Dynamic Pricing problems

[Brendan81]

I am a long time user of the Dynamic Pricing feature.  I love it, as I think it maximizes my earnings.  I never would have dreamed of asking for more than $200/nt for my first listing, but when I experimented with Dynamic Pricing, I got several bookings at over $300/nt.  I have used it ever since (save for a couple special events during the year where I set my own price), and been happy with the results.  

EXCEPT

Every once in a while, it seems to just go totally off the rails and bottom out my prices into perpetuity.  The way I understand the algorithm as it usually works is that I provide my minimum, target, and maximum prices as input, and the algorithm sets my prices.  Generally, my price should be somewhere near my target price, skewing higher for high demand times, and lower for low demand times, then as dates get closer (generally 30 days out), it reduces the price to my minimum.  Makes sense, and works great for me.  But every once in a while (like today), I get a booking that makes no sense.  My minimum price is $175, target is $250, and max is $500 (this is a different listing from the one I mentioned above).  Today, Feb 19th, someone booked the weekend of July 11th for $175 per night.  July is my busiest month.  If the algorithm were working the way it has in the past, those nights should easily be going for $300+ at the moment.  This is not the first time this has happened.  So I look at my calendar, and sure enough, every night after mid-June is set to my minimum rate all of a sudden, rather than being close to or at my target rate.  I have a ticket in with Airbnb right now to address it.  If it goes like last time, they will reach out to the guest who booked, explain the mistake and cancel their reservation.  Then, they will be free to book at the correct rate if they choose. 

What I really want to know is: Am I the only one experiencing this?  Over the last 2 years or so, this has happened to me at least 4 times.  I complain, point out what is wrong, they eventually fix it, then it happens again a few months later.  I realize that I could just set my own prices, but I feel like the better answer is for Airbnb to fix this feature.  Why spend the time and energy creating and marketing a feature, just to let it malfunction to the point where no one wants to use it?  I'd love to hear from some other hosts, and/or Airbnb with insight into this issue.

[Lawrence168]

I only use dynamic pricing for the off-season for my property.  For me, the dynamic pricing was not charging enough during our peak season because it has no way to take into consideration the amenities that my property offers vs my competitors in our area.  And these amenities do give us a BIG competitive advantage that guests will gladly pay more for to stay in our type of property; and far that reason I only use the dynamic pricing on certain months.   BUT even on the months that I do use it, I may over ride it for certain holidays or events because I know I can charge more money than what dynamic pricing sets and even better, I know we will still get booked.  However, if your having good luck with it, this was in no way an attempt to dissuade you from using it, just sharing an alternate point of view based on my experience.  It's good to know that there are people having success with it.

[Mike-And-Jane0]

Hi @Lawrence168 ,

I'm relatively new to this and have not yet 'risked' smart pricing.

Please could you explain how I use dynamic pricing for only parts of the year - I thought it was only possible to switch it on or off for the whole of your booking period.

Thanks in advance

Mike

[Lawrence168]

Hi Mike and Jane,

I hope you have found your answers by now and I apologize.  I never replied to this post, I missed the notifications that you replied and once Vermont cut off short term rentals, I have not had much reason to log in to my airbnb account.

It's a bit tedious to do but you have full control of your calendar.  Fair warning up front: Once you flip this setting to on, all custom pricing you have set will be wiped out entirely!  In other words, if you've already spent time doing your pricing for the next year then I'm not sure I would even recommend trying it unless you are ok with redoing the months you don't want to use the dynamic pricing feature.  After dynamic pricing is enabled, airbnb will set the pricing for you but you can go to every day, week, or month of the calendar and change that setting on a granular level meaning you can edit that for each day/weekend/week/month that you don't want to use it.  It's in the pricing/calendar settings.  Hope this helps and sorry again for not replying sooner.  I will pay more attention to this now, especially now with so much uncertainty so if you have any other questions, I promise not to take so long to reply! 🙂

Lawrence

Lawrence

[Brendan81]

@Lawrence168 That makes sense that it can't account for your special amenities, that would be difficult to do.  It's  just frustrating because I really like the feature, but it keeps messing up, then I have to fight with them to get them to understand that it's messing up.  They always respond with "there are a lot of factors that go into the price".  So here I am almost 2 weeks later and still haven't gotten them to recognize there is a problem.  

[Lawrence168]

I would probably not use it if it causing any friction with your tenants, its just not worth the aggravation.  People want to be able to make easy bookings, have an easy check-in/check-out process and timely communication from their hosts.  Obviously they want other things with the properties but in terms of the booking process, those are key factors in my opinion.  I would much rather set my pricing manually and if someone asks for a discounted then I would either counter offer, agree or if they are being egregious with their request then I respectfully tell them no.  Don't be afraid to tell a potential tenant no - its a powerful take away and one of the oldest sales tricks in the books called a take away.  Hope you are doing well and staying safe!

Lawrence

[Emilia42]

@Brendan81 

This happens to me as well. I don't think it is a malfunction, I just think it's how it works. Summer is my busiest season yet right now all prices in July and August are at my minimum. From my experience last year, I won't see these prices creep up until April/May-ish. However, the busiest weekend of the year for me is college graduation weekend in May. Everything will sell out and everything is a higher price. I book all my places off Airbnb for that weekend but I occasionally throughout the year will just open a date to check what the price is at. I have never seen it anything other than my minimum so I am really not sure how the algorism works. 

[Brendan81]

@Emilia42 Strange that it has worked that way for you, because it has never worked that way for me.  Dates in the future have always been priced high until they get closer (like maybe 90 days?) and then demand would become a factor, and then my prices would go to minimum within 30 days. What drives me nuts is trying to convince the people on the phone and the mysterious "technical team" with which they consult that there is even an irregularity.  Here is the response I got from them:

¨After review, I could confirm that this is an expected behaviour. Please note that the pricing through smart pricing is seletced through so many factors and as long as the nightly price isn't less than the minimum price selected by the host, it's not a bug.¨

That is the definitive answer that the way smart pricing is working is an expected behavior.

So the fact that the price isn't below my minimum is proof that it's working perfectly?!

Here is part of my response, which I hope will convince them that something has changed:

Please refer to Natasha's reservation at the Moondoggie Bungalow, checking in 8/2/20.  This reservation was made on 2/4/20, when Dynamic Pricing worked as "normal".  The minimum price was set to $175, yet her reservation for Sun-Sat was for an average of $311 per night.  There is nothing special about that week, other than it is Summer, and 5 of her 6 nights were weeknights.  Now take a look at the weekend of 8/15/20, the weekend following Natasha's reservation.  That weekend is when we have a major event in town that creates the highest demand of the year and regularly allows hosts to command double or triple their normal rate.  If I turned Dynamic Pricing on right now, it would list the Moondoggie Bungalow at my new minimum price of $200 per night.  So Dynamic Pricing is setting the busiest weekend of the year at my minimum price, when just 24 days ago, it priced the week before that at $311 per night.  Can you please have someone explain this? 

I feel like pulling my hair out, because if this doesn't get fixed, it will significantly reduce my income

[Emilia42]

@Brendan81 

That is interesting. Your example is just like my May graduation weekend which I mentioned above. I could be totally off, but sometimes I think that Smart Pricing does not take into account the demand in your area but rather your entire country or travel trends in general. I live in a college town which is absolutely dead in the summer but yet that is when my prices are the highest. During super busy graduation weekend or winter sporting events when all hotels are sold out is when I see the lowest prices. Maybe it is because in general people aren't traveling in what is presumed to be the off-season? Could it be that because of the worldwide travel scares/bans that are happening right now that Airbnb needs to get any bookings possible and enticing people to book at the lowest minimum? even if your specific area isn't affected? 

[Brendan81]

You make interesting points.  I have never noticed a discrepancy in prices and demand as you describe.  The prices have always seemed to be higher for the specific dates that have high demand in my area, like races, golf tournaments, etc.  It makes sense that the Corona Virus would have an impact on dates a few months into the future, but not sure that can explain why my rates for December are minimized.  Also, I'm pretty certain that this problem arose for me before the Corona Virus scare became an issue.

[Patrice283]

I just had the same thing happen.  A guest booked our cabin at our lowest price during the peak season which I was hoping to get my maximum price.  The July 4 weekend at the lake draws thousands of people and I would like to increase my minimum for that month only.  Is this possible or do I have to raise my minimum price all together?

[Brendan81]

@Patrice283 You could take that month off of Dynamic Pricing and set your own prices.  That is pretty much the only way when Dynamic Pricing isn't working for you.  That's what I do.  At the moment I am not using it at all because of this problem, but I keep testing it to see if it is fixed.  It still isn't.

[Pat271]

Dynamic pricing keeps track of traffic to an area and associated prices booked in realtime.  For those of you who have experienced low price settings lately, isn’t it possible that traffic has indeed slowed down because of the coronavirus?

[Brendan81]

@Pat271 that would make sense, but I'm pretty sure that this began shortly before the whole Corona Virus scare began.  Also, in the past my dates in the far future would be set near my target price, and it seems unlikely that demand could have been much of a factor in that.  Not sure why the Corona Virus scare would impact my prices for December, but right now it wants to put those dates at my minimum price.

[Brendan81]

@Airbnb could I get some help here?  Still experiencing the same thing.  Dynamic Pricing is still using my minimum rates for the whole year.  That's not how it has worked in the past.  I have called, spoken to at least 3 different people, exchanged messages, and gotten nowhere with this.  In the past when it has happened, it has been fixed within a couple days.  It's been a couple weeks now.  I'd really like to start using this feature again if it would go back to functioning the way it was before.  I'd really appreciate if someone would actually look into it and give me an explanation beyond "many factors impact the price". Please see my original post and my replies in this thread.