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.

[Helen150]

Your suggestions about lowering prices is not applicable to me as you are often comparing my accomodation - 1 bedroom in a shared home - with accomodation that is either a multiple shared bedrooms in one address or a shared home that does not meet my standards.

Nor do you take into consideration the times that I blocked out dates due to my travel arrangements or when I have my own family/friends visiting. As Airbnb had its inspiration from the couch surfing era, I feel that is where your soul should be, not catering for the people who are renting out apartments or houses.

Consequently I just delete most of your emails as you are only lookig to increase your earnings without taking care of the original base of this organisation.

Helen

[Julia353]

I have maintained my price through low season and high season. Airbnb might suggest a higher high season price a season (3 mths) in advance. Currently I am booked 6 months in advance for some folk. Good for them for being early bookers no v organised. On the other hand guests can book in a night or so in advance and get the sand deal. Is this equitable for the guests? 

[Noot-and-Steven0]

Race to zero.  The logic that lowering prices will increase occupany is only true in that - of course lowering prices will increase guests but is it worth it for good/quality hosts to continue hosting at a loss???  I mean if we offered all the rooms for free - do we think that would increase occupancy too?  Can we see how silly this is?

The problem with these unsolicited prompts by Airbnb to continually lower prices (way below local market value) is that it has a deflationary effect on our local hosting environment.  Good quality hosts (which is what Airbnb wants and the community needs) get frustrated and you get a constant churn of newcomer hosts who pop up, underprice and quickly get frustrated and quit.  Leaveing everone frustrated including the Airbnb guests who have bad experiences. 

I suggest Airbnb use a local budget hotel bench mark.  Get the prices of local hotels to get a realistic price of the local supply and then cut a certain percentage off that.  Because most Airbnb hosts don't offer daily beakfast and cleaning, etc... it makese sense that Airbnb stay should be a discount to local hotels.  

That would be a win-win for everyone.  Let's not try to have a race to the bottom where every Airbnb host is trying to canibalize eachother.  Nobody wins that way. 

[Ange27]

Spot on!

[Teratai-Homestay-Ong0]

i really agree with you.

[Cor3]

Hi @Airbnb,

Well there you go, you have just proven yourself wrong!

"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".

Your assumption is wrong! Maybe guests do not perceive a listing as comparable, but they are just curious!

Did you even once analyze how many people clicked the first listing shown and the last listing shown – on any given search? The human brain is almost always running in economy-mode. So it is just much easier to click on the first item, than on the last one.

In ‘our’ town, there is a listing of a studio. Nothing much special, and actually a bit expensive for what’s on offer. But it pops up literally everywhere. And sticks to everybody else’s listings, like chewing gum under a shoe. Why: Most likely, because it simply has about the highest number of reviews in town (this host did start pretty early on Airbnb – as well).

My assumption: Highest or a very high number of reviews does seem to attract the Airbnb search engine.

No matter during what time of the year, when you look at this listing. You will always see the message: This listing is on people’s mind, as it has been viewed more than 500 times this week (listings in our town, that show this message - all year round, are really very rare).

Again, why? Well, you just simply can’t miss it, when you’re looking at other listings.

So when guests are searching for a place to stay. And after having looked at a few listings. They just get curious about this particular listing. As it constantly pops up! So simply out of curiosity, they will click this listing!

And as this listing is being viewed that many times, and because some people just cannot bring up the patience to look for another place to stay. They may as well just book this listing, when it seems to suit their needs.

Actually this listing is also part of my own “10-competitor” comparison view in the calendar. And I guess it will be present in that same view for about any other host in our town.

Now let’s have a look at a couple of differences:

Accommodation type:

• Ours: a 2-bedroom apartment, including air-conditioning and 2 large swimming pools on premise, Max guests: 5 persons
• Theirs: a studio, Max guests: 4 persons (real cozy!)

Area/Location: Completely different parts of town, attracting a completely different type of audience. Distance: 2,7 Kms!

Ratings:

• Ours: >4.9 (Superhost)
• Theirs: ±7 and scoring average (± 4.5) on: Value and Check-In

This host can’t be blamed for some overpricing of the listing. Simply knowing it is being found, that often among guests.

My point: You are simply drawing the wrong conclusion! By analyzing what potential guests click on.

Possible guests don’t always perceive another listing as comparable, they are just getting curious!

With no real intention to book that other listing.

It is my impression, the referenced listings (at the bottom of each listing), are a very powerful means for drawing guest’s attention. We’ve already had quite a bit of confirmed bookings from guests, that actually did build up pretty large wishlists of listings in our town, whilst our listing was not in there. Despite this, they ended up booking with us!

When I look at this, it is just a simple matter of self-fulfilling prophecy.

And my advice, would therefore be: Get away from your screens for a while and look at the real world outside. Or maybe add some members to the team, with a psychology or sociology background (experts in human behavior). The world cannot be modelled by just statistics and math. Or by analyzing data and mouse-clicks.

For 1 host to be able to charge an uplift of some 10%. And a 1,000 others are being told to lower their prices, does not sound like a very rigid business model.

[Jonathan47]

You price suggestions should factor in what guests get. As many guests are prepared to pay 200 for a place that only has five-star reviews as will pay 100 for one with only four reviews. Without considering market segmentation your price suggestions will often be wrong.

[Polly10]

I don't charge a cleaning fee and I supply a really nice breakfast.  Your 'comparison' emails to me do not take that into account - so actually there is no comparison.

[Frances123]

I don't really mind the emails as it makes me do my own market research. I was the first person to do airb&b in my little city so it gives me a reminder to check out what everyone else is doing now. They are all different which is what makes it fun for guests.

Sometimes I get an email that says a guest has booked somewhere else cheaper but I know with research that they won't be getting a cooked breakfast, lots of help with information on the town, maps, tea and coffee whenever they want etc etc.

Also there are some guests that really do want the cheapest deal going, even if it's not particularly nice and they are welcome to it as they are the "got to get my moneys worth group". 

I like the nice guests who treat the place as a home, interact and are lovely. Pay a bit more but you do get a better quality of person. So choose your price with your research and don't worry.

It does make me laugh sometimes as there is certain weeks in my little city when you can not get a a bed anywhere because it is so busy and I am asked to lower my prices. 

But I don't put my prices up or down and never do deals. Then I can plan my off times which I have got to know now.  Airbnb can't know your local information, so don't worry about it

[Liv6]

I agree with Frances, we know our areas and what works and what is worth while in regards to guest turnover etc etc. Mine is near the NEC in Birmingham and I know the market now.  I set the price to cover  my cost and make an adequate profit. I have found Air B&B more helpful when you get the odd difficult guest.

[Raviro0]

How do you compete on prices of a whole house versus one room in a shared premises.

this needs to be factored in pricing so that when clients compare prices they understand the privacy and services being packed in the price.

[Sandra126]

I like to discount the odd night I have free on short notice, or gap nights ahead. There used to be a hover price when guests looked at the calendar which worked so well for me, they could see immediately that THIS night is $40 cheaper than THAT night, let's book this one. And so I could fill the calendar for flexible guests. Discounting nights makes less sense without the hoverprice function, please consider bringing it back.

I don't take any notice of the pricing suggestions, just how my own availability is going.

[Ria16]

@AirbnbI don’t really get it. You tell me my most seasonal top price should be $180. But not even houses on the beach are charging that . I’m well aware I’m three streets behind and I think my pricing reflects that? 

I do like the 5% offers you send out though. Because to me that’s free advertising and I do generally take advantage of these and get bookings through thst factor. 😉 

[Sandie26]

Well I get the emails suggesting I lower my price because listings in Elderslie are getting booked before mine etc etc - I don't live in Elderslie I live in Kirkham - which is very different.  There are 2 rooms and a bathroom in my house and I provide a very nice breafast - which most places don't.....for me B&B stands for bed and breakfast - our guests love the fact that they are staying in a lovely house and can treat it like a home away from home.  I don't charge a cleaning fee......and my charge is completely viable and worth it.  I am happy to host people but if they want something cheaper then that's fine....I have decided on a price and that's that.   I love hosting though 🙂