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.

[Norine1]

As with other comments here, I tend to ignore pricing suggestions because it’s impossible to factor in all the variables that make a listing desirable or unique. Much depends on what a guest is looking for and it can be one, or some, of many things only one of which is ‘price’.

[Rob-and-Barri0]

The issue i have most often with the pricing suggestions or emails about how X number of people looked at our property, but booked elsewhere is that it is irrelevant if we are booked solid. You algorithm should take that into consideration – that we cannot book inventory we do not have and, OF COURSE, people will have to book elsewhere. 

[Lucia518]

Hi. I have struggled to understand how your pricing system works. I am a new provider.  My home can cater for up to 10 people.  Recently I had guests, a couple booking the entire home and on a different date, one person booking the entire home same number of days.

What I could not understand was they were charged the same price. My price was as low as $15 and kept getting notifications to lower the prices .

My question is, how will I make money if 10 people booked the home? How do I cater for electricity, water, gas, Wi-Fi and cleaning services out of $15?

Please advise. 

[Charmain4]

Strangely,  your suggestions to me are to reduce my price in September from £75 to £40 per night in order to increase bookings. I cannot increase bookings as all of the identified nights are already full on £75. My suggestion to Airbnb is to focus attention on helping hosts when we call on you in need.

Recently I hosted a family who were trashing my property, they had extra guests and had brought a puppy not yet housetrained (they had described it as a small dog), I wanted to offer them a refund to leave early and asked Airbnb for help and advice which turned out to be less than helpful. Airbnb later removed a review from my listing without even discussing it with me. 

So please spend less time and energy offering uninformed advice and more on helping your staff to know how to keep your good hosts supported.

In short please do help properly when we ask for help and don’t give us advice which we have not asked for.

[Indie0]

It would be nice to summarise all the points that have been raised so the airbnb tech heads can reset their algorithm to meet what us as hosts percive is value..

First the "have booked at less $ "never takes account of my base price.

Why not set a max discount on the base.

Secondly

-compare superhost with superhost.

-homes/apartments with similar characteristics

-homes similar base pricing.

Thirdly make it meaningful on the calendar available dates.

Airbnb competitors are making a better job of competitor analysis - perhaps the techs should view other sites..

[Laura2163]

Air bnb please get a clue. The non stop “suggestions” and “what should be worked on” ratings are oppressive to good hosts. I KNOW my local market much better than you do, especially the value of a beautiful, quiet  location and a house with every amenity down to the sunscreen. One glance at all these comments reveals that other hosts are similarly knowledgeable.  We are told in this article basically “Big Brother knows best” and informed that we can’t know anything by reviewing similar rentals on Airbnb (really think we never look at other web sites?) which is insulting to both our experience and intelligence. If the model is “multiple listing hospitality entrepreneurs” with year round availability, Airbnb stat driven prices may even out the money over time, but as a property owner of just one family cottage (that  I also want to use myself) in a traditional beach vacation area, I will only rent 8 weeks per year, so it’s a non starter.  I know I am not alone. Airbnb has to talk to people like me, too; I am already considering alternatives.  

[Donna12]

"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." 

U  n   t  r  u   e    statment period... Christmas and New Years week huge private Luxury Pool with Private 2 bedroom home sleeping 6 , popular Cozumel traditonally entirely full up...air bnb suggested 15 Euro or 20 dollars per night .... ludicrous, and less than a Hostel bunkbed...not enough to pay the air conditioning bill...also 15 Euro listings do not even exist here..  

[Andrea1063]

We are renting homes that we have everything invested in;  hundreds of thousands of dollars and lots of love go into our spaces.  

I offer a stylish,  lovingly decorated home away from home.  I feel like an ambassador for my small town and give advice on a myriad of things to help my guests experience the best the area has to offer. 

I will not rent at YMCA or youth hostel prices because someone else in my area has decided that they are happy to do so, and most probably based on Airbnb's race to the bottom pricing suggestions.  Its a disaster and cheapens the area.

IF someone rents another place because its $5.00 / night cheaper, I probably didn't want them anyways.  I mean, how low do we have to go??

What's more, there are so many people breaking local laws by offering up investment properties that they don't live in, apartments in their homes etc.  Big no-no, you have to live in the home and you can not treat a house like a hotel.   I am losing bookings to these illegal rentals which is such a shame since I've working so hard for years. 

[Victoria551]

I would like to list 2 prices and do not want to let st my home twice on Airbnb.  I have a 2 bedroom suite.  1 of the bedrooms could be shut off.  Example:  If a couple stays they don’t need2 bedrooms and it would be nice not to have to clean a second bedroom.  I would like to list 1 bed suit or 2 bedroom suit...how can I do that?

[Brenda329]

my own view is this is a race to the bottom with people reducing rental costs until not viable.  The host loses and disapears due to frustration about the poor return on investment and the visitors loses as only sub standard non comparable listing will rmeian.

The motivation for Air BnB is that if the host reduce say 20% of ther rental to compete, the benefit is all for Air BnB as their fees will only take a hit of about 1% / 2% and given the overseas tax havens used there is practically no loss to them just the host.

[John292]

When did this roll out? I tried Smart Pricing again a few days ago and DEFINITELY did NOT see this:

"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."

[Lisa851]

I just ”take the information I like and leave the rest”. There is no need to take this personally. There is no possible way Airbnb can know all the perks, psychological energy, or  personal metrics of value of each host. I just look at it as information that I can use if I am looking for more bookings. One of my listings I prefer to rent less, so I have it priced a bit high for the market. That’s ok with me. I look at the pricing emails, which let me know that change in the market is happening. I do appreciate Airbnb for being accommodating and fluid, and trying to adjust to our suggestions.

[Leslie82]

@Victoria551 wrote:

I would like to list 2 prices and do not want to let st my home twice on Airbnb.  I have a 2 bedroom suite.  1 of the bedrooms could be shut off.  Example:  If a couple stays they don’t need2 bedrooms and it would be nice not to have to clean a second bedroom.  I would like to list 1 bed suit or 2 bedroom suit...how can I do that?

---

I am actually doing that. I created three listings. 

The tricky part is managing the calendar so that they don’t get double booked. Airbnb calendar blocking tools are of limited use and I have to block the sungle bedroom options manually.  This model also causes Airbnb pricing algorithms to send inappropriate messages. They have asked me to drop the price for the two bedroom option because the one bedroom option is getting booked more often at a lower price (comparing my listings to the subsets of themselves!)!  Clearly the Airbnb pricing algorithm cannot handle this kind of setup so you will have to find your own comfort level with prices.    

[Lisa-and-Steve0]

I think the messages to lower price do not account for the differences in what a resrvation includes. We have a 2 bedroom suite in our home - 2 bedrooms, private bathroom, sitting area, and mini-kitchen (fridge & microwave) - and we get compared to single rooms with or without private bathroom. We also provide a a hearty breakfast. I would guess around 80% of our experienced Airbnb guests say they rarely get breakfast.

And then - when I  get the message to lower my price, all the "comparable" listings shown are higher than my price anyway! 

[Irene-and-Michael0]

I've read most of what has been written and agree with the majority. I'm constantly being asked to reduce my prices but my price covers a full Irish breakfast, I don't charge separately for cleaning and laundry. Everything is included. Most of airbnb in the area advertise a lower price but once you've added on the cleaning and laundry fee they're a lot dearer. Stop comparing. There should be one price. It should include the room plus cleaning plus laundry and breakfast.