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.

[Di-and-Duncan0]

I want option to switch it off - one of the most annoying features - I don’t care - I have over 80% occupancy and am not giving the place away - If I followed the suggestions on price I would lose money 

[Manuela161]

About prices:

In Rome the city tourist tax is rather high (3.5 euros each person each day for the first 10 days of stay from 10 years old up). Since it is a fee that goes to the city council  I have to take it extra booking, otherwise it would figure out like something I earn and I would have to pay taxes, the VAT, and Airbnb's percentage on it. When I host families of  4 or 5  I always feel uneasy asking it, even if I have pointed it out both in the description and rules of the house. I would LIKE that Airbnb took directly the city tourist tax and gave it to Rome's city council of Rome ( as it is done for other cities in Italy , for example Florence). This would be more fair for the few ( as it seems) hosts that follow the rules and pay the city tourist taxes!! 

[Christie51]

Airbnb is suggesting prices of $15-20 for this coming weekend. They are clearly unaware that it is Homecoming weekend for the Big 12 university in my city!

[Stacey21]

Hi everyone, I don’t care for the smart pricing because some of my guests have accused the hosts of dickering with the prices and I know some have asked  for their money back because they rent that room for 50 then they see it’s 35 the next night to somebody else so they want their $15 back which I don’t blame them and it seems like it would be more paperwork than what it’s worth for Airbnb I have a seasonal business here in Maine so I’m not interested in lowering my prices especially in the winter because now I have to heat these rooms so technically my prices should go up but the volume of people down.  I think it makes Airbnb look cheap like a Groupon and I really wish they wouldn’t do smart pricing and I don’t like it when it’s on my format when I’m looking at my calendar in my face all the time there should be an option where I can just get rid of that because I don’t want to change my prices it makes it look crazy and not professional. One of my campsites rented out and it automatically charged  the smart pricing and I never even touched the option nor would I Thank goodness I talked  to a supervisor who fixed it for me because it was a difference of $20. I’m just stating my opinion with my experience with Airbnb so far smart pricing is not a good idea.

[Marleen18]

I tried the automatic pricing on a holdiday weekend with 2 listings...This has cost me lots of money as Airbnb did not change the price and actualy put it on the most bottom prizes possible...lower than ever...while there was an extremely high amount of demand and the whole of town was sold out!...Never again! It cost me hundreds of dollars! This system does not work at all...

[Alex205]

The recommendations on Pricing should be based on traffic, time of year and special events on towns and cities as reminders. Example: Oct 28 - Nov 3 Dia de los muertos in Mexico. With a minimum of 3 months in advance. 

[Josiah0]

"Your listing appeared in search for this night but people booked other listings that are about $38 less per night"

You have got to be kidding me!  Our space is $42/night.  Who on earth is charging $4 per night?

[Terri129]

Airbnb commission is ridiculously high. That is why they push to lower the rate.

[Maia29]

The price comparison can only be accurate when you calculate the extra fees that other hosts charge in their listing price. For example, one host in my area only charges $20 per night.

However, they have numerous extra charges that are not figured into their nightly price. They charge for extra guests, pets, and cleaning fees. I do not charge any of those fees. Once you factor in all of these extra fees, their place is actually MUCH more expensive than mine.

How is that an accurate comparison? Its actually the Air B&B hosts being sneaky by lowering their average nightly price and hiding extra fees to cover this reduction in price to get their listings on the top of the page.

[Branka-and-Silvia0]

Once I set the price for 1 lparticular single night  to 10 €  for the whole 2 bedroom apartment (normal price is 50 € for 2 people )

Airbnb used that as a reference and asked me to lower the price to 8 €  !!!!!

Needles to say 10 € is the lowest price we can set on Airbnb 😄 😄 😄

So much about Airbnb suggestions , algorhytms, calculations  etc etc hahaha

[Lawrene0]

@Airbnb, I am very pleased that suddenly, as of maybe a week or two ago, my price tips became reasonable. Some are a few dollars higher than I am charging, some a few dollars lower, when before they were consistently much, much lower. Where they were nothing but discouraging before, they feel real now. 

It's getting better. 

I hope this is the case for everyone. 

[Nick222]

We have a very unique high occupancy  rural  listing and I have found that the pricetips feature does not really apply to us and I have turned it off . While most  listings are in towns and cities , there are also listings which are destinations in their own right and hard  make a pricing comparison for.

I think that the search engine could be expanded to allow travellers to search for a particular type of listing regardless of location  .For example if you want to spend a week on a tree farm it does not matter  so much which forest it is in . This could be combined with 'experiences' where guests can search and  book a listing with an experience in mind that is provided by the host  .We have a residential music studio and get many bookings because of that but it would be great if travellers could search for something like that regardless of destination

[Ainaa0]

Does anybody know on what basis does Airbnb set the suggested price? 

When I set up my airbnb (940sqft fully furnished 3 bedroom apartment with 2 bathroom and 2 parking lots), the suggested price was very low at RM45-60 (translates to about USD10 per night!!!) which is ridiculous, it hardly covers my cleaning cost. Due to this very low price, as a host, I could only afford to provide what is essential such as clean linen, towel, toiletaries, etc. To keep my cost down, I am not able to provide any additional services for them such as cable TV and Wifi because I have to pay subscription fees. I am unable to increase my price as the prices of my competitors in the surrounding area charges that ridiculously low price too.

Most of my friends got demotivated as they hardly see the returns as an airbnb host, and stopped for a

If airbnb does not find a way to make hosting more sustainable, I can foresee that the number of host will decrease in Malaysia very soon.

[Sarah977]

@Ainaa0  Maybe what you have to do is start up a hosting group in your area (doesn't have to be all of Malaysia, just the area in which you have competition). Hosts may feel competetive towards each other, but it's actually beneficial to have a group where you all are supportive of each other- it would allow you to raise prices across the board so none of you feel like you have to skimp on providing a guest stay with amenities guests expect these days, like Wifi access. If you can get a significant number of hosts to agree to raise prices so that you're all finding it more lucrative, there will still be cheaper places that may get booked more, but you and the hosts you are in contact with will likely get better reviews because you're able to provide more, and eventually more bookings because of the good reviews.

As far as anyone on this forum can figure out, Airbnb's price tips are based on faulty algorithms, "comparing" places that are are really not at all comparable in what they offer, and the bottom line that the company doesn't care if hosts make a pittance for hosting- their aim is to have the highest volume of bookings they can, the cheaper the better so more guests will book, more guest fees collected, which is what fills their coffers.

No human is walking around Malaysia checking out Airbnb listings and deciding what they are reasonably worth- it's just a badly programmed computer bot.

Most of the hosts who contribute here on a regular basis totally ignore Airbnb price tips, they're absurd and laughable. Hosts who have almost 100% occupancy rate and very happy and appreciative guests will get price tips telling them they could get more bookings if they halved their price- it makes no sense at all.

[Amy38]

Add some color and raise your price....what does. A single room cost at a nearby hotel?