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

[Gail86]

After reading this thread, I turned my smart pricing off, AND raised my rates for the Thanksgiving weekend.  The “smart prices” are insulting to us as hosts.  I’ve learned a lot from so many of you that have posted in this conversation 

[Sherry24]

A challenge that I also see is that it seems to compare a private room pricing to entire apartment which is what I have.  An entire apartment with parking, WiFi, cable TV, etc is worth significantly more than a hotel room.

Also, I agree that discounts mentioned for long term stay place my pricing at what it would cost to rent the apartment unfurnished and with ZERO utilities.  

[Cindi3]

I still don't understand some things.  Can I do smart pricing for some time periods and not for others?  I would try it for some periods with a high minimum, but then don't want that to apply to high demand periods.

[Neville3]

 It seems to me that smart pricing is not an option, as can be seen from a lot of the comments below. The foot print of our apartment is 210 sqmt and listed as very spacious. Certainly we can't compete on price alone against apartments which are in the range of 75 sqmt large. There must be other factors that have to come into play and one that readily comes to mind is location. Another is size, number of bath rooms, wheel chair friendly, and availability of lifts. These are a few points that could go towards awarding a star rating from one to five for the properties advertised.

On another matter I would like to see a pop up window which appears on page one of our presentation or in the calander page that allows owners to post and change messages regarding for instance, a special event or offer, an advert from a local English language school next to us, a major pop concert in the summer, the Baroque classical festival in January etc etc. This cannot be done conveniently at the moment without going into the main body of the presentation and editing the text. This should be in the form of a white board where messages can be posted at will. 

[Susan14]

After reading some of the comments from other Hosts, it's clear why I don't trust Smart Pricing.  Smart Pricing is very related to the way the system searches for listings.  I have tried to locate listings in my area with criteria that is similar to my listing.  The system sent me listings that were no where near my home.  My listing is across the street from a beach, with a huge ocean view and sleeps up to 8.  Suggesting a listing that's 5 miles inland and comparing my pricing to that one is not beneficial to me.  Even if the other listing gets more bookings than mine, won't persuade me to lower my price.  My price is based on demand in my immediate area and the positive responses I get from my guests that state, how pleasantly surprised they were with my home.

[Dominic39]

I appreciate the insight into what creates Smart Pricing, but I too agree, it has work to be done to be of value as its suggestions that I missed a booking by double digit dollars per night, makes me immediately believe that the competition was a Motel 6 and not what I have to offer, a lake view home. Now if they want to tell me exactly where the guest went to get the double digit dollar deal, that would be useful.

[Lucie58]

Will not use smart pricing:  (1) it does not cover my expenses; (2) will change the type of guests that currently book my cabin;  (3) nor do I think that it captures all what I offer my guests: a full first breakfast (grocery stores are 15+ miles away and most guests arrive late pm on Fridays); several varieties of k-cups; a cheese platter with grapes, dry fruits and nuts; all ingredients for s'mores: wine or beer; a small gift for each guest and their pets; truffles on nightstand; a pantry with many dry and can items, etc... My favorite thing of hosting is meeting my guests; I reside 210 miles away round trip. I rather not get a booking for a lower price. It also does not take in consideration the natural waterfalls in my property that nobody else around can offer along with a $25,000 hot tub.

[Gail86]

Wow!! I just looked at your listing.  AMAZING!! And you offer SO MUCH!!  I’ve personally had it with smart pricing.  Your Airbnb is a full on resort.  On smart pricing, Airbnb would have you renting it out for $75 a night. And that would be highway robbery!!

[Ima2]

Ever since the smart pricing started...my bookings have slowed down. My space is very comfortable, clean ,review are great and has many more amenties than most in my area  . I have had a couple that has stayed with me in the past,paid my regular rate .They were encouraged to try lower rates because of the SP . Ended up renting me the next nite but had to move out of the lower rental  space AirBNB and rented a hotel room  because of the conditions of the lower rate AirBNB (SP was being used and the place was in  very poor condition, dirty and bugs) Hope AirBNB stops the SP because a computer brain has been proven not to work so well. More advertising would be great........Educating the public more often would be a big plus. I have not seen any advertising in quiet a few months.

[Caitlin55]

Instead of looking at the smart pricing, I've decied to BE the smart pricing 🙂

Take a look at similar properties in your area for the dates you have open and see if you're competative.  If you are, then leave it alone. if not and you want more bookings, reconsider.  

Question the algorithim, do your own research, is all I'm saying.

[Kevin307]

My bottom price is $175.00 per night. I have done my  calculations and this is the money I need to survive in this business. AirBnB would love me to reduce my price to $50 or less a night because even if they make $1.00 in fees from the deal they perceive that as a success story for them. What does that $50.00 a night mean for me?..........foreclosure. Come on AirBnB, work with all owners to increase our revenue and we all make a decent living.

[Pasek0]

Hi Lizzie,
Just found another excellent reason to avoid smart pricing, at least in its current state.

We used SP for one of our rooms and it offered guests the absolute lowest rate of just US$23.
We decided to Edit these price settings and surprise, surprise, what do we find... Airbnb actually recommends a minimum of $25!

Well, surely, if you're 'recommending' $25 as the minimum rate then your so called ‘Smart’ pricing should not be charging $23

- i.e. $2 less than your own recommendation!

Is there some reason why Airbnb's 70 factors don't include Airbnb's own recommendations?

[Dr-Jenny0]

Kia ora - just wondering why it is that even when I turned smart pricing on very briefly the so called minimum price protection did not work and I saw my place being listed at way below what I thought was my acceptable minimum?? I agree with others who say it is somewhat annoying being pushed to consider SP when there are so many variables in terms of geography, location, basic economics etc which make local comparisons meaningless. Airbnb continues to be an amazing community service please don't inadvertantly commercialise it so that the essential spirit of cmmunity based hospitality is ever lost.

[Rick-and-Deana0]

Just got a reservation for our place in the mountains for $295 a night for four nights and Smart Pricing suggested $115 - 151 for the same dates?!?!?!?!?!  And they call this "SMART"?????

[David126]

@Rick-and-Deana0

I think you are assuming Smart relates to the Host perspective.