your STR finances!
Helpful External Resources
🔗 AirDNA STR Market Analysis
🔗 STR Insights STR Market Analysis
🔗 PriceLabs Revenue Management Tool
🔗 QuickBooks Online for STR Owners