Airbnb Pricing Strategy: How Management Companies Set Property Rates

This guide explains how professional Airbnb management companies like Pass the Keys set property rates, what “smart pricing” really means, and what you should ask before you sign.

Short-let pricing changes constantly because the market is live. A Tuesday in February behaves differently to a Saturday in August, and a school-holiday week behaves differently again. That means “average nightly rate” is only a rough starting point.

Amateur hosts often put their trust in dynamic pricing tools such as PriceLabs to automate this. Tools can be helpful, but if you don’t configure your settings well, you could still be undervaluing your property and losing income. On the other hand, manually checking competitors and changing rates every few days becomes a time sink, and it’s easy to miss demand spikes.

A strong management company should combine pricing technology with local market knowledge and regular human oversight.

Before you enlist an Airbnb management company, ask how their pricing process works.

A good pricing strategy usually includes:

In the beginning, don’t expect to get 95% occupancy and charge top rates. Instead, make sure you can cover your costs at 50% occupancy, charging a fraction of what you would like. This allows you to build reviews and booking history. Over time, as your reputation improves, rates can rise and your income typically becomes more predictable.

Make sure your Airbnb property manager establishes their pricing strategy, including information on the potential highs and the worst case scenarios, to give you accurate expectations of your potential earnings.

This is an important question, and it’s also where owners can accidentally choose the wrong model for their goals.

Typically, you’ll see two commercial models.

Model 1: Guaranteed income

This is when a company pays you an agreed amount each month for the right to operate the property as a short let. The biggest benefit is stability: your income doesn’t swing with seasonality or occupancy.

The trade-off is that the operator takes the upside. If the property performs exceptionally well, they keep most of the additional profit. The risk for owners is accepting a guaranteed payment that’s lower than the property’s realistic potential.

Model 2: Management fee

In this model, your earnings rise and fall with performance. The management company is incentivised to drive bookings and maintain strong reviews because their income depends on it.

Typically:

Before signing with a company, it is essential to query them about their standard minimum occupancy and enquire if their properties consistently run above a 60% occupancy.

The takeaway is simple: you want pricing that’s active, evidence-led, and reviewed regularly. Look for a manager who can explain how they set your base rate, how they adapt rates for seasons and events, and how they handle minimum stays.

Get clarity on what you can realistically earn in the first few months versus once reviews and ranking improve, then choose the commercial model that fits your appetite for stability versus upside. If those pieces are clear, pricing becomes a lever you can trust rather than a constant worry.