Prices dropping by 50% - is the pricing tool a complete disaster?

[#1]

What is happening with the prices in London? I have been an airbnb host for 3.5 years and the prices are tumbling like I have never seen before. Am I the only one experiencing this? 

I have two listings, one for a private room with own bathroom in my large 2bed home, the other one is for the entire home for times when I’m away (I only started doing this one year ago). Ever since the pricing tool was introdcued I looked at it in disbelief of what it suggests and could only ignore it. To me, it actually feels unsafe using the recommended prices, yet I totally and utterly rely on the income from my place being rented and, for the first time ever, this month has been incredibly slow. When I first listed my entire home over Christmas last year I charged £140 plus cleaning as an introductory price, I since had regular bookings throughout the year for £200 per night with all all the reviews saying "good value", now I am suggested to charge £100 and even less. I have also checked a website called Pricelabs, who is making similarly low price recommendations. If I had followed the suggestions by these pricing services all year, I would have had a much lower income. Instead I do what I always did: regularly check what similar listings in the area are charging, or what the average price is for listings like mine seen on the home page. But I am now wondering whether overall prices will be affected, if every new airbnb host sticks to the price recommendations by the pricing tool? Understandably, if I was new I would do the same. However, this is London - everyone knows that a million dollar mansion could be right next to a council estate and a computer just won’t have an algorithm for that anomaly. 

What is everyone else experiencing? Especially longer term hosts - are you experiencing drastic price drops? Are you following price suggestions from airbnb or other services like Pricleabs? Are you finding them useful? Any info would be much appreciated as I’m at a loss as to what to do - drop prices drastically (and risk opening my home to people who might not appreciate it for what it is worth) or keep taking the risk of higher prices and a potentially empty home?

[Lia63]

New host here. I am very frustrated as I realize tips had me put  the price way too low,  and does not seem to calculate the percent off that it pushed me to do as a new host.  Now I have a guest booked for the next three weeks for a about a fifth of what the price should have been. I want to cancel but I do not think I can considering I have no reviews yet other mind good reviews.

[Neil10]

its hard to get bookings with no reviews and what i did was to take a handleful of two day bookings to get my reviews up and then set your price to wat works for you. i have a four star hotel opposite me so i check their prices and try to undercut by 45 per cent. also look at the calendar ahead sometimes wen events like marathons have filled up the hotels your price will rise. so try not to open your booking window too early as last minute people sometimes are happy to pay more.

[Helen427]

Airbnb have there worldwide starting prices currently set around $28 per night regardless of where you live so maybe that's what they consider as not been discriminatory.

It's a very unusual way of marketing a service that has considerable variables.

it's "comforting" to hear others who have been stung with "prompts "

alas there are Laws in every country relating to Consumer Guarantees Acts, Fair Trading Acts, Commerce Commission, Tenancy Acts, the list goes on, that are applicable and I understand that in New Zealand, as with other countries there's investigations going on

As a suggestion, if you put Airbnb into G o o g l E, & under "news" in G O oG l e you can keep abreast with what is happening where with potential and current legal & other issues relating to Airbnb.

That said, it sucks that anyone could inflict on people to not even cover basic essential cost of living costs as a result of there "prompts" to provide discounts x 2 at different percentages only to be stung with finding out that you have unwittingly given a Guest a 43% discount when you already had your property offered at the lowest possible rate to commence trade.