Smart Pricing

Smart Pricing

I am not a host but I do use Airbnb frequently here (US) and abroad.  Recently, and for the first time, I was charged for my stay by what is called the Smart Pricing scheme. I say scheme because it's not obvious to users that Smart Pricing exists or is even being used, unless you Google it. If I click on a location on the Airbnb map and it says $185 per night, that's what I expect to be charged regardless of the dates.  I don't expect it to go up or down based on some theoretical "demand". The nightly fee for my recent reservation in Charleston, SC, was changed after I reserved a cottage over a weekend. It was not obvious, and we did not notice the fee increase until we went to pay the 2nd payment. Surprise, we were suddenly made aware that the total cost was not the $1,000 we expected, but more like $1400. We called, Airbnb said "that's the host's choice, call them". The host said it's a feature called Smart Pricing and they have no control of it.  Hummmmm. So who's telling the truth? I think Smart Pricing is a scam. The price stated on the map should be the price....period. If you don't post the correct price on the website, that's deceitful, if not illegal.

 

I will not use an Airbnb if Smart Pricing is part of the deal.

 

Chris Stock 

22 Replies 22
Emiel1
Level 10
Leeuwarden, The Netherlands

@Christopher902 

A confrmed reservation has a fixed price, calculated at the time of booking  (if the listing is on Smart Pricing or not, total price is fixed at the moment of booking). Also if it is a "long term reservation" (more than 27 nights, so payment is in installments, total price is still fixed.as calculated at time of booking)

 

But if you make an change to a confirmed  reservation (for example an extension), then (offcourse) the extension is calculated using the price settings at moment of change.

 

Best regards,

Emiel

Sarah977
Level 10
Sayulita, Mexico

@Christopher902 As Emiel says, there is something amiss here, unless you made changes to the original reservation after the fact. The price you are given when you make the booking is the price it stays at, any changes a host or Smart Pricing made after your booking is confirmed shouldn't change the price you are being charged.

Smart Pricing is just an automated algorithm that some hosts use that raise and lower prices according to demand, seasons, holidays, etc. It's unrelated to the issue you are having, unless there's a glitch in the Smart Pricing (which would be on Airbnb, not the host) so you need to try to get the bottom of this with Airbnb. Call back and be firm about there being an error somewhere. 

Emilia42
Level 10
Orono, ME

So what you are saying is that all hotels  should have one price and remain that one price regardless of the time of year or day of week. Do you know any hotel chain or airline that operates that way? I don't. Rates in the service industry fluctuate by demand. They always have. Have you ever driven by a car dealership to see a big billboard out front that says "Buy a new car for $199 per month" but then when you choose the car you want, it is much more than $199. How is this different? Even at Walmart, the price of an onion changes from week to week based on supply and demand. I'm sorry you felt cheated and scammed but I don't know a world that doesn't work like this.

 

When you clicked the confirmed button you locked in the price. It did not change after you booked. The host does not have the option to change the price after a confirmation and neither does Airbnb (unless both parties agree.)

My point is...it's not obvious when some host is using Smart Pricing. If I pick a city on Airbnb, pull up the map, and then click on one of the balloons, on a specific balloon that says $185 per night...I expect to get it for $185 per night for the days I want to take it. But in this case it was higher than that. OK caveat emptor...I didn't check the total plus fees and divide by the number of nights we stayed to get the actual Smart Pricing rate.  But I didn't know about it either.

 

The woman who owned the property in Charleston said, "Airbnb sets the low price, I don't. But you'll never get it for that low price because it's always in high demand." OK show that on your map, show me the calendar just like hotels do.  Don't hide it. I understand demand pricing, I just think Airbnb and some hosts a not being upfront about it. Tell people on the website that you are using Smart Pricing right up front. 
 

@Christopher902  Even if a host doesn't use smart pricing, they may set rates higher or lower manually depending on demand, seasons, weekends, holidays, etc. And the rate you see will never be the final price, because Airbnb adds its fee (which fluctuates, and the %s they use are information not privy to hosts- we have no idea how much they are going to charge the guest in Airbnb fees) , then the price can also change when you go to book because you are adding guests, and the host has an extra guest fee, or adds a cleaning fee, etc.

You are shown the final price when you enter all the booking information- it's your choice to take it or leave it. It's seldom a matter of hosts trying to fool guests.

You made it sound like the price you are being charged somehow changed between booking and now, but that doesn't seem to be the case.

But I do agree that if a host always has high demand and always charges more than the nightly base price showing, they should really change that base price to reflect reality.

If you input your dates into the search then all the little bubbles that appear on the map are the correct price for that date. But if you search with no dates then Airbnb will pull the lowest rate available on the calendar since the dates fluctuate. Just like you CAN get a car for $199 per month but most of the cars in the lot are much more than this (using my previous example.) How does the Airbnb search engine know what price to select if it does not know when you want to stay. I suppose it could take an average of all nights, but that price would still be incorrect to you. It really doesn't have anything to do with 'Smart Pricing.' One of my listings shows as $68 a night but if you select a weekend date it could go up to $90 if there is a hockey game. I would not be a good business person and would lose money otherwise. 

Whether it’s obvious or not is irrelevant.  When you make a reservation the price is fixed. Smart pricing is based on demand, time of year events in the area a number of factors but once you are quoted your price it’s SET. If you were charged something else that’s on Airbnb. You need to go after them. 

Sarah977 proves my point. "...if a host always has high demand and always charges more than the nightly base price showing, they should really change that base price to reflect reality." 

 

Sorry, that means you don't show the real price and that's a bit deceptive. If you want to compare your services to that of used car salesmen and hotels, perhaps you should be regulated like they are. I'll take that up with some folks I know.

 

 

 

 

 

@Christopher902  

 

There was some talk last year of Airbnb factoring fees into the price shown, and I think they did that for about a week.  Then it disappeared.  I imagine it's difficult to be accurate with those numbers because they are percentages.  Some, but not all, cities and states charge occupancy tax, and like Airbnb's service fee, is a percentage based on the total amount of the stay plus the cleaning fee.

 

There are hosts who work the system more cynically, like one out west somewhere who advertises a luxurious condo at $10 a night.  In reality only some days here and there are $10 a night, but it's impossible to get a $10 stay because she has a two-night minimum.  That seems quite cynical to me.  Most hosts just set a higher price for popular holidays or events, or a lower price for off-season times.  That seems like good business.

Yadira22
Level 10
London, United Kingdom

@Ann72 this is so true. A superhost in London rents out the first night at £9 for a luxury home in zone 1 central London but for  the 2nd day it’s over £200/night with a minimum 3 night stay. Clearly it is “click bait” and Airbnb should be more strict on these types of situations. But if you define a location Airbnb states total pricing as well as nightly rental- so it should be easier. 😕

Sarah977
Level 10
Sayulita, Mexico

 

@Christopher902  Just to be clear, the key word was "always". Some hosts may indeed charge the base price they show at certain times and days of the year, or when business is slow and they want to increase their bookings, and the correct price will appear when you enter the dates, so they aren't doing anything deceptive.  

Personally, I charge the same every day of the year, only host one guest at a time (therefore no extra guest charge) and figure cleaning time into my nightly rate, so there aren't any pricing surprises on my listing- I don't have a dog in this fight myself, but I know that there is only so much that hosts who do have fluctuating prices can do with the way their pricing is shown.

By the way, if you go to book an airline flight, you'll be shown a price that is the lowest price for that day, unless you filter for first class or something. When you actually go to look at that flight, you might find that there are many flights between those destinations that day, and the one you were shown was the cheapest one because it entails a layover along the way, or leaves at 2AM, and that the direct or more reasonable time flights are actually much more expensive. It's the same kind of thing. Hotels might advertise "Rooms from 39.99!" but the rooms at that price are small, have one window that faces a wall or a busy street and the better rooms are more expensive.

Sarah977
Level 10
Sayulita, Mexico

@Christopher902  One other thing to understand about Smart Pricing is that the base price is something a host has to set so that the Smart Pricing algorithms never show a price which is less  than that. A host might have a base price of $50, when in fact, they can command $100/ night on a regular basis. But if the algorithm detects that the host still has an unbooked night or two during slow season a day or so before the dates, that price might indeed drop to $50/night. The host has decided that they are willing for the price to go as low as $50/night, if need be, in order to have full occupancy. 

The intention isn't to bamboozle guests, it's just the way the Smart Pricing Tool works. Which is not to say there isn't room for improvement.

Lisa723
Level 10
Quilcene, WA

@Christopher902 Smart pricing is a red herring here. It’s just one mechanism by which hosts may vary future nightly rates. When you search, if you don’t enter dates, Airbnb shows the lowest availabile nightly rate for every property. This is regrettable. Regardless, your actual price is shown to you before you book and can’t change after you book.