Smart Pricing Can Work – If You Do It Right

[Ann72]

Last winter I spent a lot of off-season time drilling down into my nightly prices, seeing what had worked best over four years of hosting.  I came up with a “sweet spot” for each of the three listings and set that number as the minimum with Smart Pricing.

My prices were already higher than most of my competitors.  But here’s the long story short:

*by May, my booked income for 2019 was 100% of my booked income for 2018

*overall income for the year so far has now increased 25%

*number of nights booked has gone up 13%

*average nightly price across three listings has gone up 10%

*at this point last year, I had 34 bookings; this year so far, I have 68 bookings.

Before using Smart Pricing, I looked into Beyond Pricing. (Wheelhouse is not available in my area.)  Their demo showed that, on average, they would be charging less than I was already charging.  So I decided to try Smart Pricing, which many hosts hate.  They hate it because it “tells them” to set a lower minimum price than they want to charge.  But if you SET YOUR MINIMUM AT WHAT YOU WOULD NORMALLY CHARGE, rates will go up dynamically.

And by adding the Smart Pricing tool to Instant Book, I found my listings rose dramatically in the rankings.  I signed on with Rank Breeze and found that they were almost always on the first page.

Other discoveries:

*after a few months, I found that even when I used Airbnb’s suggested minimum, Smart Pricing set most nights at my “sweet spot” rate – showing me that the algo drew the same conclusion I had drawn.  However, I never left it at the minimum rate for more than a few minutes!  🙂

*Smart Pricing’s suggested maximum changes often, and I always use their suggestion for the maximum, even though my prices have never hit the maximum.

*in an effort to keep the listings fresh and drive them up the rankings, many of us make changes regularly.  Changing or adding photos doesn’t update the listing, but changing ONE LETTER of the listing description does.

*when your prices are up, you might get a suggestion to send out a special discount offer for a period of days.  In the off season, I always did that, because Airbnb sends an email with the offer out to people searching those dates.  It mattered less to me that I got bookings than that I got more eyes and clicks.  And more eyes and clicks raises you in the rankings.

It seems like your listing will get more favorable treatment the more Airbnb tools you use.  I know there are a lot of Smart Pricing haters out there, but why not give it a try, making sure you always use your own minimum, and see what happens?

[Suzanne302]

@Ann72  I have been using smart pricing since I started but only for bookings that are at least a month out. I manually adjust the price 3-4 weeks out if I have spots to fill. I usually increase the rate the closer I get to the date.

I don't understand why it's so hated because you control your minimum and can always manually adjust any dates you want. Granted, it usually never prices my room more than 5% above my minimum, but that's why I manually adjust as needed.

But I'm also one of those hosts who doesn't depend on the income to make my mortgage or pay for my investment property, so I guess maximizing pricing is not as critical to my listing.

[Ann72]

@Suzanne302  That's great intel about adjusting the prices higher as you get closer.  The hotel business model says that unbooked rooms should be offered at a lower price the closer you get to the open date.  Which is why Smart Pricing doesn't raise the rates when a place is very booked up.  So I also go in and manually adjust the rates around the other bookings to keep the nightly rate at the rate those were booked.  On the other hand, if I don't, and dates get booked at my minimum, I'm perfectly okay with that because it's what I would have been charging anyway, not a penny less.

I can't tell you how many hosts I've seen here and on Facebook groups say, "Smart Pricing is crap.  It tells me to offer a much lower rate!"  And in my head I'm always like, "Aren't you an adult who makes all your own decisions?  If so, why are you listening to a bot and getting upset about it?"  🙂

[Mike1034]

@Ann72  Thumbs up for your thorough research and analysis. I agree with you for all your findings especially the one you mentioned that you get favorite treatment when you use more Airbnb tools.

I tried to use price tips for some days in some cases and I then found that my listing went to first page from third page.

You have found the trick for getting Airbnb's discount notification emails. I will try that.

Congratulation to you for doubling the bookings from 34 to 68! Your excellent work got paid off.

[Ricardo85]

@Mike1034 

Did you use "price tips" alone or did you use it along with some "rule set"?

Ricardo

[Mike1034]

@Ricardo85  I do use rule sets for some date ranges. But I don't use rule sets in combination with price tips because the price is already very low.

[Ann72]

Thanks, @Mike1034!  I was astonished, to tell you the truth!  But not complaining.  🙂

[Michelle-And-Michael0]

@Ann72  Thank you for sharing this post. It's got such great information that is the perfect timing for us right now! 

We've been going through a major slump in bookings at the moment, but we've also had a busy time in our personal life, so we haven't had the time to research why! I'll definitely be following up on all the advice given here...... Cheers 🙂

[Ann72]

Thank you, @Michelle-And-Michael0.  Don't forget to put your prices UP, higher than your competitors.  Then you'll most likely get one of those special offer notices, and it's easier to swallow a discount when the price is high.  Plus people look at the more expensive listings and get excited when they see a discount.  Those emails are totally free marketing that go out to a lot of people and drive visitors to your listing.  I found that since most people can't travel on those exact dates, those who took advantage of the discount booked one or two days during the discount period and the rest at the regular rate.  I only offer that in the off-season, which is a VERY off season, so getting half a dozen or more bookings when I might have gotten one or two at the most was a good result.

[Alice595]

@Ann72  You wrote:

*when your prices are up, you might get a suggestion to send out a special discount offer for a period of days.  In the off season, I always did that, because Airbnb sends an email with the offer out to people searching those dates.  It mattered less to me that I got bookings than that I got more eyes and clicks.  And more eyes and clicks raises you in the rankings.

I am just curious to know how you made your prices up in order to receive Airbnb special discount email? I had only receive a couple of this kind of email in the last one year. Did you just manually set a few days in your calendar to have higher prices?

[Ann72]

@Alice595  No, as I said above, my prices are already higher than my competitors.  I set a high price and use that as the minimum in Smart Pricing.  But to be clear, I only get those messages in the off season, when my calendar is pretty empty.  Maybe your calendar is always full?

[Alice595]

@Ann72  In my area, it seems that I don't get many bookings far ahead of time. It is not a vacation destination. There are more work related bookings than vacations. 

Normally the vacation bookings are booked one month or more ahead while work related are more likely to be one week or two weeks ahead. Therefore, my calendar is usually empty two weeks in the future.

[Ann72]

@Alice595  That's interesting, and the opposite of mine.  I get bookings 2 months to a year ahead.  🙂

Still, the special offer notices are usually targeted at dates within two or three weeks.

[Ian-And-Anne-Marie0]

@Ann72 

Interesting and useful analysis Ann. Thanks for sharing.

[Branka-and-Silvia0]

@Ann72 

I've turned on smart pricing and a few dates got these arrows, do you have any idea what they mean?

[Alice595]

@Branka-and-Silvia0  I thought that they all have that curved arrow. 35 is your minimum price. Arrow means it goes up from 35 potentially 🙂