Airbnb Answers: Pricing suggestions

[Airbnb]

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.

[MaryBeth39]

 First, thank you for beginning this conversation. I appreciate that Airbnb is open and provides a form where we can discuss matters that are important to us. I do not like the prompts that say guest looked at your listing and chose one that was $23 less or somesuch. Frankly, I don’t want that guest. It’s been my experience that when I priced too low I have guests that are  not very respectful of my property. 

[Mona61]

 Mary Beth,  i’m in  The small town of Laton California  and I constantly get mail to lower my price. If I charged any lower I would be getting less than chambermaid wages. I cannot possibly lower my  Price to what is being suggested.  

[Janet403]

just to say that I normally have a fixed price for the single room available in my flat. Having been an airbnb host for some 2 years now and receive some 60-70% capacity on my availble nights, that works well for me. Takes me about an hour to change over room, I do not wish to work for less than minimum wage either!

[Janet403]

what does 'level 10' or level 2' etc. mean?

[Lizzie]

Hello @Janet403,

Lovely to meet you and thanks for your comments here. 

Just to answer your question regarding what the different 'levels' mean. This is based on your activity here in the Community Center, such as how many comments your have made, thumbs up given/received etc. 

I hope this helps to provide a little more information on this. 🙂

Thanks,

Lizzie

[Barbara297]

It doesn’t seem accurate that Airbnb will compare a 350 sq. One  bedroom in a $200,000 property to a 1,900 sq ft one bedroom in a $600,000 property.  Maybe they should add another comparison and break down the cost by sq. footage as well as number of bedrooms and bathrooms. 

[Joe477]

Thanks but no thanks I have noticed that when I lower my price so does the kind of guest it attracts I go out of my way to make my guests feel comfortable with extra touches and it costs money and then I get these messages and make me feel bad and makes me question is it worth it

[Cor3]

Hi @Janet403,

Usually a level 10 means, that this person has wasted way too much time on the Community!

So you should count yourself lucky 🙂 !

[Ed-and-Robb0]

As guests we made the mistake last year of chosing a property based on the pictures and the price. We booked for 17 days. It was horrible. Fortunately, we learned a lot from that experience for us as hosts. We offer a truly comfortable place to stay with a breakfast adapted to the desires of our guests. We give them advice on sightseeing and also shopping and how best to attend any business meetings or conferences on their agenda. We found that if the price is too low, we get problem guests who are careless and uncaring. Now we are getting repeat customers who know us and our home. This, for us, is building business. As they say: You get what you pay for. Many people know that as do we. 

[Chris1365]

My listing is a an entire 3 bedroom cottage on a lake, sleeps up to 9 watercraft included, firewood included, WiFi, premium brands of coffee, and tons of pantry items that are included. I feel that Airbnb can't possibly be taking into account all the different offerings at each unique listing when they make comparisons. In September - November (low season in my area) Airbnb is sugesting I list as low as $49 a night which is just laughable. It tears apart my confidence in my prices, which I already feel I set too low in order to stay competative.

Still, I love being a host and I understand the limitations their platform has in comparing listings, especially in more remote locations such as mine. I'm always hopefull to see improvements, but in the meantime I set my price and usually ignore the suggestions, even when they're suggesting I raise the price!

[Andrea1063]

I totally agree, there is no point in renting out space at the prices they suggest and it is a race to the bottom.  People fall for it so it cheapens too many listings in the area.  Its a lose-lose situation for us.  

Hotels and motels rent a rooms in my area from between $160 t0 $300+ / night.  My price is $75 and Airbnb incessantly 'suggests' that I lower my place with private living room, full use of the kitchen and yard for $55 / night.  No way in hell will I do that.  

Newbies under-cut to get bookings and they're using their introductory price as an example on my place with 2.5 yrs on Airbnb and a Superhost for 8 quarters in a row. 

They could have an inflatable bed and cheap as hell and you still use their price as a comparison.   

[Terri103]

I understand your just trying to help but the comparisons are usually irrelevant.  I’m not going to rent below my bottom line.  If a group of four can find a place for $30

less a mile outside of town, More power to them.  But I don’t want them here. For the most part your website is wonderful but you have to watch how many pop up suggestions you pound at your users before it becomes an irritation.  

[Pete28]

Why not start with the simple stuff - get prices right for weekends and holidays !! Left to its own devices smart pricing will use the min price for Xmas, New Years, thanksgiving, July 4th etc etc. as well as every weekend. Hopeless implementation of pricing. If you can't do it yourself go buy a pricing engine.

For a technology company investing in data science etc etc you seem to miss out on your most obvious function. Maximize price for each booking.

[Dominic39]

I can understand the intent of AirBnB in working towards creation of a useful tool with these tips on what we as hosts missed for booking and at what cost, but honestly there are just too many variables, too many details that I would want, and I am sure I am not alone in this, to make me consider these to be useful in setting my pricing.  Maybe a new host who isnt seeing any bookings would find this info useful, but I think the seasoned host cannot imagine an algorithim any better than their own intuition and cost benefit analysis in setting pricing. If I contact AirBnB and ask why am I not getting bookings? maybe then I might want this info included in a reply, but to me, its something we should just opt out of receiving with a setting, as I dont it ever reaching the capability of making me revise anything about what I do as a host

[Charlie111]

Smart pricing requires constant babysitting. If you’re not careful, holidays and peak weekends will be rented for peanuts.  We know that from hard experience.  Eventually, the analytics do seem to up the price the longer you rent on the site-  but there are costly glitches along the way. The only person that can be ultimately trusted with the pricing is the person that pays the bills and knows the property.