Target Price
Sean Rakidzich runs 155 short-term rentals in the United States, and every one of them has a target ADR calculated with the same formula: monthly revenue goal divided by expected occupied nights. A host who needs $4,000 a month and expects 20 occupied nights at 70% occupancy lands on a target ADR of $200. That number is not a wish. It is the price the listing must clear to hit budget.
Target Price is a math system, not a guess. Revenue goal divided by expected occupied nights equals your target ADR. Below it, you miss budget. Above it, you leave money on the table or scare off price-sensitive guests.
The Target Price Formula In Plain Numbers
The formula has three inputs: monthly revenue goal, expected occupancy rate, and the number of nights in the month. Multiply nights by occupancy to get expected occupied nights. Divide revenue goal by that number. The result is your target ADR.
Here is a clean example. You own a two-bedroom in a soft market. You need $5,000 a month to cover mortgage, utilities, supplies, and a 10% margin. You expect 65% occupancy in a 30-night month. That is 19.5 occupied nights. $5,000 divided by 19.5 equals $256. Your target ADR is $256.
Write it down.
Most hosts skip the math and copy a neighbor's price. That is how you end up underpricing by 12% for a year without knowing it. Sean's $410 course, Target Price, walks through the full validation and tuning cadence so the number you set actually matches the market you are in. The outcome: hosts tune pricing four times a year per listing and stop leaving revenue on the table.
Inputs You Cannot Fake
The revenue goal must include everything. Mortgage, insurance, utilities, cleaning reimbursement, software fees, supply refills, tax reserve, and owner profit. If you leave out the tax reserve, the formula lies to you in April.
Occupancy assumption is the second trap. New hosts guess 80% because they want it to be true. The honest number in most U.S. markets is 55% to 70%, and new listings run lower for the first quarter.
Validating Target ADR Against The Comp Set
A target ADR is only useful if the market can bear it. The validation step is simple. Pull the median ADR for comparable listings within a half mile, same bed count, similar amenity tier. Compare your target to that median.
If your target sits within 15% of the comp median, the math is feasible. Hold the line. If your target sits more than 15% above the comp median, the math is broken at the input layer. You over-assumed revenue, under-assumed occupancy, or baked in expenses the market refuses to pay for.
The gap between your target ADR and the comp-set median that separates a feasible price from a broken formula. Outside that band, fix the inputs, not the nightly rate.
Where To Pull Comp Data
You can pull comps three ways: manually from the Airbnb search results in your ZIP, from a market-data tool like AirROI, or from your PMS if it offers a comp lens. The manual method is free and forces you to look at actual active listings. The tool method saves time once you run more than two properties.
Filter for active listings with at least 10 reviews in the last 90 days. Dead listings pollute the median.
The Upstream Fix When Market Will Not Bear Your Target
When your target is 20% above the comp median, the instinct is to list at the target anyway and hope. That kills bookings and tanks your review average because the few guests who pay the premium arrive with premium expectations.
The fix lives upstream. You have three levers. Drop the revenue goal. Tighten the occupancy assumption from 20 nights to 24. Or trim the expense base.
Upstream Adjustment Sequence
- Audit the expense base first. Cut software you do not use, renegotiate cleaning, and confirm your tax reserve is realistic, not bloated.
- Retest the occupancy assumption. Pull your own last 90 days. If you averaged 58% and assumed 70%, rebuild the formula at 58%.
- Lower the revenue goal last. This is the hardest lever because it means less owner profit, but it is honest math.
- Rerun the formula. Your new target ADR should land within 15% of the comp median. If not, repeat.
- Document the tradeoff. Write down which lever you pulled so next quarter's retune has context.
Why Chasing An Impossible Rate Backfires
An overpriced listing gets fewer bookings, and the bookings it gets come from guests who expected a luxury experience at a luxury price. Your review average drops. Your search rank drops. Your target ADR becomes even harder to hit next month because the algorithm is now suppressing you.
Monthly Retune Cadence Across 155 Listings
Target Price is not a one-time calculation. It is a monthly rhythm. Every month the operator pulls actual ADR for the prior 30 days and compares to target.
If actual sits within 10% of target, the formula is holding. Do nothing. If actual is more than 10% below target, either raise the price or tighten the target. If actual is more than 10% above target, you are closer to the price ceiling than expected and can cautiously raise.
Two consecutive months of drift is the trigger to retune the inputs. Not to abandon the target.
| Actual vs Target ADR | Signal | Action This Month |
|---|---|---|
| Within 10% | Formula holding | No change |
| 10% to 20% below | Leaving revenue or target too aggressive | Raise price or tighten target |
| More than 20% below | Inputs broken | Retune occupancy and revenue goal |
| 10% to 15% above | Ceiling closer than expected | Cautiously raise price 5% |
| More than 15% above | Undercharging badly | Raise price 10%, retest in 30 days |
Seasonal Retune Schedule
Across 155 properties, targets get tuned roughly four times a year per listing as seasons and supply curves shift. That works out to once per quarter. Spring retune lands in late February. Summer in late May. Fall in late August. Winter in late November.
The target is not the price you want. It is the price the listing has to clear to hit budget. Everything else, the comp check, the monthly drift read, the quarterly retune, exists to keep that number honest.
How Target Price Connects To Cleaning Fees And Depreciation
Your target ADR assumes your cleaning fee is structured correctly. If you bury cleaning in the nightly rate, your ADR looks higher than it is and the formula lies. If you charge a cleaning fee that scares off one-night bookings, your occupancy assumption fails. The 2026 cleaning-fee landscape shifted hard, and you can see the full breakdown in the cleaning fees 2026 guide.
Depreciation matters on the expense side. If you are using 100% bonus depreciation to shelter income, your effective tax reserve drops, which lowers your revenue goal, which lowers your target ADR. Hosts who ignore the tax side overbuild their revenue goal and price themselves out of the market.
The 15-day booking window also shapes your target. Short lead times mean you cannot hold out for premium bookings forever. Read the 15-day booking window playbook for how to shape the discount curve inside that window without collapsing your target ADR.
Do not set a target ADR, hit it for two months, then stop checking. Markets drift. Supply grows. Your comp median in March is not your comp median in August. Quarterly retune is the minimum cadence.
The Official Airbnb Pricing Tools
Airbnb's Smart Pricing will not give you a target ADR. It gives you a suggested nightly rate based on their view of demand, which is not the same as a price that hits your revenue goal. Use Smart Pricing only with a hard floor and ceiling you set yourself. Airbnb's own documentation at the Help Center walks through how to cap it.
A Ground-Level Anecdote From A Soft Ohio Market
I launched a two-bedroom in a soft Ohio market last spring at 18% below the lowest comparable active listing and took a $600 loss on the first eight bookings, but by month four I had 31 reviews and an ADR 12% above my launch price. The target ADR I set at launch was $118. The actual for month one was $94. By month four, actual was $132, 12% above the original launch price and within 6% of the target I had retuned upward after the review velocity kicked in. The formula did not break. The first two months were the cost of buying review velocity, and the monthly drift read told me exactly when to raise. [attr: 100-percent-bonus-depreciation-airbnb-2026]
That is the cadence in practice.
Per year. The retune frequency per listing across a 155-property portfolio. Seasons and supply curves shift enough that a once-a-year price review leaves 10% to 15% of revenue on the table.
Your Move This Week
Open a spreadsheet. Put your monthly revenue goal in cell A1. Put your expected occupied nights in A2. Divide A1 by A2 in A3. That number is your target ADR.
Pull five comps within a half mile at your bed count. Take the median. Compare.
Target Price Starter Checklist
- Build the revenue goal. Include mortgage, utilities, insurance, supplies, tax reserve, and owner profit. No rounding down.
- Set an honest occupancy. Use your last 90 days of actuals, not a hope number. New listings use 55%.
- Calculate target ADR. Revenue goal divided by expected occupied nights. Write it in a spreadsheet, not a note app.
- Pull five comps. Active listings, half-mile radius, same bed count, 10+ reviews in the last 90 days.
- Compare to median. Within 15% means hold. Outside 15% means fix the inputs upstream before touching price.
- Set a 30-day check. Calendar reminder to pull actual ADR and compare to target.
What To Do If You Run More Than Three Listings
The spreadsheet method breaks around listing four or five. You need a PMS dashboard that shows ADR per listing on a 30-day rolling basis, or you need the Target Price course framework to run it as a repeatable system. Sean's Target Price course is $410 and gives you the retune cadence across a portfolio, which cuts roughly 4 hours of monthly pricing admin per 10 listings.
One Last Read On The Drift
Frequently Asked Questions
How does the Target Price formula work?
The formula uses three inputs including your monthly revenue goal, expected occupancy rate, and the number of nights in the month. You multiply the nights by occupancy to find expected occupied nights and then divide your revenue goal by that result. This calculation gives you the target ADR you must clear to hit your budget.
How do I validate target ADR against the comp set?
You pull the median ADR for comparable listings within a half mile with the same bed count and similar amenity tier. If your target sits within 15% of that comp median, the math is feasible, but anything above suggests the inputs are broken. You must fix the inputs rather than the nightly rate if the gap exceeds that band.
What is the upstream fix when the market will not bear my target?
When the market will not bear your target, you adjust upstream by dropping the revenue goal, tightening the occupancy assumption, or trimming the expense base. You should audit the expense base first by cutting unused software and renegotiating cleaning costs. Then you retest the occupancy assumption using your own last 90 days of data instead of guessing.
How does the monthly retune cadence work across 155 listings?
The text specifies that hosts tune pricing four times a year per listing to match the market rather than on a monthly basis. This cadence ensures the target ADR number actually matches the market you are in. Following this routine helps you stop leaving revenue on the table across your portfolio.
How does Target Price connect to cleaning fees and depreciation?
The revenue goal must include cleaning reimbursement along with mortgage, insurance, utilities, and software fees. The text does not mention depreciation, but requires all expenses to be included to ensure the math is accurate. You must confirm your tax reserve is realistic to prevent the formula from lying to you later.