Smart Pricing Overriding Minimum Nightly Rate?!

[Sarah327]

I'm wondering has anyone else experienced the same and is the only option to disable Smart Pricing?!

I've recently had two instances where my nightly rate has dropped significantly lower than the minimum set. In the first instance, it was dropped by £24 (in total) for a recent two-night booking and in the second today, upon accepting Airbnb's 'Price Tip' for a few nights I'd selected, it dropped it again by £12.

Usually, when accepting Price Tips my minimum nightly rate is applied and NOT the much lower rate suggested. However, today it was changed and I had to go back and manually adjust it!

Upon contacting Airbnb for advice they said:

The problem you are having with the minimum price is because of the Smart price. This option ends up lowering your daily rate to be competitive with prices in the region for the same date. You just need to disable this option.

I've always found Smart Pricing usually in my favour, suggesting higher rates and getting me booking for these dates, so I'm happy to use it as a feature. Whether it pushes my listing up the rankings, I understand that's an interesting topic for debates, but up until now, it has worked for me.

Just wondering what the best course of action is because I cannot afford to take a £24 hit on a two-night stay and if I do, without asking the guest for extra money and embarrassing us both, I can't leave them anything extra as a welcome as I would and like to.

[Mike-And-Jane0]

@Sarah327 A few thoughts

1) You say you can't afford a £24 hit on a 2 night stay. If this is true you are probably underpricing or your costs are too high.

2) You will do more harm by cancelling/asking for more money than just accepting a small loss

3) If you have accepted a price tip then there is no reason why it wouldn't go below your min price. There is no point in a price tip needing acceptance if it was within your set price parameters

4) Where we have smart pricing on we don't get price tips so not really sure what has gone on with your listing.

[Sarah327]

Thanks for your response @Mike-And-Jane0. It's certainly a combination of the points you've raised!

1. I agree I am likely underpricing my property and, in most instances, this is because many Airbnb's in my area compete solely on price. Sadly a fact for many hosts, not just myself. Although I often wonder how they cover their costs and/or why they undervalue their property (and time) so much! 
   
   
2. I have no intention of asking the guest for additional money (to save embarrassment alone) and will accept the loss and learn from it. However, this means I am unable to leave them any kind of welcome besides tea, coffee, sugar and milk which makes me feel uncomfortable. Partly perhaps because I feel a warm welcome and a little treat goes some way towards receiving a good review.
   
   
3. Until today, when accepting a price tip, it has never dropped my nightly price below the minimum set. Although did when I used weekend pricing as the two never seemed to work together at all! I am wondering why this has happened now? I have always understood the minimum nightly rate was there and in place to ensure hosts cover their costs, so Airbnb can suggest a lower price but should not drop it below the minimum rate set? 
   
   
4. I often get price tips and usually they suggest a higher nightly rate, which I am always happy with and accept. Not for all nights just a good few of them. I assume because demand is fluctuating in my area?

I used to check my calendar regularly for price tips but lately not so much due to ongoing health issues, which meant I missed this one weekend priced significantly lower than my standard / minimum rate. Note, it was not suggested as a price tip nor did I accept one for it, so Smart Pricing automatically dropped my rate well below the minimum.

It seems the only options to avoid this happening in future is to check my calendar daily (like I used to) and/or turn off Smart Pricing. Although, I understand the latter increases your listings rank / visibility so I am reluctant to do this just yet...

[Ryan2352]

Never use ABB's smart pricing tool.

[John2406]

@Sarah327 @Mike-And-Jane0  Oh what a wonderful topic to raise - and thank you so much for doing so!

I became part of Airbnb in February 2018 when I decided to "try them out" as although I was already achieving many bookings every year without Airbnb, I hoped that being advertised on their platform, I may well achieve more bookings during that part of each year when the market was fairly quiet. Well, that was the theory at least!

Of course, as you probably realised, the intention I had  wasn't matched by the reality, and so, rather than attracting Guests during the last three months of the year, what actually happened, was that we lost a fair number of bookings from previously repeat-ing Guests during the rest if the year!

Now, that in itself isn't a gripe on my part, but what I did gripe about at the time (both in 2018 and 2019), was Smart Pricing.

I don't know whoever came up with the wording, but "Smart" it certainly was not, and is not, for Hosts; "Cunning" would have been a better word, although far better still would have been "Anti-Host Pricing",  for in both 2018 and 2019 I made the worst losses ever in my holiday lettings career, and it was all down to the so called "Smart" Pricing!

Yes, I did enter my own minimum nightly price, but fairly often the price the holiday was sold at to the Guest was way below  what it should have been, but also being set to (at the time) Instant Book, the only way for me to recoup the loss, would have been for me to either inform the Guest that the price was incorrect or for me to cancel the booking (the latter not being a favourable to the host situation in which to find oneself, so I bit on the bullet, and let each booking go through.

The big crunch, however, came in August 2019, when Smart Pricing totally  ignored my minimum nightly price, by giving  approximately an 86.5% discount off it to a Guest! Needless to say I was not best pleased (that's the clean version of my opinion of Smart Pricing), but at that point I switched off Smart-Pricing, and ever since, have only used our own nightly prices without any flexibility in them (we can't have any as our outgoings are substantial!)

In a sense I suppose that no two Airbnb Hosts are going to be the same when it comes to the amount for which they can afford to sell a night at, in order to break even with their outgoings, or better still, in order to make a profit, but in my book, to rely on a bot to make financial decisions when it doesn't have a clue as to what Hosts' needs are, is asking for trouble (and a big "fall" in one's income!)