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.

[Kat120]

nice one! exactly my thoughts!

alas, like Uber and all these delivery companies in this new 'gig industry ' of ours they all aim exactly for that - that you ( the provider) will endlessly lower your price until its all poundland.

in the case of Uber it works for them as they aim for driverless cars anyway long term, in case of airbnb - I heard rumours of airbnb like hostels - purpose built and to cut out the middle men i.e. the current host.

If this is true then we the hosts are currently the 'advert' that soon will be obsolete.

I live in London in a very popular area and extremely expensive area - Notting Hill ( where the movie was shot:) and airbnb constantly suggests I charge as little as £20 a night for a double room while the average price here is £65 per night.

why indeed would I open my home to people who want to stay for that kind of money> this is MY HOME. so no. I wont. and I predict that in the near future airbnb will loose up to 1/3 of its hosts through the dumping down.... but this still leaves them with a multi billion, so, no sleepless nights for them.

[Maddalena3]

I get e mail from Airbnb all the time ....

asking me to lower my price as " my competitors are selling 20, 30 euro less them me"( and my prices are quite low already) 

Sadly  a very high percentace of competitors  in my country and in my area are not working legaly ( which in my country is becaming a norm )  so they can afford to to sell a room or an appartament for 15 euro per day  as nothing has been declare and they don t pay taxes to thei profit , which ruins the price market  and people like me paying the conseguenze ( having a property empty for weeks ) 

Airbnb or our goverment seams NOT  to try to controll this  phenomen, ( as long as they make their money ) 

if everyone would play the game fairly and thruly  ( and above all  following the legal roules ) we wouldn t see rooms advertaised for 15 euro per day  and Airbnb wouldn t pestaring in lowering the price as much as 30 euro per day .

It is pain me to say that sadly Airbnb is not doing enough to make sure that everyone is following the roules .

[Valerie152]

We have had an increase in the number of listings in the area.  Of course a lot of them are new owners and have lower their prices to attract more bookings.  When other places book, Airbnb seems to repeately send emails out to the all the other owners telling them they must reduce prices.  As  as a result some more owners reduce prices and then get booked and then Airbnb sends more emails about lowering prices and so on and so on until the prices are ridiculously LOW until it becomes impossible to stay in business.

1.  Airbnb's proecudures make the market unstable and  drives prices down.  What a raquet!  Just 2 years ago we used to rent the entire cabin for $170/night and now we are struggeling to get $150/night yet we have more features and sleep more guests (10-12).  In fact, they often suggest me to reduce my price by $40/night.  I would lose money if i rented an entire cabin for $110/night....linens, wear and tear of furntiture and soaps.....  Crazy.  Eventually other inexperienced owners will realize the problem but by then our market prices will have dropped as a result of Airbnbs "suggestions".

2.  Airbnb compares our cabin that sleeps 10-12 guests with cabins that sleep 4-6 guests.  My 3 bedroom 3 bath with bonus rooms gets compared to a 2 bedroom  and sometimes with a 1 bedroom that has multiple beds in a tiny ONE bedroom cabin or simply a couch in the living room.

It is frustrating.  I can easily ignore the repeated pricing suggestions becuase it would lose money if I rent it for a lower price BUT that doesn't mean that the other owners ignore and as a result repeatedly reduce their prices which causes problems in the market and increadibly low prices!

[Kathy406]

Why is it that only the comparible lower stats given. I would also like to know the ones higher than my price that have been booked. If there are equal booking both higher and lower than mine then perhaps it is not business sense to lower my price. I would like all the information so I can make my decision on all the comparible prices of other places booked in my area. Kathy

[Valerie152]

Simple Pricing Suggestion: 

Add a pet fee that guests can click when booking with a pet for listings that are pet friendly.

We have to send a request for $$ AFTER a guest books and then hope they pay the fee that is clearly outlined in the listing!  How long do we have to wait until the guest pays? What if the guest doesn't pay?  Does th owner get penilzed for cancelling the reservation when the guest clearly didn't pay what was outlined in the listing?  Sometimes it gets frustrating to follow-up repeately with a guest to get them to pay.  Trying to collect a pet fee after a reservation gets some guests upset over what was clearly marked in the listing.  As a result you get a guests who is angry and writes a bad review simply becuase they didn't want to pay a pet fee for their pet that should have been included in the original booking with a simple click of the mouse!

For a online service that is suppose to make it easy for owners and guests, Airbnb has really missed the mark on this issue despite the repeated requests.

Hey, Airbnb.....Add a button marked "Pet" instead of waisting so much time sending "Reduce Price" emails out to owners give them something they really have been asking for!

[Cathy396]

I applaud Airbnb for taking a hard look at this issue.  I began writing to customer service about the emails I was receiving about lowering my price at least a year or more ago.  Now, looking at the number of comments, and the amount of space it's taken to explain the in's and out's of pricing suggestions, it's pretty clear no one is in favor of this.  We all know our markets and I think we'd all be a lot happier if you just got rid of this darned thing!  Thanks for listening!

[Michelle144]

I have been hosting since 2013, and I note that the behaviour of airbnb guest has changed considerably. I assume its because there are an increasing number of persons using the service. It amazes me when I get inquiries asking me to lower my price, with the wide range of price points available in my Caribbean location, why would they be looking at properties that are outside of their price point in the first place ? In the earlies I would entertain the whole bargaining process with them and ALWAYS ended up with persons who were undesireable guests. As a result of this experience, I no longer entertain these discount requests from enquiring guests.  

The suggestion to reduce prices is laughable to me as well. I am on an island in the Caribbean where the average hotel room for two persons is somewhere around $250 US per night, a car rental will run you $40 US per night and airbnb will suggest I lower my 1 bedroom apartment, (sleeps 2) with AC, wifi, and TV to $32 US per night...seriously?!!

[Mauricio225]

I also don’t get the whole pricing suggestion scheme, it seems to be way lower than what I charge, so I simply ignore it and get annoyed by the whole thing.  Two of my units have over 80% occupancy rate year-round, and continually get pricing suggestions (which is always to lower it).  We just opened a new property where we are starting at 90 USD per night, and the price suggestion came in at 19 USD.  It is just way off.  

[Lisa1416]

Although only 20 mins. away, I am outside the city limits and very close to the Cuyahoga Valley National Park.  You told me to lower my pricing due to reduced activity in Cleveland.   I raised my pricing because people come to the National Park in the fall to view the beautiful colors of the season.   My guests enjoy both the city and the park.  Most enjoy the National Park at any time of year.

[Jackie20]

My listing includes cleaning fees and taxes, about 20% of the price. I can't find one other listing in my area that does that. So when I get the 'price tips' I feel it is not a true comparison.

It's annoying to get these price tips e-mails all the time. If it affects how often my listing is shown to potential guests, that makes me angry, as I'm a Superhost with 4.9% 5-star ratings. And yes, I do get better guests and hardly ever have a 'problem' (only twice in three years). 

I have used the 'reduce rate by 10%' a few times during slow season, sometimes it works sometimes it doesn't, in terms of getting extra bookings. But I'd never reduce my rate more than that. 

Personally, I'd rather rent less times for more money, that makes perfect economic sense to me...and let another host have the bargain hunters. I've been a business woman my entire life, bargain hunters generally get the left-overs.

[Jana28]

I would like to comment with regard to pricing. Often  the homes don’t compare and the prices are too low, however it gives me an idea of what is going on in the marketplace and I adjust accordingly. I may not put the price Airbnb suggests, but I go up and down according to my base. My home is booked solidly.

My neighbor on the other hand refuses to adjust her prices and I have watched her income diminish. Her property is beautiful but there are many more AIRBNB’s from when she started as well as boutique hotels. I personally think she is foolish and stubborn. There are many ways to look at the pricing issue. 

[Christine615]

Here's my concern, in my area the city confirmed that only 200 of the more than 800 confirmed listings had completed paperwork to be legal in our city. So how does Airbnb tell me that there is a 43% increase in listings?  In Japan when people were not ready with paperwork, Airbnb cancelled their listings.

Now I'm competing with a 1500 square foot apartment with other properties offering "teaser" rates of $20/night (usually on one night).

You could help owners maintain a reasonable level of pricing (honestly - our spaces compared to a hotel room are a bargain) if you would crack down on hosts operating in areas without going through the documentation required.  Airbnb called me constantly asking me to lobby the city to make Airbnb legal.

Now support us by cracking down on the people who had months to file and didn't do it by the deadline. THAT would drive value up in the area.  Also - get proof from out of state (or out of town) buyers that they actually have resident approval (or a certificate of non-compliance). It's maddening to see investors come in to Kansas City to buy up properties in residential areas, then put them on the platform at prices lower than the cost of a bed in a youth hostel. Are they trying to drive the Airbnb business into the ground?

[Susan514]

Has anyone ever received a discounted commission rate offer from Air BNB to owners when demand and our incomes are low?  All these requests for me to lower my rates feels like they are inferring that my properties are not worth what we are asking for them and that is just not a good feeling. 

The bottom line is that by making these sort of inferences, asking us and everyone in our market to drop pricing without offering a lower commission rate, Air BNB is positioning themselves as a vendor. There are so many vendors to choose from.

Setting themselves apart from the other booking sites and working with us as a trusted partner would benefit Air BNB in the long run by creating "brand" loyalty.  I believe that the current relationship with the property owners and Air BNB could be described as adversarial.  Both sides would benefit from a better relationship between Air BNB and the property owners.  

[Sarah176]

I agree with everyone’s assessment of the pricing suggestions- generally worthless and encourage sketchier guests. 

I check Expedia and Priceline to see what availability and pricing is in my area especially for weekends. I generally keep my price higher than cheap hotels and a bit lower than better hotels (Best Western)

There aren’t any higher-end hotels in town.

I also check the University’s schedule for sports, graduations etc and price accordingly. I assumed in the beginning that “Smart Pricing” was doing that for me, but I got totally screwed during the eclipse when Airbnb seemed oblivious that a huge crunch was coming. Someone booked my place 6 months in advance for the regular weekday price. Grrr!

[Matthew83]

Please could you add a button to switch off your pricing emails altogether? I find them irrelevant, unhelpful and annoying. I would recommend you to others, if you can do this.