How Smart Pricing Works

Lizzie
Former Community Manager
Former Community Manager
London, United Kingdom

How Smart Pricing Works

Smart Pricing

 

Hello everyone,


Smart Pricing is a commonly discussed topic in the Community Center and we have heard from many of you that you would like to know more about how it works. So, similarly with our previous topics on Instant Book and How Search Works, the Smart Pricing team have helped answered some of your top questions. Here is what they have to say!

 

Deciding on the right price to charge for your listing can be a challenging task for anyone. You search your area to see what other hosts are charging, compare your listing to theirs, and wonder how you measure up. But what you don’t know is the price those listings actually get booked for (and how often they, in fact, get booked). You can’t tell how much interest your own listing is generating, or if travelers are willing to pay the price you’re asking. This is where Smart Pricing comes in, by keeping your nightly prices competitive as demand in your area changes. The goal of Smart Pricing is to increase your chance of getting booked.

 

How does Smart pricing determine its suggestions?

When you have Smart Pricing turned on, your pricing suggestions reflect the controls you’ve set, combined with a lot of data. In fact, Smart Pricing takes into account over 70 different factors that could change your price. These factors, plus your controls, determine the best price for each available night on your calendar, and your price updates to reflect changes in factors like:

  • Lead-time: as a check-in date approaches, your price will update
  • Market popularity: if more people are searching for homes in your area, your price will update
  • Seasonality: as you move into, or out of high season, your price will update
  • Listing popularity: if you get a lot of views and bookings, your price will update
  • Listing details: if you add amenities, such as WiFi, your price will update
  • Bookings history: as you get bookings, your future prices will be partly based on the prices you got for successful bookings. So, for instance, if you set your price higher than Smart Pricing suggests, and you get a successful booking at that price, the algorithm will update to reflect that.
  • Review history: Your prices update as you get more positive reviews from successful stays.

 

There are lots of factors at play—Smart Pricing even evaluates how many travelers look at your listing every day and how long they view it for! We really have built this tool to reflect factors you can’t discover just by simply comparing your listing page to others in the area.

 

What control do hosts have over setting their prices while using Smart Pricing?

Smart Pricing lets you set your prices to automatically match demand, with the goal of attracting bookings. To make sure you’re always comfortable with your listing’s daily prices, we give you a couple of simple settings to establish the boundaries you’re comfortable with:

  • The minimum price you set is the lowest your price will go when demand for your space is low. This means nightly prices may drop to attract more guests to book, but never below the threshold you set.
  • The maximum price you set is the highest price your listing can be booked for, even on high demand nights. You can set this as high as $10,000 per night, and it is not publicly displayed. Currently, every listing that uses Smart Pricing must include a maximum price setting.

At any time, if you see prices you disagree with for a date, you can just type a new price in your calendar or adjust your minimum or maximum price in your Smart Pricing settings.

 

How does Smart Pricing interact with other pricing settings?

Prices guests see can be adjusted based on some other settings you have in place, but not all.  For example:

  • If Smart Pricing is turned on, your weekend price setting will not be used. However, we will make sure the recommended price stays above your minimum price setting, including on weekends.
  • Extra guest fees and cleaning fees are applied to stays in the same way whether Smart Pricing is on or off.
  • Weekly and monthly discounts get applied to the prices on your calendar for longer stays whether Smart Pricing is on or off.

We’re always adding flexibility to Smart Pricing, such as the ability to turn it off for certain days only. And we appreciate hearing your ideas on how to improve this feature. We do this by surveying and interviewing hosts all over the globe, staying current on topics and comments here in the community center, and testing new features with small groups of hosts.

 

That’s a long way to say, we appreciate all of your feedback and how much you care about helping improve the Airbnb products hosts use every day. Stay tuned for updates.

 

Feel free to share any comments you have, here in this discussion.

 

Thanks,
Lizzie


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287 Replies 287

I too have been somewhat mystified by the suggestions re smart pricing. I offer a very unique space with great amenities that are way beyond the spaces that i am compared with. My bookings are consistent and guests themselves have commented that my price is extremely reasonable when compared with other outfits in my general area. On top of that Abb wants to offer hefty weekly discounts....that's just not practical. We have had huge events in town where thousands of folk are on attendance and SP does not increase my nightly price...what's up with that?  Ann needs to review SP to reflect the reality in more areas than they do now.  SP has not been great for me really!

I agree with you completely. SP is based on the belief that the only criteria for staying somewhere, is the price. That is SO wrong. I’m both a host and guest. When I choose a place to stay, I look at so many other criteria. Only one of them is the price…

Rebecca342
Level 1
Colorado, United States

Amen to Andrea’s comment and to the thread of what the comments are saying! If we would all be following the smart pricing suggestions, the value Airbnb provides to our communities at large would be extremely diminished. I have that been with Airbnb almost from the beginning and I appreciate the unique value I give to my guests and therefore attract guests who appreciate that same value 

Helga0
Level 10
Quimper, France

@Lizzie, thank you for telling me about this thread. It’s a very good idea to bring some clarity to the mysterious working of airbnb’s algorithms. ... And brave too 😉

the rate views to bookings is already visible and a very useful tool to check your listing’s attractivity for its target public. If I compare mine with success rates of sales efforts in other areas I ever worked in, it’s high - it would be very interesting to have airbnb’s average rate per town or region and per type of listing. 

I also noted fluctuations between 3 and over 6% , sometimes within a short period. It’s clear, that this would drive an algorithm  to crazy seeming results. It could not know, that I discussed the listing on a forum and got lots of views and advicebut no booking was intended. Or maybe, one of the 70 parameters checks, if several direct hits come from the same page. 

Does the program take into account lical holidays or weekends, not for the potential booking dates but into the source of searches? When we started renting, we noticed a correlation between weekends, bored people and searches, with a high pourcentage if window shopping. 

 

What I would love to see in the dashboard is the visit duration, as this gives a host real information on the attractivity of his presentation.

the first picture and a little but the title gets the visitor to click on the listing, but if they stay or go quickly, tells you if the pictures do their job. 

Having an insolite listing, I would even love to have more than one average values, which I am sure the techniciens have: the value how many close the listing quickly and the value how long the rest stays in average. 

My first three pictures summarize what it is and what it isn’t, to scare away those who will not be happy. The rest of the photoz sell the place to the target public. So the two values would tell me, if both my aims work well. 

So, I added a wish to the demiurges behind the scene. 

J-Renato0
Level 10
Rio de Janeiro, Brazil

@Lizzie

Here goes my comments.

It seems to me that the logic of smart pricing (and prices suggestion to the ones that does not set smart pricing on) is not reasonable considering that it always lower prices when the check-in date approaches.

Notice that, the closer to check-in, the less the options of accommodations that are available.
The closer to check-in, the less time the potential guest has to make a choice.

One thing is last minute booking, within 2 to days to check-in. In this case, it make sense to lower prices of the 2 first nights.

However, another thing is to book with an antecedence of 10 to 30 days. In this case, prices should be increased.

In most of the cases, we can get the lowest prices for flights if we book at least 2 months in advance.

If air companies would follow the logic of "smart pricing" they would go bankrupted at once.

Marzena4
Level 10
Kraków, Poland

Thanks, @Lizzie, for heads up with this topic.

As @Kelly149 suggested, the most important is to help SP distinguish between weekdays and weekends - I suggest adding such two options for hosts to set manually (minimum/maximum x weekdays/weekends). Also, a possibility to set various periods of time for different min/max ranges (just like with minimum stay in Availability) would be great should anyone listen to hosts.

 

As for events/special days in the calendar being reflected by SP - a lot is to be done... I don't rely on SP for that and the above mentioned option (time spans) would help a little bit in this respect.

// "The only person you can trust is yourself"
Edwin57
Level 10
New York, United States

Thank you for the work you and your team put together and giveing us the information thank you so much I am going to look into it more closely 

Lizzie
Former Community Manager
Former Community Manager
London, United Kingdom

Hello @Andrea9@Helga0@J-Renato0@Marzena4@Edwin57@David126@Lawrene0@Kelly149

 

Thanks so much for your replies, I am pleased to see that you are finding this information helpful in understanding how Smart Pricing works. It is great to see you sharing your feedback and I value the constructive points you have raised here.

 

I have noticed from your comments here and previous discussions in the CC that you like the concept of the feature but may not necessarily find it beneficial to you personally. With this in mind, do you have any specific thoughts on how this feature could be improved to be a more useful tool for you and the rest of the host community? For example, by making it more flexible it would enable you to turn this on to harness any last minute bookings?

 

I feel this is a great opportunity for us to share and develop some great ideas around this. 🙂

 

Thanks again for all you responses.
Lizzie


--------------------


Thank you for the last 7 years, find out more in my Personal Update.


Looking to contact our Support Team, for details...take a look at the Community Help Guides.

Andrea9
Level 10
Amsterdam, Netherlands

@Lizzie

 

I could imagine being able to set it up for certain dates or time periods only would be beneficial to many hosts who are happy to rely on it.

Sure, @Lizzie. I wonder if it is possible to allow the customizing of more than just minimum and maximum prices. Airbnb is so many unique offerings that the inability to customize might be why smart pricing is such a poor fit for so many of us. For example, the system would pick up the amenities, etc., as it does now, which is great, and maybe some uniqueness such as "pirate ship", "treehouse", "lighthouse", if those parametres are chosen in the listing setup, but the host could input local high holidays and events, and such things as "within 10 kilometres of the airport" or "on an island". And I suppose the comparison to what is nearby is helpful in some cases, but when the system has to look an hour away, to @David's Leadville and my Petrolia, then it needs to drop that part of the equation. 

I think I would be more apt to look to it if it were customizable. 

Thanks for asking!

I used smart pricing and in return I received a booking in our peak time period (in 3 months time) for about half of what it is really worth.  I declined the booking and explained the reasons to my guests who  were very understanding.  I then sent airbnb a message to express my disappointment at the system and I have not had any response except a review from airbnb on my website saying "this host cancelled their booking".

For smart pricing to work effectively it needs to be able to capture a specifie time frame that the hosts agree to.  

I can see it is a work in progress, but I am disappointed that my previous feedback was not replied to,  and that I have an unfavouable comment on my page for all the future guests to see.

@Lizzie

  

I like SP as I once in a while get more than I would have with my own price setting, and I don't have to be keeping track constantly.  BUT I also would prefer the idea already stated in this forum of being able to change the minimum of smart pricing for weekends vs weekdays, as well as host manually changing SP minimum for holidays.  

 

As a side point, I also feel the same as several hosts in this forum about needing to make a decent profit to be in the hosting business.  I don't appreciate much the automatic emails from Airbnb telling me I would have booked with a lower price,  it is not even clear if this is a comparable listing in terms of amenities (Question -- is there a way to see the actual listings that were successfully booked over mine?).   It feels a bit like scare tactics to help Airbnb get more of the market share by driving the prices down, which is not in the hosts' interest, and may eventually drive away the high-quality hosts who are attempting to operate under the original concept of Airbnb -- correct me if I'm wrong here -- personable, friendly, individual hosting.   

 

Thanks for the thread, Lizzie.

Don’t appreciate those comparison emails either. Is there a way to opt out of those?

@Rachel414

 

I think the biggest service that @Lizzie could do is to pass on this from the Community, should be easy enought to have a tick box opt out.

 

As fars as I am aware @Lizzie is the Admin for this board, not a ABB employee.

David
Lizzie
Former Community Manager
Former Community Manager
London, United Kingdom

Hello @Rachel414,

 

It is great to see you here in the Community Center, thank you for your sharing your thoughts. I am sorry to hear you would prefer to not receive these emails. 

 

To answer you question, you can opt of of all promotional email (shown in your account Settings), however currently it isn't possible opt-out of just receiving this email, so it is something to keep-in-mind. 

 

I hope this is helpful.

 

Thanks,

Lizzie


--------------------


Thank you for the last 7 years, find out more in my Personal Update.


Looking to contact our Support Team, for details...take a look at the Community Help Guides.