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.

[Linda209]

  I have long thought that true B&B's, should have a separate listing catagory.
Comparing us with a bedroom in a house that goes for $49 is not fair!

[Sylvia304]

Sylvia Jahn

Etty Bay, Qld, Australia. 

most price suggestions I receive are completely ridiculous. If I would agree to follow them, I would make a loss. Obviously, Airbnb is not comparing apples with apples. To let a 2 bedroom apartment with all I provide for 50.00 is ridiculous. You pay more for a space in a caravan park. 

However, I do get a lot of complaints that the price shown is not the full price, it misses out extra persons, cleaning costs, and especially Airbnb’s commission. This should Be remedied and total cost be obvious before booking!! Transparency is necessary to keep faith with guests!

[Jess78]

Your pricing suggestions are lie or irresponsible at best and dangerous at worst. As a newer host, I had a few days I booked and figured, okay they’re right maybe it’s best to make any money at all at all and take a loss for a few nights rather than it sitting vacant.  I followed the “price suggestion” and a drug addict and his friends booked it almost instantly at that point. Of course I didn’t know it was a low life until after he had vacated. Lowering prices is lowering the quality of guests. If hosts offer brothel-like rock bottom prices as the suggestions tell us to do, Airbnb will soon be a platform of nothing but bottom feeding bookers.

I have raised my prices. 

[Marko9]

I have a house on beauitiful island of Hvar in Adriatic sea. Airbnb suggest price EUR51 for my house with 2 apartments that can acomodate 8 persons, 80m from the sea, with sea view, for mid of Sepptember. I can't accept any explanation for that!

[Parrish1]

I think the price suggestions do no good where I am. I live on the Island in the St Augustine area. I am about a mile from the historic district, about the same from the Anastasia State park and the Amphitheater where many big name concerts happen almost every weekend and some week nights. I am less than two miles from the beach. I get price suggestions based on places on the mainland that are miles from all these places with busy roadways and a lot of traffic. Our access to all the places listed above is easy and nearly without much traffic.

The other complaint I have is one I’ve seen in other comments or close to it. AirBnB is about to lose its soul and the battle. People in our area are up in arms over AirBnB’s in their neighborhoods mostly because of absentee landlords using AirBnB. WHen it began AirBnB was for people who had space in their home to share—thus homesharing. Now our community has realtors listing on AirBnB to rent out condos, “vacation homes” and the like. Many of the “vacation homes” are in neighborhoods where the codes prohibit short term rentals of less that 6 months. These listing give those of us who are almost always present when guests are present a bad name.

[Andrea1063]

@Linda0 

Um ... I have a bedroom in a house and treat my guests with the utmost care and concern, act as a tourism specialist and advocate for my town and its businesses.

 Some days I think I deserve a medal for the eccentric's and others that I share my home with and keep smiling.  

What I believe is that hotels and professionally managed properties need to have their own platform / category.

[Andrea1063]

Got an email just this morning saying that I have days open from now until October 6 -- I whould lower my price by a whopping 25%.  

That wouldn't cover the wear an tear, the hydro, gas and water.  Not to mention my time doing a full clean, stripping, washing and making beds.  Oh, and scheduling my life to accommodate others etc etc.

WoW 

[Cor3]

Not strange at all: As the "Product Lead - Pricing" (Yes, there is this function within Airbnb). Used to be the "Product Manager e-Mail"

[Siobhán2]

I was being induced to lower my prices lower than the local hostels 6-14 to a room so I did.

Two days ago I stopped smart pricing, put my prices up to €28 per day, weekend 32 increased my cleaning fee from 10 to 15 but still give weekly and monthly discounts, I just couldn't understand how Airbnb wanted me to go to 20 and 17.

It is the language used as well-

Others are getting more bookings

People looked at yours but went for one 6 lower

Those around you are cheaper

Want more bookings lower your prices

Smart pricing will get you more bookings

Don’t know why Airbnb are gone like this maybe they’ve brought in a team of psycho behaviourists who use social theory and power language which only breaks the very ethos of the classic Airbnb.

Very annoying.

I felt badgered and under pressure to reduce, reduce.

I give breakfast and people can cook their lunch and dinner here. It is home from home. They can leave their luggage if they check out and collect later and arrive before check in, they can use the washing machine. 

But

Another Airbnb host who asked if I had room for one of her guests couldn't believe my prices. Why are your prices so low people can't get a place, I'm gone up to 45 a night she said. Increase your prices the market says no availability.... no availability means increase your prices!! I can't send people to you if you are half what I charge. She is full.

We are Airbnb surely we are meant to be fair not go by the market? And you think Airbnb don't?

Get a life.

I hate that it's all about the money but it does make the world go round.

I can’t say I sit around doing a profit and loss analysis this costs that costs add this minus that you’re broke really there is no profit.

I love the guests and the diverse stories and using space that would otherwise be empty.

Money is only a means to an end not an end in itself.

Love Airbnb not unconditionally now though:) you hear it in all relationships.

You're changing.

[Mindy61]

Your pricing suggestions only take into account the base charge for the space. They don't take into account the total price which includes cleaning and extra charge for extra guests. Some people around me charge a $70 cleaning fee while others charge $20 for the same size space. Some price a super low $45 a night with $15/extra guest, while others charge $65 for all the guest with no extra charge. Your suggestions are just off. I agree with the other host that said you should compare to a hotel. I have a 3 bed 1 bath space that is very nice. To get 3 bedrooms at a hotel, it would be $150  per night at least. But you want me to charge $32 a night. You tell me that people booked spaces $18 less a night than mine and it's $50 for 1,500 sf. I look at the spaces you compare me to and none of them is that cheap. Which leads me to believe that people looking at mine end up booking rooms in homes and they were hoping they could afford a 3 bedroom space all to themselves. There is still something wrong with your suggestions.

[Cuky1]

I agree with you, I went to the cheapest Hotel nearby and found they charge $60 per day, and the rooms are not as great. We make sure the person feels at home and try to accomodate their needs. Of course if the person stays more than 3 days I will give them a disccount, other wise I want to keep my prices the same. 

[Pawan7]

Hi

Welcome to all of you

[Kat120]

agreed!

I predict that airbnb will loose up to 1/3 of its business as people like you and me will eventually leave... 

[Craig112]

I do mostly what you suggest Airbnb should do. I look at the upper end hotels (Hyatt, Marriot, etc.) within 2 miles of my home. I price in the same ballpark. While you can't really compare the two as far as functionality, I have found the pricing model works. My Airbnb is in a beach community and relators gouge pricing during the summer. My place is two bedroom beach cottage for 4 people so in reality they would need to book two hotel room. I am trying to find that sweet spot price for year round. I ignore the Airbnb suggestions as they are comparing Beach Crash-pad places to my fully furnished home. There is no comparision. Those other places are for college kids cramming a dozen bodies into the rental - no thanks.

I know I got off topic on your post, but I wanted to agree with you that comparing to local hotels has worked for me (only been at it for 15 months, all great guests, and booked close to 300 days/year.

[Craig112]

Also part of the problem is also...

Someone is browsing Airbnb properties. They see one that is listed at $175/night. They enter their dates and the total price is calculated and because it is during a high-demand time it comes out to $250/night. I think a simple fix would be to have the listings show the range of pricing for each property. My minimum is $195 but during high-holiday I max out at $250 - so my listing should show that range to eliminate price shock when potential guest are exploring. Show $195-$250 and maybe some small print, "Price varies base on time of the year"