How Smart Pricing Works

[Lizzie]

Hello everyone,

Smart Pricing is a commonly discussed topic in the Community Center and we have heard from many of you that you would like to know more about how it works. So, similarly with our previous topics on Instant Book and How Search Works, the Smart Pricing team have helped answered some of your top questions. Here is what they have to say!

Deciding on the right price to charge for your listing can be a challenging task for anyone. You search your area to see what other hosts are charging, compare your listing to theirs, and wonder how you measure up. But what you don’t know is the price those listings actually get booked for (and how often they, in fact, get booked). You can’t tell how much interest your own listing is generating, or if travelers are willing to pay the price you’re asking. This is where Smart Pricing comes in, by keeping your nightly prices competitive as demand in your area changes. The goal of Smart Pricing is to increase your chance of getting booked.

How does Smart pricing determine its suggestions?

When you have Smart Pricing turned on, your pricing suggestions reflect the controls you’ve set, combined with a lot of data. In fact, Smart Pricing takes into account over 70 different factors that could change your price. These factors, plus your controls, determine the best price for each available night on your calendar, and your price updates to reflect changes in factors like:

• Lead-time: as a check-in date approaches, your price will update
• Market popularity: if more people are searching for homes in your area, your price will update
• Seasonality: as you move into, or out of high season, your price will update
• Listing popularity: if you get a lot of views and bookings, your price will update
• Listing details: if you add amenities, such as WiFi, your price will update
• Bookings history: as you get bookings, your future prices will be partly based on the prices you got for successful bookings. So, for instance, if you set your price higher than Smart Pricing suggests, and you get a successful booking at that price, the algorithm will update to reflect that.
• Review history: Your prices update as you get more positive reviews from successful stays.

There are lots of factors at play—Smart Pricing even evaluates how many travelers look at your listing every day and how long they view it for! We really have built this tool to reflect factors you can’t discover just by simply comparing your listing page to others in the area.

What control do hosts have over setting their prices while using Smart Pricing?

Smart Pricing lets you set your prices to automatically match demand, with the goal of attracting bookings. To make sure you’re always comfortable with your listing’s daily prices, we give you a couple of simple settings to establish the boundaries you’re comfortable with:

• The minimum price you set is the lowest your price will go when demand for your space is low. This means nightly prices may drop to attract more guests to book, but never below the threshold you set.
• The maximum price you set is the highest price your listing can be booked for, even on high demand nights. You can set this as high as $10,000 per night, and it is not publicly displayed. Currently, every listing that uses Smart Pricing must include a maximum price setting.

At any time, if you see prices you disagree with for a date, you can just type a new price in your calendar or adjust your minimum or maximum price in your Smart Pricing settings.

How does Smart Pricing interact with other pricing settings?

Prices guests see can be adjusted based on some other settings you have in place, but not all.  For example:

• If Smart Pricing is turned on, your weekend price setting will not be used. However, we will make sure the recommended price stays above your minimum price setting, including on weekends.
• Extra guest fees and cleaning fees are applied to stays in the same way whether Smart Pricing is on or off.
• Weekly and monthly discounts get applied to the prices on your calendar for longer stays whether Smart Pricing is on or off.

We’re always adding flexibility to Smart Pricing, such as the ability to turn it off for certain days only. And we appreciate hearing your ideas on how to improve this feature. We do this by surveying and interviewing hosts all over the globe, staying current on topics and comments here in the community center, and testing new features with small groups of hosts.

That’s a long way to say, we appreciate all of your feedback and how much you care about helping improve the Airbnb products hosts use every day. Stay tuned for updates.

Feel free to share any comments you have, here in this discussion.

Thanks,
Lizzie

[Sushmita0]

Completely agree with you Jean, Iain and David. SP does not take into account quality - only quantity. In any case, I reluctantly turned on SP to kick-start my bookings after I had blocked my calendar for several months. There was not a single booking received from the system following that - other than from past Airbnb guests who wanted their friends visting Delhi to stay at my home.

[Jamie168]

Exactly the issue I am having! I have 4 listings and my “best” listing seems to be compared to the “least expensive”....

[Kathleen1]

I agree.  Smart pricing is basically an insult to hosts.  

[Lynn159]

Ooooh, I do agree with your statement!!!!!

I also love(not) they way I get these notices stating I basically lost out on a booking and the place that was booked was $32.00 lower per night....... PER NIGHT!

I think either the host is so desparate to have the booking or the place is a dump or they simply can not be comparing similiar lodgings.    I charge on average $50.00 per night for an entire,self contained apartment!

[Francine18]

I know.  It's playing on our fears. Offering my place for a price below its value only encourages desperate hosts to drop their prices even lower. I prefer being patient because I get regular bookings just a couple days prior to the checkin date, at full price. Furthermore, slow periods are usually very easy to understand: demand is low because there's really nothing to do in town at that time, or the weather is discouraging at that time of the year. I mean, who wants to come to Ottawa fand on mid-November to mid-December? 

[Kara13]

I would think that is really cheap! I'm in Calgary and I refuse to go lower than $80 on my self-contained suite. 

[Thembi1]

I would recommend that Airbnb put more emphasy on advertising our places 

Regards 

[Bruce104]

I think that Airbnb is a great product, but the smart pricing and area location information needs a lot of upgrading.

Area is general and often wrongly listed!

Our suburb in JHB is very upmarket. The area that it is listed in is not! It is not possible to change that!

This affects the ability of pricing, and smart pricing to be effective!

Smart pricing is not therefore earea specific enough, as someone earlier stated that he is beeing compared with a place 81Kms away and in a very different situation.

Local events such as fairs, cycle races, major sporting events and similar, are not factored in. 

The last two requests that we recieved from Airbnb to reduce our nightly rate, have been met with us increasing the rate!

We have an 85% - 90% occcupancy rate. Our cheaper neighbours have a 50% occupancy rate!

This says something of what people coming to our area are prepared to pay for what they pecieve as quality accomodation.

We have fine furniture, cutlery and crockery. We do not want backpackers in here!

We use the computer gernerated information from Airbnb when it suits us and we plan according to our own experience.

[Kara13]

Good on you! I think we should all get together and RAISE OUR PRICES instead of lowering them. If for nothing else in response to AirBnB continuous harrassment to lower our prices!!! I say get rid of Smart pricing or make actually work properly.

[Sheron5]

I have used Smart Pricing for stays in the not-too-distant future and it has worked well to fill gaps between stays.  I charge a cleaning fee, so even half the normal nightly rate generated is better than none.

[Dana-and-Warren0]

This is why I decided to try Smart Pricing.  I live in an area where there is high tourism May - Oct but very little during the winter.  I researched Smart Pricing and it said that if I manually price certain nights with a specific price, that Smart Pricing will not override it.  Well, that didn't happen.  I manually priced EVERY SINGLE NIGHT between May and Oct but as soon as I turned on Smart Pricing, I immediately got five reservations for some of the busiest weekends in high season at HALF PRICE!!!  I am just livid and so far Airbnb is not doing much to help me.  I immediately turned off smart pricing, but am really disappointed that I can't use it for my low season without it affecting my high season. 

[Harriet5]

To Airbnb:

What are  you thinking?  You are suggesting that I rent my apartment as low as $32/night!!  Are you nuts?  We have been having very cold winter with snow and ice.  I HEAT the apartment and it is not free.  Additionally I provide toilet tissue, box of tissues, paper towels, fresh bar of soap for the shower, plus dish soap and hand soap.  Do you think this is free?  And what kind of guests might I possibly attract when an attractive, newly painted, warm apartment is available for so little? 

And many thousands of your hosts are also being asked to push prices down.  If we hold them at a somewhat reasonable price, they may book.  They can’t get anything in a good hotel for this ridiculous amount of money.

I booked for myself, and two others, an apartment in San Francisco for about $200/night.  It is larger than mine, but it is not a big luxury place and it’s not in a special neighborhood.  Seattle is very “hot” right now and we could be doing much better, if you hadn’t pushed prices down for years.  You want to pay me $600 for getting a new host?  Should I tell the new host that they will make almost nothing?  

You’ve been asked this over and over by many hosts and yet you never respond in a real way.  We are told that many low prices will actually give us more money, but it will also give us much more work and a small amount of more money.  And yes, I have always kept prices low enough to feel well paid for my work, but once you started pushing for more hosts, you started lowering our earnings possibilities.  

One true response for all hosts would be great.  

 Harriet Husbands

Seattle Washington (host for 8  years, and, of course, Superhost!)

[Jace1]

You are correct Sir!

[Wendy147]

Thank you for expressing our same thoughts exactly! I do not want someone staying for 50% discount. I'd rather have a great night's sleep.

[J74]

I'm in a prime Manhattan location with private upscale accommondations and sometimes smart pricing suggest prices for $50 and under....