[Festival] A Smart Pricing Journey

in
NY, NY
Level 10
5,092 Views

Ann 1.jpg

 

When you decide to list your place on Airbnb, one of the most difficult decisions to make is setting the nightly price.  I’m going to walk you through how I set my prices and how using Smart Pricing maximized my bookings and my income.

 

With this house, I set the nightly price at $209 the first year (2015).  I came up with that price not by looking at nearby listings, but by deciding that this very beautiful little house with high end finishes and great interior design set on half a dozen acres shouldn’t be priced too low, yet I needed the price to be somewhat modest to attract bookings the first year.

 

After achieving SuperHost, I raised the price to $297 the second season.  By setting such a high price, I wanted to convey that I valued the property highly.  I left that price for three years and had a good number of bookings and consistently excellent reviews.  After a few years, more Airbnbs flooded our local market, but I still had bookings. 

 

Last year I had fewer bookings, partly because the calendar was blocked for half the short summer season.  Over the winter I decided to look closely at my prices versus my expenses in maintaining the house. I saw two things:  that $297 was the “sweet spot” – most of my bookings had come in at that price – and that a lower price wouldn’t be cost-efficient.

 

I decided then to try Smart Pricing.  But I knew that I would have to set my minimum at the “sweet spot” of $297 a night.  I simply couldn’t afford to accept a lower price. 

 

If you haven’t used Smart Pricing, here’s how you go about it.

 

Go to your listing and choose “Pricing.”  Next to “Nightly Price,” choose “Edit.”

 

Smart pricing 1.png

 

 

Before going any farther, look at that sentence at the bottom of the screenshot: “You are responsible for choosing the listing price.”  Keep that in mind.

 

After choosing “Edit,” you’ll see this screen for editing your nightly price:

 

Smart Pricing 2.png

 

  

Right under “Nightly price,” you’ll see “Smart Pricing.”  Turn it on so the check mark looks like the one in the screenshot above.

 

Then go to the Minimum price.  You’ll see a tip in green. Mine says $177 – 40% less than my chosen minimum.  That’s too low, but let’s talk about why the tips are so low.

 

Airbnb’s data shows that lower prices attract more bookings.  That may be true, but I look at it this way: more bookings means more wear and tear, which means more things need to be replaced or repaired.  And that costs money. Now, let’s say I would like to bring in $5,000 for the month. At $297 a night, I would only need to book 16 nights. At $177 a night, I would need to book 28 nights.  I would rather have only 16 nights booked at my price than 28 nights booked at a lower price – because of wear and tear.

 

So set the minimum price at what you would normally charge.  Then set the maximum price at the tip in green.  The price will probably never go anywhere near that maximum.  But the algorithm likes to have a range to work with.

 

Now take a look at the graph at the bottom of the screenshot.  The green dots show some booked nights in September, October, and November.  (This is a summer vacation kind of place, so the bookings dwindle after October.)  The nights have been booked at $297. Then look at the black dots under the green line.  They show the suggested price. But here’s what’s strange: the suggested minimum is $177, but the suggested price looks like $250.  That’s weird. What would happen if I changed the minimum to $177? Take a look:

 

Smart pricing 3.png

 

 

With the minimum set at $177, all the unbooked night for September, October, and November are now $253.

 

Yet look at the second half of December and the first half of January:

 

Smart pricing 4.png

 

  

Prices now range from $253 to $422 a night!  That’s okay, but since they range from $297 to $422 a night when my minimum is set at $297, I’m going to leave my minimum at $297, because I don’t want to risk getting a booking at $177 – which might happen when I’m not looking.

 

Another interesting thing about the screenshot above is this:  Smart Pricing often does not raise prices for holidays. Why? Because searches for holiday dates are more numerous, and in keeping with Airbnb’s belief that lower prices mean more bookings, it wants to show lower prices for popular date searches.  Many hosts who use Smart Pricing manually raise prices over holiday dates. In this case, however, Smart Pricing has raised my rates for the Christmas and New Year holidays. I will have to keep an eye on that the closer I get to those dates, however, because prices go down the closer you get to unbooked dates.

 

Last January, I switched to Smart Pricing for all three of my properties.  All three also have Instant Book turned on, with all the requirements checked:

 

Smart pricing 5.png

 

 

With Smart Pricing on and your minimum set, you might get a message on your calendar page asking if you’d like to send out a special discount for unbooked nights.  The discount offer usually covers about 10 days and is sent by email to guests looking at those dates. In the off season, when I typically have almost no bookings, I frequently sent out this discount offer.  In return I got half a dozen or more bookings when I typically had none. But the boost my listings got in the rankings was worth more than that.

 

Since turning on Smart Pricing, using Instant Book, and sending out a series of special discount offers, the following things have happened:

 

  •     Average number of bookings per month went up more than 50%
  •     By May, booked income for 2019 was 100% of booked income for 2018
  •     Overall income for the year so far has gone up 38% over 2018
  •     Number of nights booked has gone up 25%
  •     Average nightly price across three listings has gone up 10%
  •     At this point last year, I had 50 bookings; this year so far, I have 78 bookings.

 

I concluded that the more you use Airbnb’s tools, the higher your place rises in the rankings.  The discount offers get more eyes and clicks, and more eyes and clicks lift your listing in the rankings.  As Lizzie’s post from a couple of years ago shows, Smart Pricing uses more than 70 factors to determine the prices on your calendar.  But keep in mind the following:

 

  •     Smart Pricing and Pricing Rule Sets cannot be used together.  You can use Availability Rule Sets with Smart Pricing, though.
  •     Price Tips are not the same as Smart Pricing.  I have never used Price Tips and never will. They don’t offer the same benefits as Smart Pricing.
  •     Remind yourself that the minimum price you’ve set is the price you will be happy with if you get bookings at that price.  So try not to be disappointed when those minimum-price bookings come in. If you want bookings at a higher price, raise the minimum.
  •     When looking at the suggested minimum or reviewing an email from Airbnb suggesting you lower your price, remember this: “You are responsible for choosing the listing price.”  It’s YOUR house or apartment. YOU pay the bills and YOU know the value of what you’re offering. If you don’t want to get those emails from Airbnb, turn off email notifications in your settings.  

 

To be honest, Smart Pricing worked so well that I almost got tired of all the bookings coming in!  But with property taxes looming on the horizon, I couldn’t be happier with the results. Why not give Smart Pricing a try?  You might be surprised at the results.



55 Replies

Re: [Festival] A Smart Pricing Journey

in
Orono, ME
Level 10

@Ann72 I also benefited from Smart Pricing this year! 

 

"Price Tips are not the same as Smart Pricing" and "If you want bookings at a higher price, raise the minimum"

... This is SO important for hosts to understand! The tools can work in your favor if you know how to use them.

Re: [Festival] A Smart Pricing Journey

in
Wilmington, NC
Level 10

Love this @Ann72 !

 

Particularly interesting was your point about wear and tear. Such a good point that if you can make the same amount of money with fewer bookings you will also have less wear and tear!

Re: [Festival] A Smart Pricing Journey

Administrator in
London, United Kingdom
Administrator

Great post @Ann72 and super insightful for new hosts, experienced hosts....all kinds of hosts really! 🙂 

 

Thanks so much for sharing this and for all your amazing effort.

 

To add, I imagine the answer is yes, but now that you have got your pricing as you like it, do you still continue to watch it and play around with it and if so how often do you think it's good to review?

 


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Re: [Festival] A Smart Pricing Journey

in
NY, NY
Level 10

@Lizzie Thank you!  And yes, I continue to play around with it, monitor it, test it, and change it.  Once or twice, when bookings slowed down a bit, I set the minimum at the suggested minimum just to see what would happen.  I got two bookings this year at less than my normal minimum.  But that's okay, because I got a lot more than two bookings at more than my normal minimum.  Lowering the rate like that judiciously probably pushes the listings up in the rankings.  Then they get more clicks and views.  Then after 24 hours or so I put back my normal prices. 

 

Like many hosts, I hover over my listings like a hen with eggs.  🙂  But I've heard that "hover time" also impacts your ranking.  I think that's because a lot of hovering shows you're a conscientious and responsive host.  And one ranking factor is how quickly a host responds.

Re: [Festival] A Smart Pricing Journey

in
NY, NY
Level 10

And big thanks to my friends @Emilia42 and @Suzanne302!  :):):)

Re: [Festival] A Smart Pricing Journey

in
England, United Kingdom
Level 10

@Ann72 a great article, clear and informative. Thank you.

Re: [Festival] A Smart Pricing Journey

in
Rabat, Morocco
Level 10

Salute, @Ann72

 

Thank you for sharing this topic and valuable informations 

 

Thanks, 

Miloud

Re: [Festival] A Smart Pricing Journey

in
Pensacola, FL
Level 10

@Ann72  Thanks so much....I really wanted to better understand how Smart pricing works for a host - and you have it very clearly described and explained.  I kept trying to understand it and how it really worked. Excellent. happy hosting, Clara

Re: [Festival] A Smart Pricing Journey

in
Málaga, Spain
Level 10

Thanks for the post, @Ann72 . It made me want to try. However, I cannot seem to find the option to activate the smart pricing. Would you happen to know if it is not available in some countries or if it is incompatible with some other option? Thanks a lot.

Re: [Festival] A Smart Pricing Journey

in
NY, NY
Level 10

@Antonio-Luis0 I just saw your exchange on the Spanish board and was surprised to see that it appears not to be available in your market!  I had not heard that before and wonder if @Lizzie or @Sergi could find out for you?

Re: [Festival] A Smart Pricing Journey

in
Málaga, Spain
Level 10

Thanks for your answer and support, @Ann72 . I am not sure yet it that the issue is Spain, maybe it is some other thing.

 

I found this at airbnb.ES site: https://www.airbnb.es/help/article/1168/c%C3%B3mo-puedo-activar-o-desactivar-los-precios-inteligente... explaining how to activate the smart pricing ("precios inteligentes"). It is the .es domain, not Mexico or some other Spanish speaking countries. It would not make much sense to explain on the .es site how to turn it on if it is not available, it would rather say that it is not available in Spain if that was the case. We will find out soon. 

Re: [Festival] A Smart Pricing Journey

in
NY, NY
Level 10

@Antonio-Luis0 No, it certainly wouldn't make sense.  I await the answer with you.  If you assume there's an algorithm or some such that takes the 70+ factors into account, surely that wouldn't be language or region based?  It's just 1s and 0s, after all!

Re: [Festival] A Smart Pricing Journey

in
NY, NY
Level 10

PS and thank you for the nice words @Antonio-Luis0!

Re: [Festival] A Smart Pricing Journey

in
Northland, New Zealand
Level 10

Thanks  @Ann72  That’s very insightful. I never ever thought about more bookings would mean more wear and tear .

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