With "Smart" pricing it seems impossible to get the same revenue

in
Medellín, Colombia
Level 2
249 Views

I've read that Airbnb ups your rankings if you use their algorithms and Airbnb insists their "smartpricing" boosts revenue.  I'm a superhost with 4 similar properties, that generally go for around $150/night, and if I have gaps I want to fill at the last minute, I lower it to as low as $100/night using the "Rule set".  I turned on smartpricing, setting $100 as the minimum since that is the minimum price when I want to heavily discount last minute gaps.  But Airbnb just opened my entire calendar for 6 months at the blow-out $100/night price, and began taking bookings months in advance at that price.  I had to cancel them since I can't afford to take such a hit in my income, and I'm sure the cancellation of the bookings lowered my ranking, thus defeating the whole purpose.

 

As I've since learned from the other posts in this forum, this is normal, and so your smartpricing minimum needs to be your normal price.  BUT, once you turn on smartpricing, then the rulesets do not work anymore.  So that means then when you want to give away a last minute gap at a big discount you cannot, and you will have to leave the place empty with no revenue since you can no longer discount it.

 

Thus I don't get why anybody would ever use smartpricing since it seems impossible to earn as much as you would with smart pricing turned off.  If you set the minimum to your true minimum when you need to blow out unoccupied units, Airbnb just gives away all your future bookings at that low price.  And if you set the minimum to your "normal" minimum, then you can't lower it when you need to and the unit goes unoccupied.

 

Since turning on smartpricing seems to maybe boost your rankings, has anybody figured out how to turn it on and not have it result in a big loss in revenue?

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16 Replies

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Sayulita, Mexico
Level 10

@Aaron676  Cancelling all those bookings will do you a lot more damage than your search ranking. Are you not aware of the penalties incurred by hosts for cancelling? The dates you cancelled will be blocked on your calendar- you can't remove the block, and won't be able to rebook those dates. So you shot yourself in the foot there.

 

You will also be fined $50-$100 for each cancellation- Airbnb will take this out of your future payouts. And notices will appear on your review page saying you cancelled the bookings, which will make future guests think twice  about booking with you.

You will also lose your Superhost status.

 

I have never used Smart pricing, so can't advise you on it, but you can change your calendar availibility so dates past 3 months in the future will not be bookable.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Medellín, Colombia
Level 2

@Sarah977, agreed, cancelling is absolutely horrible.  But it's trying to find the lesser of 2 evils because I turned on SmartPricing and instantly Airbnb starting giving away my property at the lowest blowout price, so if I keep the reservations, I've lost my income for the next several months.  My post is both a question and a warning to other hosts that, in my experience, if you turn on SmartPricing you'll be forced to choose between giving up your income for several months or cancelling the reservations to go back to manual pricing.  Hopefully Airbnb pays some attention to the SmartPricing algorithm because blowing out the units at half price also means Airbnb is shooting themselves in the foot and will get half as much commission.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Alberta, Canada
Level 10

@Aaron676Below is a great post on how to use the not very smart ‘smart pricing’ to your advantage.  


https://community.withairbnb.com/t5/Hosting/Festival-A-Smart-Pricing-Journey/td-p/1123517

 

You could have set your minimum to 150 and then just run promotions or manually adjusted the price for certain dates. 

Cancelling those bookings was the greater of two evils, as the auto cancellation reviews will

stay with you forever and impact guest confidence. 

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Jersey City, NJ
Level 10

@Aaron676  I assume you must be listed on other platforms so you have the chance to book the Airbnb dates you cancelled elsewhere.

 

Smart pricing is terrible, I'm not sure how much it helps in the search placement.  But, as @Colleen253  recommended, if you want to do a last minute discount you can use the custom promotion function where you can set the discount starting at 10%.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Sayulita, Mexico
Level 10

@Aaron676  "I've read that Airbnb ups your rankings if you use their algorithms and Airbnb insists their "smartpricing" boosts revenue. "

 

Don't believe any of that stuff. There's all kinds of things that supposedly improves your ranking. The truth is no one knows what complex algorithms boost rankings, because it's a combination of many factors. The only thing that definitely improves ranking is using Instant Book. And that's only because Airbnb uses it as a tactic to try to get all hosts to accept IBs. They don't want hosts to vet their guests, they want all bookings to be accepted, regardless of the red flags a guest may present.

 

And Airbnb isn't interested in your revenue. They don't care if you only make $10 profit a night. All they care about is bookings rolling in as fast as possible that they can collect service fees on.

Re: With "Smart" pricing it seems impossible to get the same revenue

Level 1

"smart pricing" is ridiculously low!!!!
I first started- I took it as a pricing advice. They value my listing SO LOW!!! no host could possibly pay the mortgage with how low they suggest. It the same price as what youd pay for a youth hostile dorm room bunk bed. I had it selected for all of 10 mins. I got 3 requests to book. I quickly turned them all down and set it higher. I then received notices from Airbnb saying my ranking will be lowered for refusing bookings.  So I cant turn down anyone for any reason?!?! most of the people who have tried to book- have basically no profile. its like shooting darts in the dark....

Clearly Airbnb does not care about hosts. Its all about the cheapest rates to attract renters. 

 

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Sayulita, Mexico
Level 10

@Sarah4277  You should not put up a listing until you have all your settings and pricing the way you want them.

Airbnb doesn't set your prices, you do. 

 

Yes, Airbnb's pricing tips are to be ignored. They are ludicrous. 

Set your price to what you want, forget smart pricing, at least until you understand how to set it.

 

You can't just keep declining bookings- guests aren't responsible for a host not having things set up right. If you need to, snooze your listing until you are satisfied with all of it.

Re: With "Smart" pricing it seems impossible to get the same revenue

Level 1

You are so helpful.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Alberta, Canada
Level 10

@Sarah4277 “Clearly Airbnb does not care about hosts. Its all about the cheapest rates to attract renters.”

 

Congrats, you’ve already cracked the code and you’ve only just begun. You’ll do just fine!

Re: With "Smart" pricing it seems impossible to get the same revenue

in
NY, NY
Level 10

@Aaron676  "Since turning on smartpricing seems to maybe boost your rankings, has anybody figured out how to turn it on and not have it result in a big loss in revenue?"

 

Yes, I have, and I've gotten extensive private feedback that many other hosts have, too.

 

You've already learned some important things to know about SmartPricing - (1) don't accept Airbnb's minimum under any circumstances, and (2) it doesn't work with pricing rule-sets.

 

Airbnb's SmartPricing works better with far-in-advance bookings than with close-in bookings.  VRBO's Market Maker (I think that's what it's called), is the exact opposite, raising prices high for close-in bookings and gradually reducing them to the minimum the farther away the dates are.

 

This difference illustrates the different origin markets of each platform.  Airbnb - "air bed no breakfast" - appealed to a younger and more budget-conscious demographic once upon a time, and VRBO - "vacation rental by owner" - appealed to the kind of demographic who used vacation homes.  The former might be more spontaneous, booking things last-minute or without a great deal of advance notice, and the latter might plan well in advance.  

 

The two platforms are pretty much trying to do the exact same thing - offer their perceived market the lowest rate possible.  It's your job as the host to manage your prices, not Airbnb's.  It's Airbnb's job to market your listing to the most customers possible.  

 

The more you understand about Smart Pricing, the more you'll be able to use it to your advantage.  Manually raise any rates you want.  If you get more short-notice than long-notice bookings, you're probably not going to see a big change in price.  My market is the opposite.  I had an Airbnb guest book a week in August 2022 the other day whose nightly price was almost embarrassingly high, while a VRBO guest booked for the same month and got my base price.

 

Since I began using Smart Pricing, my annual earnings have increased on average 44%.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Jersey City, NJ
Level 10

@Ann72   Really?  Every time I've tried Smart Pricing putting the minimum at or a few dollars below the daily rate, it has never done anything dynamic, let alone increase earnings by 44%.  

Re: With "Smart" pricing it seems impossible to get the same revenue

in
NY, NY
Level 10

@Mark116  Yes, that's the average revenue increase since I started using it a few years ago.  It's not only the nightly price that contributes to that, because using it and as many Airbnb tools as possible seriously boosted my bookings.  I didn't think I could improve over 2020, which was a madhouse, but I raised my rates, kept using Smart Pricing, and I'm up 58% over last year.

 

As I say above, though, Airbnb will only push those amounts up farther out, not close in.  And TBH they changed the whole algorithm shortly after I wrote the post here a few years ago.  The first year I used it the algo was fantastic.  Then it changed and was not nearly so robust.  You set a price and review the calendar and you see that it barely budges - as you say, only a dollar or two.  So for the major holidays I always set the price manually.  But then, something weird happens.  Those get booked early, and I start to see prices rise.  When this returning guest booked for next August, I had opened the calendar for him and hadn't looked at the prices, and I was honestly shocked at how high they were.

 

Conclusion - it seems very inconsistent, but has an impact over time.  I keep it on but don't hesitate to set rates manually whenever I feel the need.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
Oregon City, OR
Level 10

@Sarah4277 My listings have "smart" (haha) pricing technically enabled but every night's price is overridden by Wheelhouse, which has more than doubled my revenue.

Re: With "Smart" pricing it seems impossible to get the same revenue

in
NY, NY
Level 10

@Aaron676  Dynamic pricing tools like Wheelhouse definitely work with underpriced and undervalued listings.  I have tried some and their pricing always comes in too low for me.  @Lisa723 is Wheelhouse available in Colombia?

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