Smart Pricing makes me wonder if it’s worth the effort

[Deborah630]

Hi I recently started advertising my home. It has 3 bedrooms, sleeps 6, the whole home is for rent, it’s wheelchair accessible, pet friendly, in a seaside town, less than 10 minutes walk from the front with mountain views. 

Live a family of 6 coming this week and smart pricing means they pay £34 for the night. I’ve to make up 3 double beds, leave clean towels and a welcome pack for 6, they’ll use my heating, electricity and WiFi. I’ve checked on booking.com and on Airbnb and they wouldn’t get anything else in the area for less that £160!  I set up smart pricing as I didn’t want to underprice my home but this price is ridiculously low! 

Any ideas why? 

Thsnks 

[Elena87]

@Deborah630 

Take back control and set your own pricing Deborah.

You will always know much better than any 'finger in the wind' algorithm about how much your business costs and expenses are and what the local market conditions are like.

This was a good post by Robin earlier on consideration of what your floor should be with pricing.

https://community.withairbnb.com/t5/Hosting/Considering-This/m-p/967665#M242814

[Robin4]

@Deborah630 

Smart pricing is not designed to help you as the host make money Deborah....it is designed to make the prospective guest an offer they cannot refuse and escape to another booking platform.

Airbnb are not the slightest bit interested in whether you make money, give your property away or actually pay someone to stay in it! They are only interested in their service fees for providing the connection service.

Smart pricing is an insult to all hosts who are serious about what they do and have been through the proper profit and loss statement to set a price that will ensure they make something!

Deborah, ignore Airbnb's pricing tips and price your listing to a standard, not a pound value.

You are much better off having your property sit idle than actually have a guest in it at a loss with the potential for damage.

'Smart' pricing.....don't be a dumb follower!

Cheers.....Rob

[Ann72]

@Robin4 I respectfully beg to differ!  I think we were writing our posts at the same time, as I didn't see yours until after I posted the below.  Please read it.  Smart Pricing has been an amazing tool for me, because, as @Elena87 said, I maintain total control of my pricing.  I'm not really interested in what others in my area charge.  In my opinion, they don't charge enough - or rather, they didn't when I started out.  The funny thing is many of them have come up to my pricing level.

I know the value of what I have to offer.  And more to the point, I know what my bills are!  🙂  Thus I've never understood why so many hosts get their knickers in a twist over Airbnb's suggestions.  They come from a bot.  They don't read my balance sheet or visit my home.  

[Robin4]

@Ann72 

Hi girl, I accept what you are saying and I can see how it would work for you with those amazing properties of yours, but the reality is most hosts are not in your position......They are in competitive suburbia, and are in a race to the bottom as far as pricing is concerned in order to keep guests coming through the door. 

Last year in the United States the average Airbnb nightly occupancy rate was 11%!! Just think about that for a minute Ann.......for every 100 US hosts, 89 of them did not have an Airbnb guest on any given night. Hosts right across the US will tell you that they are struggling for bookings, those good ol' days are in the past. I don't want to see good hard working people put a noose around their necks by following pricing tools that bare no relationship to their personal circumstance. Either it is profitable to host, or it is not, simple as that. I have had a bit of experience in this area. I took a mechanical services company from 3 employees to 27 in 5 years, I understand that an important financial foundation is worth more than all the airy fairy glossy statements companies like Airbnb can come up with! 

I did another post on this subject today where I emphasised the imposrtance of properly pricing your listing> I know you don't need it, but it might be worth a read.....

Good on you Ann.

Cheers.......Rob

[Ann72]

@Robin4 Hi Rob, yes, I hear you, and I did read your other post with great interest!  As you saw in my post, I mentioned my balance sheet.  I run those numbers frequently, too.  

I appreciate your compliment on my houses, but there are a lot of wonderful places up in that part of Maine, which is basically God's country (I admit I'm prejudiced :)).  If you look at one of my listings and scroll down to see Airbnb's recommendations for similar listings, you'll see that the prices are on a level with mine.  That wasn't true when I started.

The point we're both making is What is your number???  Figure it out and stick to it.  I believe Smart Pricing can be a very good tool if used properly.  Virtually every host who has complained about it has set a minimum they're not ultimately comfortable with.  The host is the only person in the world who knows the true value of the listing.  Everything you do as a host - from pricing to messaging and everything in between - should telegraph that value.  I want to tell people, stick to your guns, know your value, and don't be a sheep!  But I've run a small business for 25 years that depends solely on what I send out into the world, so it's normal for me to ignore naysayers.

[Robin4]

@Ann72 

Oh Ann, you don't have to tell me about Maine......we, (all 2,600 of us on the Eurodam) navigated our way up that channel through all those lobster pots into Bar Harbor. I deliberately secured the last verandah cabin on the port side of the ship so our view was not just to the port side but accross the stern of the ship as well from our balcony. 

We dined on great lobster chowder, took some beautiful photos in the late Autumn air......yeah, I would go back to Maine again in a heartbeat!

Cheers......Rob

[Ann72]

@Robin4 I'm happy to hear you're a convert!  That is a beautiful time to be there, and what a wonderful way to see it.

If you do, you will come as my guest.  Bonus:  my new caretaker is a lobsterman, and he will not only bring you lobsters, he'll take you out on his boat if you like!  🙂

[Robin4]

@Ann72 

I would be there in a flash but alas, Ade's legs won't make another trip that far I am afraid!

I have to tell you Ann......after that trip I have experienced the hardest task on the face of this earth......... and that is to push a wheelchair around New York. I have stood in that exact spot where Meg Ryan found a teddy bear and lost her heart in 'Sleepless in Seattle'....I took this photo on the anniversary of 9/11 during our visit.....

It had been hot in NY for the week that we were there and this heat haze hung over the city at about the height the trade towers would have been, and as those massive searchlights hit that heat haze they balooned. This is one of the best photos I have taken and it is my screensaver on my phone.

I don't need an excuse to come back to the country I love.....but I am making one! Ade is just not up to it any more.

I am doing a few trips of my own though. I have one coming up sailing on one of Ponant lines boutique ships (LeBouganville) from Papeete in French Polonesia to the Galapogos Islands and I am looking forward to that and hopefully next year Ade and I will do a 21 night around Australia cruise....provided her health holds up.

But Oh how I would like to go out with that caretaker of yours, that would definitely go on my personal 'Bucket list'!

Cheers......Rob

[Ann72]

@Robin4 What a wonderful photo and what wonderful memories, Rob!  Thank you.  I can look out my window at the top of the Freedom Tower, only a few blocks away.  I love people who love my city.  🙂   Best to Ade, and have a wonderful trip.

[Ann489]

@Ann72   Sorry, but I'm with Robin on that one.   The smart pricing is ridiculous in my opinion.  I KNOW what my bills are as well, and there just comes a point where it woud not be worth my time and money where I to implement this stupid "dumb-pricing".  I set my price according to comparable properties around me and have been doing very well, despite Airbnb's "warnings".    😛

[Ann72]

@Ann489 As Rob would say, good on you, but if you had read my post, you'd see that Smart Pricing has given me higher prices and more bookings than ever.  My minimum is based on my knowledge of what the place costs to maintain.  The higher prices are pure profit.  So it's not really dumb where I'm concerned.  Price tips, however, are another matter entirely, as @Emilia42 pointed out, and they should never be used.

[Ann489]

@Ann72  I read your post.  That's why I responded.

[Ann72]

@Ann489 In the meantime, I looked at your listing, and it's GORGEOUS.  I don't have any reason to go to Boise right now, but I would seriously want to go just to stay in your place.  But it's so inexpensive!  How is that possible?  Is Boise in general a very inexpensive place to live?  If it were me I would set, I don't know, $125 as the minimum in Smart Pricing and watch the rates go up from there.  I wouldn't even look at the competition because I'm sure you have the best 

Airbnb in town.  Anyone would be lucky to book there.

[Ann72]

@Deborah630 Yikes, that's low!

I do have an idea why, though:  when you set up Smart Pricing, what minimum price did you choose?  Did you use Airbnb's suggestion?  Or a low minimum that was a little under that of your competition?

If you did, or if you chose a minimum that was lower than what you would ever like to get, well, Smart Pricing thinks you're okay with that number.

I've had the opposite experience with Smart Pricing.  I set it up at the beginning of the winter, and for the minimum, I put in the price I would normally charge.  For one of my listings, that's $297 a night.  I figured if it never went up, I would still be fine with any bookings at that price.

The price rose through the high season, and I've gotten bookings ranging from $297 a night to $312 a night, with an average nightly price of $306 for the coming season so far.

In addition, using Smart Pricing and Instant Book brought my listings to the first page consistently, and I've gotten 60% more bookings by this point in the year than any previous year.  No one who has booked has said a word about the price.

It sucks that you have this booking, but try adjusting your minimum to what you would normally charge and see if things improve.  Don't be afraid of higher prices.  You have a lot to offer and if you show that you value your listing, guests will value it too.