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.

[Sandy195]

Additionally, and I just checked, for graduation week which is the 2nd week in May 2019, 2 nights for 2 people -- only 19% of the listings are still available; for 4 guests 2 nights (my place can sleep 5 guests), 18% of bookings are available (17% left for "entire place").    Clearly, the Airbnb algorithm doesn't work AT ALL to maximize profits.

[Diana103]

I usually get compared to a condo or

a home that is shared with the host.  Yes, it’s a separate upstairs unit of their two story home but my house is completely unattached.  They can lay out in the privacy of my backyard without sharing the pool with any other person. And the upstairs unit really ticks me off....it’s on the mosquito ridden lake and they don’t have a pool or hot tub.  Airbnb tries to lower my price to less then I pay for the mortgage alone..forget that the home is furnished and has WiFi and um ya running water and electricity!!!’

[David786]

I basically have two prices, short term and long term. Unfortunately my long term prices for each night are low and I think that affects all the units in town. I don’t want to use the percentage discount because it’s not straight forward. I wish there was a way to cull the long term rates from the pool of nightly rates in my area. I have three units and usually two of them are booked out for months at a time. It’s a lot of nights. 

[Sandy214]

We have smart pricing and it has been benifical at times.  However, I just had someone book at Thanksgiving time for my lowest rate!  Why doesn't smart pricing look at holiday figures.  This is our first year with Airbnb and so far we are pretty happy, but we question the smart pricing algorithm at times.

[David1544]

In my opinion, AirBNB is doing hosts a grave injustice.  First of all, AirBNB wants to take a larger marketshare away from traditional hotels/motels.  By gradually educating consumers/travellers that AirBNB is an option to hotels/motels, they can and will get a larger share of the lodging market over time. 

The best advertising AirBNB can get is "word of mouth".  If travellers tell their friends, "I got a great place to stay through AirBNB, and it cost far less than a hotel", then more and more people are introduced and start using AirBNB for their travel lodging.  In order for AirBNB to be a more economical option to hotels, hosts must lower their prices.  In essence, AirBNB is asking the property owners/hosts to "take the hit" pricewise so that AirBNB may accomplish their own goals.  It's the homeowners/property owners that have to "drop their pants", and not AirBNB.

Secondly, AirBNB has started pitting AirBNB hosts against each other.  I keep getting emails from AirBNB that say my competitor (another AirBNB host) is booking guests after they've looked at my properties because my competitor's price was lower than mine.  They're suggesting that I lower my prices because other AirBNB hosts in my area have lower prices.  So, then I lower my price, and then AirBNB runs (via emali) to my competitor (another AirBNB host) and tells them to lower their prices because they're higher than me.  It's a vicious "back and forth" and only ends up pitting one AirBNB host against others in his area.  To me, AirBNB is "playing" their hosts against each other.  AirBNB DOESN'T CARE which host books the guest... as long as the guest books THROUGH AirBNB.

I think AirBNB hosts are going to soon "wise up" to AirBNB tactics and start dropping out.  I have six properties on AirBNB now and am certainly thinking about tell AirBNB to take a hike.

[Ari57]

Sorry for sticking in  a sour note, but Airbnb's constant - even daily suggestions - concerning pricing, is an annoyance for me. Honestly, it's a pain on the neck. I've tried every way I could to politely request that you stop sending me these "suggestions", but to no avail. They are routinely ignored.

No one knows better than I do what is worth my while and what is not. I pay 35 % income tax on everything I get. My "competitors" don't. So they get more requests than I do, because my price is higher. But staying in my place is an experience very few can offer. So I charge more, but you get more value for your money.

So please stop preaching to me about what I know better than you do!

Thanks in advance.

Ari

[Yvonne287]

I also don't lower my pricing just on airbb prompts-the suggest price is so low if you take into account all the wear and tear,daily cost to clean,soaps,saving some money to replace linen,new mattresses that you will host at a loss!!

[Sandy195]

I know this is my 4th post, but this is a hot button issue for me, and I hope someone at Airbnb is reading these all of what we hosts are telling you.

Your last price suggestion email (from yesterday) said that someone booked a place for 3 nights, five people, at $97/night.  That's less than $20 per person per night -- which I have to assume does not include local taxes or Airbnb fees, or the host would be making approximately $74/night.

My price is $270/night and I can host up to five people.  That's just over $50/night per person, which is very reasonable, considering my location, high level of decor, and ammenities.   

The $97/night place can't possibly be anywhere near my Airbnb as -- I just checked -- and there are only 13 listings available for that weekend that are within walking distance of the Boulder Pearl Street Mall (very important for Boulder).  I am the lowest of the remaining avaiable listings for that weekend that are in the center area of town.

Also, who are these guests?  Are they newbies?  A family?  A group of unrelated 20-somethings?  What is their rating and do other hosts recommend them?   Without telling who they are and what they rented (and where), it means nothing.

Given the fact that I have a good chance of getting a last minute booking, and the fact that I pay my 18-year old daughter  $150 per cleaning (so, unless the place is trashed, she makes $25-$30/hour, which is a living wage; less per hour if the place is a mess), and my other expenses, I nudged up my prices for next weekend $15/night.  Supply and demand.  I don't want those guests who can't afford my place; I've had very bad experiences with low-budget guests.  I'd rather be empty -- less wear and tear and fewer headaches. And, a lot less laundry.  Five people!  So many linens.  $97/night -- not even close to worth it.  I did the math, and after paying my daughter, I would earn $141 for those 3 nights.

This also proves that your emails only provide discouragement.  Clearly, with only 13 listings left in the central part of Boulder for next weekend, your "suggestions" do not take in consideration supply and demand.  Instead of paying someone to create these emails, please spend the money on advertising -- which I have seen very little of in the past year.

Please stop sending me these emails.

[Valerie243]

We get "advice" from Airbnb suggesting we respond to vacancies next month by lowering our price... when next month (and the three months after) are 100% fully booked.  

At first we paniced -- thinking we were over charging, but eventually we recognized that these notices at NOT thoughtful, sage business  advice, but, rather, poorly-targeted junk mail with a generic corporate message from the Airbnb brand managers, who want to tell the world that Airbnb is low-cost.

We provide better value for the dollar than any local hotels, at half the price or less. If these notices were indeed practical business advice, they would be asking an operation with our track record "Are you sure you aren't UNDER charging?"

I am surprised that Airbnb doesn't realize that this constant stream of inappropriate advice undermines their credibility with their front-line partners. Perhaps this is a question the CEO should put to whomever is responsible for junk mail disguised as thoughtful business advice.

[Natasa5]

Never accepted any pricing suggestion because suggestions are ridiculous. Plus it suggests prices for dates booked or blocked. Just an annoying notification...

[Lorraine132]

26 bucks a night in Los Angeles? Oh goodie, they joined Air BnB a whopping 3 minutes ago. 

These suggestions and my ignorance led down a scary dangerous path. I had people subletting, and I have only had one traveler. EVERYONE ELSE LIVES IN AIR BNB’s. So for 26 bucks they come here and have a maid, towels, a shower, laundry and a kitchen. Basically homeless folks... 

then they defended  the client, not me. When my place was sublet I threw the interlopers out and Air BnB REFUNDED HER MONEY!! 

Endia SUBLET my house with me in it, and Air BnB REFUNDED HER!!! 

26 bucks a night is axe murderer territory. 

NO WAY IS THAT EVEN SAFE! 

[Charmaine1]

Airbnb wishes to be seen  as the company offering great value for guests - and it is.

Many hosts panic when they have several nights open so settle for some rediculously low pricing suggestions -  its something rather than nothing. 

I did not.

I simply signed up with other booking agents and get my rooms filled.  I now fill my rooms at prices that keep me in business. 

Pity as I would never have gone elsewhere had Airbnb not encouraged this price war. 

Dont do it Airbnb.

The worlds largest booking agent is now offering the same admin opportunity  - they collect the money from guests. This I believe is a threat to Airbnb. Youre going to loose your family Airbnb  as many Airbnb hosts will now simply list with others rather than lowering prices. 

[Kevin828]

 There should be some base price that hosts cant go below  I get tired of these prompts, and dont even look at them any more, as you say there are new people coming to AB&B these people look at these prompts and reduce their pricing to where it is just on economical and everyone loses

[Kevin828]

 What other companies do you use I like AB&B but not going to reduce my prices to some of the unfeesable prices that have been suggested

[Sylvaine2]

Hi,

One thing that I find interesting is the indication on the calendar that someone has been looking and asked for the price. However, that little symbol is so frustrating ... how many people looked? Just one? and a week later, is it just that one that is still showing?

It would be so useful if that symbol could be clicked on and tell me how many people actually were interested enough to ask for a price, with a date next to it.

If 2 or 3 ask, and no one books, then I might consider reducing the price.

Otherwise, I do agree that price tips might be of interest in cities with lots of listings or right at the sea-side with comparable listings (even though Airbnb will never really know if you are better than next door!), but in the country, with low demand, no crowds, extremely seasonal rentals, and extremely variable quality... no way!  Numbers are too small and statistics don't work!