Optimize Your Short-Term Rental Pricing for Maximum Revenue on Airbnb & VRBO

If you own a short-term rental property, you know that pricing can make or break your profitability. Setting the right price isn't just about covering costs—it’s about maximizing revenue while staying competitive. That’s where Rental Price Pro comes in. Our expert pricing strategies help property owners unlock higher earnings on platforms like Airbnb and VRBO.

Why Pricing Strategy Matters for Short-Term Rentals

Platforms like Airbnb and VRBO use dynamic pricing algorithms, meaning prices fluctuate based on demand, seasonality, and local competition. However, these algorithms are not suited for all owners. Without a strong individualized pricing strategy, you risk:

• Underpricing, leaving money on the table.

• Overpricing, leading to low occupancy rates.

• Inconsistent revenue, making financial planning difficult.

By optimizing your rental rate strategy, you can increase occupancy, maximize nightly rates, and boost overall revenue.

How Does Dynamic Pricing Work on Airbnb? (or VRBO)

Dynamic pricing automatically adjusts rental rates based on market demand and other influencing factors. Airbnb's Smart Pricing tool, as well as third-party pricing software, considers variables such as:

• Seasonality – Prices increase during peak travel seasons and drop during slower periods.

• Local Events & Holidays – Large events or holidays can drive up demand, raising rates.

• Competitor Pricing – Airbnb compares your listing with similar properties in the area to stay competitive.

• Booking Lead Time – Prices may adjust based on how far in advance guests book.

• Supply & Demand – If there are fewer available rentals in your area, prices may increase.

While dynamic pricing can help adjust rates based on trends, it’s not always the best option for every host.

Why You Shouldn’t Rely on Airbnb’s Smart Pricing Alone

Although Airbnb's Smart Pricing tool is convenient, there are several reasons why relying on it alone can hurt your revenue potential:

• It Prioritizes Occupancy Over Profit – Airbnb’s goal is to ensure bookings, which sometimes leads to undervaluing your property to attract more guests. In the hospitality industry, there is a metric called RevPAR (Revenue per Available Room), which in some cases means setting higher prices for fewer nights booked to maximize overall profit. Airbnb does not account for this—it simply positions you at an average market rate based on demand.

• Limited Customization – You have little control over specific pricing strategies tailored to your rental’s unique appeal. If you are a brand-new listing or a Guest Favorite, having an "average" price won't maximize your earnings.

• Ignores Local Market Nuances – Airbnb’s algorithm may not fully capture localized demand fluctuations like nearby construction, new attractions, or competitor trends. It also doesn't take into account other demand-driving factors, such as additional marketing channels, a push for 5-star reviews, or upgrades to your photos and decor.

• Simply Put: It Doesn’t Optimize for Your Revenue Goals – Smart Pricing doesn’t factor in your specific profit objectives, which means you could be leaving money on the table.

To maximize your revenue, a customized pricing strategy that factors in your rental's unique value and local market conditions is key. That’s where Rental Price Pro comes in.

Key Strategies to Optimize Your Short-Term Rental Pricing

1. Implement Dynamic Plus Pricing

Static pricing is outdated. While dynamic pricing helps adjust rates based on demand, layering in additional pricing strategies can give you an edge. We help you leverage data to adjust prices in real-time while also incorporating:

• Custom pricing based on your individual home or portfolio's characteristics

• A hospitality professional based - RevPar approach (Revenue per Available Room) to optimizing for revenue and not occupancy.

• Using advanced techniques discussed below, such as Gap Pricing, to uplevel your take home revenue.

2. Competitive Market Analysis

Understanding your competitors is crucial. Rental Price Pro provides deep market insights to help you:

• Identify peak pricing opportunities

• Adjust rates based on local competition and local events

• Position your rental as the best-value option in your area, with an easy to follow-guide on how to stay up-to-date with competitive pricing.

3. Minimum Stay Optimization

Finding the right minimum stay requirements can significantly impact revenue. We analyze booking patterns to suggest:

• Shorter stays for high-demand periods

• Longer stays during low seasons to maintain occupancy

4. Weekly & Monthly Discounts

Offering strategic discounts can attract extended-stay guests, ensuring consistent bookings. We help you design tiered pricing strategies to maximize earnings while keeping your calendar full. Additionally, we can help you craft "channel specific" pricing, where different websites and platforms are used to price properties at different levels based on the more common types of stays on those platforms.

Take a look at our more detailed 30+ day stay and corporate housing pricing strategy tips here.

5. Smart Seasonal Adjustments

Seasonality is one of the most important inputs for short-term rentals. Our team can help you:

• Understand the seasonal adjustments needed to optimize for greater revenue.

• Adjust prices for peak and off-peak seasons

• Utilize early-bird and last-minute booking strategies

• Optimize holiday pricing for maximum profit

6. Gap Pricing Strategy

One of the biggest revenue leaks in short-term rentals is unbooked gaps between reservations.

Gap pricing is a strategy that adjusts prices—either by offering discounts or slight increases—to extend stays or fill small gaps between bookings. Since Airbnb's Smart Pricing tool does not optimize for this, it’s a crucial tactic for hosts looking to maximize occupancy.

Benefits of gap pricing include:

• Filling short gaps – Discounting 1-2 night openings to attract last-minute guests.

• Encouraging longer stays – Offering reduced rates for guests who extend their trip by a night or two.

• Reducing vacant nights – Adjusting rates dynamically to ensure no wasted space in your calendar.

• Boosting revenue per booking – Slightly increasing rates for guests who book optimal-length stays that leave fewer gaps.

At Rental Price Pro, we use advanced pricing analysis to help you implement gap pricing effectively, ensuring higher occupancy and revenue without unnecessary price reductions.

7. Increase 5-Star Reviews & Guest Favorite Status

A crucial factor in maximizing revenue is securing consistent 5-star reviews and earning Airbnb’s ‘Guest Favorite’ or VRBO's 'Premier Host' designation. Higher-rated properties receive better placement in search results and attract more bookings at premium rates. To achieve this:

• Enhance Guest Experience – Provide exceptional hospitality, clear communication, and local recommendations. We can look through your customer interactions and provide easy to follow guide on how best to do this.

• Improve Cleanliness & Maintenance – Ensure every stay meets or exceeds expectations.

• Take Professional Photos from a Real Estate Photographer - Taking photos from a designated Real Estate Photographer can make a huge difference. Have our team assess your photos and give you honest feedback on how to improve them.

• Automate Guest Follow-ups – Politely request reviews and feedback after each stay. We can set you up with an easy to follow guide to set up a "drip" campaign, which will automatically ask for reviews and followup with guests after their stay.

• Offer Thoughtful Touches – Small gestures like welcome gifts or personalized messages can increase guest satisfaction. So can a "guest guide" or other information made easily accessible to guests.

• Be Honest about "Faults" – All homes or properties have quirks. Disclosure is king in the review space, if your property has a steep staircase, nearby street noise, ongoing construction, etc, being honest will help keep those reviews at 5 stars. While in the short-term you may gain more bookings by hiding faults, you will hurt your brand or review score which can cost your more overall in total revenue.

By focusing on guest experience and optimizing for high ratings, your rental gains more visibility, leading to increased bookings and higher nightly rates.

How Rental Price Pro Can Help You Earn More

At Rental Price Pro, we provide customized pricing and marketing strategies that adapt to your property, market, and revenue goals. We can give concrete strategies on how to leverage our pricing strategies on the most used platforms, like Airbnb and VRBO. Our data-driven approach ensures that your short-term rental stays competitive and profitable.

Ready to Increase Your Rental Revenue?

Don’t leave money on the table! Submit an Inquiry and let us show you how to optimize your pricing for maximum returns.