Smart pricing will not account for an extra bedroom?!

[Vanessa137]

Hello,

We recently finished an unfinished room in our basement to make it suitable for guests. Man, can I tell you it is SWEET. And super budget friendly. I can add a description of what we did for under 1000 if you are interested.

Anyway, I was thinking, this surely would increase our minimum smart pricing suggestion. I put in the information, from 4 bedrooms to 5, the bedroom details, and the maximum occupancy... NO PRICE INCREASE.

Kind of furious. So, what would you suggest I increase minimum by? I was thinking 25, maybe 40 extra per night.

[Willow3]

Is it possible you've "over improved" your space for your market?  Are you in a location where large groups or huge families visit?  Is there a demand for properties sleeping large numbers, and is that demand greater than the current supply?  

[Vanessa137]

Very good point. This is not something I thought of. I still just find it strange that the minimum price did not increase what so ever. Would it be the same if it was only a two bedroom home as opposed to a five? Interesting.

[Gillian19]

@Vanessa137 Smart pricing is not smart in any way shape or form. I am constantly being told by the 'smart' airbnb algorithms that people are renting similar properties to mine for $200 less a night. No they aren't. They might be in the same general area but that's about all they have in common. I would only use smart pricing as another input to the decision making process. ki would not recommend anyone actually use it. It alos doesn't know about local events that may mean higher prices. Mis-leading,inaccurate, rip-off-the-host pricing may be a more appropriate term.

[Vanessa137]

Thank you for that very insightful information. What do you use as a price recommendation? How do you know you're in the "sweet spot"?

[David126]

I would second @Gillian19 comments, many threads on this.

Do your own market research, see what comparable properties in your are seem to be going for.

[Gillian19]

@Vanessa137 A bit of research on what other properties are charging, a bit of what would I pay, a bit of what does it cost me and a lot of guessing! I also don't want to give my place away - for example, my 4 bedroom, across the road from the beach property isn't yet booked this weekend - and I allow just one nighters. But I figure I would rather keep it empty rather than reduce the rate. I also think that giving things too cheap means people don't appreciate them. No simple answer!

[Rebecca181]

@Vanessa137 Yesterday Not-So-Smart-Pricing told me that people who looked at my place booked somewhere else for 80.00 less a night. My lowest rate (in the off-season) is 84.00 a night (my place is a 3 story beach house loaded with amenities, including a sun-room and hot tub, 300 feet from the beach). So that means these people supposedly booked a place like mine for $4.00 a night. Really?

I look at the prices on comparable listings, the time of year, events, holidays, high season or low season, etc and I've been doing just fine with my pricing this way. And with my occupancy rate. I've had 100 percent occupancy since I opened last May, even during the off-season. So, I'll stick with my current method, and not rely on some algorithm to tell me what to charge. In the end, you need to understand what the market will bear at any given time. Your new bedroom may add value in the long-run, or it may not. Or, you may need to look at listing on multiple sites - Some sites attract people looking for larger places for family reunions and such - I don't see that as much with ABB.