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

[Ann10]

@Eugenia0- Hey, I've been to Sevilla. I lived there for 4 months and I went to the University of Sevilla as an exchange student. I've had the same experience that you are talking about with SP. It make no sense. Use the higher pricing, but also look at the calendar of events in your area. 

[Leonie11]

Pricing Tips in Sydney have gone CRAZY.  My standard rate is $165. Two weeks ago my pricing tips for my 2 bedroom home 5 minutes drive North of the Harbour Bridge (tips for later in the year) were showing up as $78.  Now all of a sudden pricing tips are showing up to $220 up to $250.  

While all this is happening, my listing that for the past 4 years has been on page 1 for Sydney, is now often not even included in all 17 pages.  As a superhost who lives of my airbnb income I am finding it extremely stressful trying to get the situation changed.

The main problem is that Searches for sydney are showing up suburbs in the city and up to 20kms away to the south and east and west, but not showing up any or sometimes only a couple of listings north of the harbour in all 17 pages of searches.

I just did a search now and my superhost listing is excluded from all 17 pages.  What is the benefit of being a superhost for a long time, if you can't even get your listing to show up....

I speak to Airbnb customer service EVERY DAY, but they tell me it's only me (except for one person).

I sent photos of 5 different mobile phones, an ipad, 2 laptops on about 4 different browsers and all are not showing fairy for proximity to the city if you are in the north.  As a result I have more days vacant this month than I did for the past 12 months.

For 4 years I was such a wonderful advocate for Airbnb, now I am thinking I might have to rent my house out locally and get a job if the system is going to keep skewing the searaches away from the northern suburbs.   

Almost ready to give up.....

[David126]

@Leonie11

Have you tried other short term booking systems?

[Bryan150]

Does the smart pricing calculation take into consideration whether or not I charge a cleaning fee? For example, if I charge a big cleaning fee, will smart pricing suggest a lower daily stay price in order to bring my overall price in line with the market? 

The original post says, “Extra guest fees and cleaning fees are applied to stays in the same way whether Smart Pricing is on or off,” but that doesn’t really answer my question. I understand that the cleaning fee will be itemized separately with or without smart pricing, but I am asking about how the smart pricing amount is calculated.

[Roberta221]

Smart pricing is not for me if I keep my prices too low I don't get the kind of guests I want. I want my guest to be clean neat and agreeable

[Myndi0]

@Lizzie - I just got booked for below my minimum price set. When I called for help I was told by the customer service agents that the minimum price set does not apply when we use Smart Pricing, but in your link above it says "we will make sure the recommended price stays above your minimum price setting". HELP - What do I do?

[Thomas972]

It seems that frequently my set prices are being overridden when guests book. I have smart pricing turned on but I am also setting certain dates higher and turning off the spart price feature for those days. It does not seem to matter. The rentals are going for less than my "set"  rates. I am not happy about this and "help" has dropped the ball on my request for help.  

If the algorythm can override our prices, set outside of "smart pricing" we should be advised about how this works. I cannot find it anywhere. Therefore, to me at least, it seems dishonest especially since customer service is not responding to this issue. Must I turn smart pricing off all together instead of certain days only or is this feature happening regardless? I am surprised more people are not complaining about this. 

[Jan288]

One thing you can do is not allow a guest to book until they check with you.  I switched my automatic booking to another site instead, in order to still catch the impulsive guests.

That way, you can check the price, and if you do not like it, you can decline the reservation.  It is the only way to let them know your minimum price is your minimum price!  

They do say they will not go below your minimum, then they do.  So if you also have instant booking turned on, you our out of luck. 

[Sarah1748]

Hello Lizzie in UK

Unfortunately I had a property which wasn't doing so well, so I enabled smart pricing and instant book.

Imagine my HORROR at what happened next.

Perhaps you can explain to me why your 70 factor "smart pricing" has accepted a booking for 16 nights, for four people in the absolute peak time of the year in this area, and I mean the ABSOLUTE peak time of the year for $55 per night.  When there is not one other property in this region that is listed for less than $100 per night, and that includes 1 bedroom places.

I will have to accept the booking, but it is clear to me that your algorithm is inept.  I really think that you need to look at this very closely before recommending this to future owners.

[Gabriel2868]

Yup same experience. What pisses me off is I checked their suggestions before turning it on and they were reasonable. But once your turn it on they reduce them by 70% in some cases.

[Leslie171]

I hope they can address this issue, Sarah. It's just plain wrong, and reads as exploitation of Airbnb hosts.

[Marco1150]

Do y’all know if Airbnb is capable to upload virtual tours?

Cause I have a 360 Virtual Tour company I create tours similar to Matterport do you know anyone interested? Ph 2102790172. Www 360studiotours com. Airbnb says that this future will be available in the future but for now you can send the link to your prospects and clients of your property to capture their WOW FACTOR of your beautiful HOME.

[Ann72]

I just set SP for next season (I'm in Maine and my bookings are mostly in the summer).  I'm thrilled to see that SP set prices higher than my already high prices, as I don't believe in lowering my price.  After the first season, when the prices were more modest to attract people to a new, un-reviewed listing, I jacked them way up and got more bookings AND better guests.  ("Better" in that there were far fewer things broken or damaged.)  If you have a nice place you want people who are used to staying or living in nice places.  I find it easy to ignore all of Airbnb's suggestions that I lower my prices.  I have plenty of bookings and a 5-star rating.

That said, I'm going to keep an eye on it to see if the prices go down as the high season approaches.  That's my only real concern.  If that happens, I'll switch out of SP and post the right prices.  

[Rick-and-Deana0]

They can sayand write whatever they want and it just goes to show that they are willing to be dishonest with us all when it comes to Smart !?!?! Pricing.  We have been with AirBnB and love their app and even appreciate their customer service.  But DO NOT Be Fooled. They are in the business to sell to and suppor the Guest - NOT the Host.

On average in the winter we are able to Routinely get 100% more than what their Smart Pricing suggests.  They should be embarassed about this. We have been hosts for 8 years and ever since Smart Pricing came online we have be suspicious of it.  I test it regularly to see if it is getting any better.  It is IN FACT getting WORSE. The prices are coming down on it all the while I am getting more.

DO NOT use their Dumb as hell - Smart Pricing program.

[Harriet5]

Thank you Rick & Deana.  I am responding to your very intelligent post.  I have been a host for 8 years.  I've had the Superhost label for about as long as they gave it.  I have many great reviews.

However, I also have NO bookings for December, 2018, January, 2019, and February, 2019.  It is true that AirBnb suggested lower prices many times.  I, of course, ignored that, and also gave them "feedback" so that hopefully they would take a look at my prices received compared to what they had offered me.  

Sometime recently they stopped saying I should drop my pricing (which I had set at $59/night, the same price I got on the first two bookings when I started 8 years ago!)   What also was different is that AirBnb started to show me the map of my close neighborhood, the numbers of people looking for rentals and the number of hosts available to rent.  The number of guests was smaller the the local, available hosts!  Big surprise, right?  And the prices were either high, or low but it didn't matter.  

Let's make this clear now.  I keep getting offers to be rewarded $600 if I found new hosts and they had actually rented a unit.  Obviously they are pay ing a lot of money to get more hosts while the existing hosts get no guests.  They have been doing this, admittedly at lower costs, for a very long time.  

So that's how they work, and that's why I'll be leaving.  I do this hosting to make an income, not to have fun, which it really isn't.  

I'd like to hear feedback on this, if possible.

Thanks, for reading.