Airbnb Answers: Pricing suggestions

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Airbnb Answers: Pricing suggestions

Airbnb Answers Pricing Article.jpg

 

You asked: You're constantly pushing me to lower my price—why? Who are you comparing me to?

 

This was a top-voted question that we answered at the July 2018 Host Q&A, and it comes up often, so we’ve captured the answer as well as some updates for you here. Let’s dive in.

 

You’re always in control of your listing price

It’s important that you know you’re always in control of the price you set on your listing. You can decide based on your business goals and risk tolerance how high or low to go, and when to change that price to encourage bookings or to maximize your profit. Our intention behind offering pricing suggestions is to give you the information you need to help you get bookings, and adjusting your price is often the most effective way to do this. The goal is to dial in a price for your listing that matches what guests are searching for—and willing to pay for—at the time of their trip.

 

Pricing suggestions when demand is low—and when demand is high

We have some updates to share about how we’re developing and delivering the information you need to price your listing competitively—both during low and high demand seasons. The pricing tools we build are intended to help you boost your income by getting bookings. Historically these tools have focused on helping you set a competitive price when demand is low. See, when demand is low, setting a lower price is more likely to get you bookings. Some of you may prefer to keep your price higher even if that means your place goes unbooked, and of course that is absolutely okay. You’re always in control of your listing price.

 

Some of you have told us that the suggestions you get are sometimes so low you question if it’s worth continuing to host on Airbnb. Please know that we value you as the core of our community—there’s no Airbnb without Airbnb hosts! Our intention is only to give you the most reliable information we can gather, so you can make informed business decisions that work for you. Our pricing suggestions may not always capture the nuances of how you host, or what makes your space unique. That’s why it’s important to add a minimum price that ensures Smart Pricing only gets you bookings at prices that are worth it for you. We might still send you suggestions below that minimum simply to keep you informed about what price we believe would get you bookings. You’re free to ignore these if they don’t work for you. We also understand that this is not always welcome information, so we’re working on ways for you to let us know if you’d like fewer, or no, notifications in your inbox.

 

So we’ve talked about pricing suggestions when demand is low, but what about when it’s high? Indeed, many of your calendars are quite booked up. And what you really want are tools that help ensure you’re not leaving money on the table by charging too low a price when there’s plenty of demand. That’s why we’ve spent the first half of 2018 working on this problem and have launched improvements to our Smart Pricing suggestions to be more in tune with the market during periods of high demand.

 

The updated model looks at the previous years’ Airbnb data and the relationship of demand (bookings) and the prices of the booked listings in your area. Your Smart Pricing suggestions will now do a better job of taking these factors into account. This is just the first step. We’re still working on more ways to make our pricing suggestions better suit your goals, and ways to give you more market data rather than suggestions, so you can make informed pricing decisions. We’ve started testing these new ideas this summer.

 

How your space is compared to others

Some of you asked about how your listing is compared to others. When it comes to comparisons, we look at your listing through the eyes of guests and compare it with other listings that are successfully booked. In addition to finding listings that host similar numbers of guests and are close to your listing’s location, we look at what guests click before and after visiting your listing. Sometimes you’d be surprised (and we are too) at what guests perceive as comparable.

 

Next, we try to make sure your listing is compared to other listings that are successful and competitive. Unfortunately, many listings on the platform receive few bookings, especially in periods of low demand. We realize that most of you compare your listings to others by searching as guests in your area, and this can yield very different results than our comparisons. This is because it’s hard to assess how successful listings are with just a search. Moreover, if you search with dates, you’ll typically only see listings that have not been booked. These listings tend to be priced less competitively than the ones that have already been booked for those dates. So if you’re looking only at available listings, you have no way to tell if they’re getting booked successfully, or if their prices may be too high.

 

Despite all this, sometimes our model still doesn’t take into account all aspects that are important to you in your comparison. That’s why we’re continuing to expand the way in which we think about comparisons and are working to increase the relevance of our tools and suggestions.

 

Improvements on the way

Thanks to your feedback, we’ve made some strides in how we calculate and deliver pricing suggestions. Here are a few things you can look forward to:

  • We’ve made improvements that will reduce the number of pricing-suggestion-related emails you get by up to 15%
  • We’ve added prompts for you to give us direct feedback on our emails to you, so we can make sure you’re getting the information you need, when you need it
  • We’ve improved the consistency between messages you’re getting regarding pricing
  • We’re working on an exciting feature that will give you up-to-date market information for each calendar night. This feature will take into account things like how many guests are searching in your area, how many of these guests have already booked, and what prices nearby listings are getting booked for.

 

Stay tuned for even more pricing news during the next Global Host Q&A, which will air on October 10 2018.

140 Replies 140
Tarrant0
Level 3
Chatham, MA

Last year I followed some of the Airbnb prompts to lower our prices after being bombarded (at least that is how it felt to me) by emails saying (screaming?) “everyone is booking elsewhere for less!”. And it worked in that we got more bookings — but we got some really bad guests as a result. After trying that for a year I now ignore the prompts entirely as it simply is not worth the financial and emotional cost of having guests who want things on the cheap. We would much rather have fewer guests who are willing to pay a fair price for a quality experience and will treat another person’s home with the respect it deserves. The “race to the bottom” mentality behind the “lower your prices to get more bookings” benefits no one (except, sorry to say, Airbnb which gets more service fee income). Is that really where Airbnb wants to go?

Maureen237
Level 1
Whitefish, MT

i find it annoying and not helpful to recieve emails suggesting i lower my price when i am already fully booked. obviously i didnt need to change the price. then there are "comparisons" that sight some place not even close to what my listing is. i wonder if these suggestions are just random and you dont even pay attention to who you are sending them to.

I don't mind the suggestions, but quickly deterined that you miss some important nuances regarding my pricing and location. Furthermore, I think it might make your suggestions more accurate and helpful to me if you did retrospective looks to see what my actual booking rate is after the fact. 

 

I'm just closing in on my first year, but have had consistent growth in bookings and earnings, and have found that my location--in a 'hot' part of town, and very close to a fairly pricy private college--differentiates my place versus many of the others you suggest are like me. Because some of these factors, I get a lot of bookings in the week or two ahead of the booked date. Waiting for those bookings, versus dropping my rate by 30% or more, which has often been suggested, would result in lower earnings even with some additional bookings. There have been times you suggest that I lower my prices, but the comparables you provide have a lower booking rate and much lower prices.

 

The plus is that you make me examine my pricing and other aspects of managing my Airbnb, which makes me a better host and helps me make better financial decisions in running this side business, so thanks for that.

Patree0
Level 6
Crescent City, CA

I'm hopeful that you will finally make an "Opt out" feature for pricing tips, as  I have requested many times.  I, like many others here, offer a unique experience, and I would never lower my price based on your suggestions.  I also believe your "tips" set up competition among hosts for $5.00 or $10.00, just so you can get more money as hosts are encouraged to engage in a price war.  

We would find it very helpful if we knew exactly which properties we are being compared to.  We recently took a recurring guest to dinner and asked why he stayed with us so often.  The answers were very helpful.  We have “real” towels, nice bath mats, an AppleTV with lots of streaming channels, and comfortable clean rooms.  Also the art is appreciated.  We get lots of comments on our in shower toiletry dispensers and courtesy items.  Most of all every room we have has an en suite bathroom.  No going down the hall, no sharing.  The bathroom door is in one’s room!  You don’t mention anything about whether who you’re comparing me to has an en suite bath.  That is the number one most appreciated and commented on feature that we offer.  We also are constantly booked with upper 90% occupancy and I’m still getting emails telling me to lower my prices by over $10 a night.  That’s over a 30% discount.  Nothing of what you write to explain yourselves adds up to the reality I’m experiencing.  

 

Just show how me who you’re comparing me to so I know what is relevant and what is not.  

John220
Level 2
Leamington, Canada

I agree with all the criticsims that have been voiced about pricing recommendations. I find the pricing suggestions given to me to be completely ridiculous and useless. My place is in a small town with a limited number of travellers, my prices are already rock-bottom ($50), and for 4 years I have gotten the lion's share of rentals for a one room rental within a home. (Other hosts have cottages along the lake and charge much higher fees.) One competitor tried lowering her price $5 less than mine when pricing suggestions came out. I knew it was a losing strategy. I continuted to get the vast majority of bookings in town and that host ended up returning to her original price $15 above mine, which is a better strategy because when my place is booked she gets the other guests who come to town and want a room in a house. 

 

I have also been told by Airbnb that cheaper places have been rented in my 'locality'. In my town, no one is cheaper than me. About an hour away in a city, prices are cheaper, yes. But that's an entirely different market.

 

After reading the announcements about improvements to pricing suggestions, I understand more clearly why those suggestions are so wrong. Your researchers/developers need to know what the numbers mean. They don't.  And, as others have said, they need to know the particularity of a given accomodation and locale/market.

 

In contrast to others who have said they have had bad guests when renting at lower prices, I have not. Ninety nine point 99999... percent of my guests have been extraordinarily  respectful. And most of these end up being like family. It's been a beautiful experience. And for that, I am thankful to Airbnb.

Mattye0
Level 2
Corpus Christi, TX

I agree that the pricing suggestions make no sense. It’s obvious that my top notch rentals are being grouped with the dumps a few blocks away. 

Michael1052
Level 3
Austin, TX

I've long had quibbles with Airbnb's "suggested" pricing mechanisms, and they've only been amplified now that my two listings have been added to Airbnb Plus:

 

  1. I already had a distressing problem beforehand with Airbnb automatically using flats of significantly inferior quality and interior-design caliber as "comps" for one of my listings in particular. It merely worsened after it was added to the Plus program in June: it is still being "compared" to units that are neither in the Plus program nor operated by Superhosts, and which unlike my listing have not been gut-renovated with high-end appliances, marble countertops, etc.
  2. Despite the assertion that we're "always in control of the prices we set" for our listings, it is highly distressing to do exactly that ... only to see a mysterious red dot show up on every date for which our set price is an unknown amount higher than whatever Airbnb's algorithm determines it "should" be. This further makes us question whether we're even showing up in Airbnb's search results, given how "abnormal" our pricing ostensibly is; the dot feels like a de facto scarlet letter!
  3. Most problematic of all, however, are the dates in which we're given the Scarlet Letter of Death on days for which Airbnb has no accurate data upon which to calculate price tips!! Yes, they may seem high to you given that, say, they're three months out, but we know that events like a university football game that will draw over 100,000 weekend guests to town are taking place at that time.
Blaise8
Level 2
Chicago, IL

Agree with MaryBeth from West Palm Beach...In the past, we've lowered our price to fill in spotty vacant nights here and there (usually Sundays and Thursdays for some reason) but typically we'll spend more time cleaning up and or fixing broken stuff caused by those guests that went for the cheap. Or they turn out to be the guests that piss off our neighbors and cause tension on the block. Ask for less and you'll get less. Much better to suffer a vacant night here and there.

Frank92
Level 3
San Diego, CA

Complete nonsense. Does Airbnb actually think any real host is going to believe this ridiculous convoluted explanation as to why they pressure hosts to lower prices? Why can't hosts just turn the feature off? Typical Airbnb. They put out these statements claiming to be all about hosts and everything they do is for the hosts benefit, then in the next paragraph describe everything they are going to do that is totally not at all for the hosts benefit but 100% for the benefit of Airbnb. 

Nicholas110
Level 2
Kuala Lumpur, MY

I am shocked to see some of the pricing suggestions, they are so low that it is not worth our while, and are bordering on the insulting. It is clear that your findings are based purely on what your algorithms crank out, but for their results to have any menaing they must be  supported by human intervention. For example, my nice luxuy 1-bedroom apartment with designer furniture and  stupendous view of the lake and mountains beyond cannot be compared to a nearby place of the same size which consists of cheap nasty furnishings, lies within earshot of the main road and has a view of the car park, only a human being can make that judgment call.... 

Leslie82
Level 6
Philadelphia, PA

I understand that I have complete control over my pricing and I have appreciated receiving some guidance on local demand patterns, and relief from constantly having to manually update my prices to try to take advantage of events and holidays. Frankly, though, I don’t think the smart pricing is working as well now as it did in the first year I was open (I am now in business three years). It has almost completely undercut my weekend rates (rendering my set weekend rates irrelevant) even in the busiest seasons, even though my base rate is already quite low.  My revenues dropped this year despite being frequently booked all summer and I believe that was at least in part due to the fact that smart pricing hardly ever kicked in for me when it was busy. I have now turned smart pricing off because I really need to charge those weekend rates to make up for what was lost earlier in the year. 

 

There is also an unseen fallacy in the premise that lower prices = more frequent bookings = higher revenues = a more desirable outcome. This may be true for some hosts that are capable of operating 365 days a year, but not all of us are in a position to do that. Some of us are operating under limits that make it very important to be able to maximise the revenue potential of fewer bookings. In my case it is the city ordinance that governs my business license which limits my Airbnb operations to 180 days per year.  I simply cannot follow a business plan that increases my booking frequency at a lower price and earn enough money to make this worthwhile within that 180 day limit. 

Fara6
Level 2
Destin, FL

I think AirBnB needs to add much better Analytics here.  Your tech team should be more than capable of this..  or do as other platforms do and allow the hosts to select which properties they want to be compared to, as we should know our peer group better than a simple geo lookup..

 

Sandy195
Level 10
Boulder, CO

 I base my prices on the most expensive hotel in Boulder: for the same price as 1 room in the fancy hotel, my guests get 2 bdrms, living room, kitchen, 2 bathrooms, outdoor decks, a woodsy view,  serenity & quiet, & the amenities of a hotel -- except daily maid service, gym, pool, & restaurant/bar.  For many of my guests, my place is a BETTER value than the fancy hotel.

 

Airbnb should study the gas station wars of the '60s - the winners were the consumers & the few gas station owners who could stay afloat during the down-trend in gas prices.  The few that survived were then able to gough customers as soon as the competition was wiped out.

 

I start my nightly prices at $400/night.  If someone wants to book months in advance, they can, but at a premium price.  For special events, I am booked sometimes 9 months in advance.  As open nights are closer, I start slowly lowering my nightly rate.  As open dates get really close, I check out which Airbnbs are left, and if very few places are available, I start bumping up my prices again.  It works very well.

 

At $200/night, I would be booked almost solidly and well in advance.  However, I would still have "orphan" nights.  Let's say I had 5 orphan nights in a month; that would mean I would gross $5K.  My method gives me an average of about $8K/summer month gross.  Yes, I have more "orphan" nights, but less wear and tear on my place, and more income. 

 

Airbnb constantly informs me that I should be $200/night during the summer.  The last email I got said I should be at $96/night for Sept and Oct.  Never going to happen!  I'll quit.

Sandy195
Level 10
Boulder, CO

I also want to add that NEVER has Airbnb suggested $400/night.  Half of my May-Oct bookings are at that rate.  For the University's graduation week, I always get $800/night.  I just looked and Airbnb is suggesting $226-$229/night for thoses nights in May 2019.  I'm a 5.0 star "superhost" with about 200 reviews.  My place is well located and awesome.  Airbnb does not take these factors into consideration.  They just keep trying to get me to be a budget accomodation, which I certainly am not.