At the beginning of your Airbnb journey, setting prices can seem overwhelming. With so much data to take into consideration, where do you even begin? In the article Airbnb Pricing: How to set your Best Price we discussed the best techniques for establishing your listing price. Even if you’ve mastered the art of setting prices, it becomes very time-consuming! In this article, we discuss how to use Airbnb Smart Pricing to your benefit.
When you understand the Airbnb Smart Pricing tool, it can be a great tool to use as a host. When you don’t quite understand the pricing tool, it can be a deadly weapon against your profits. Read below to use the Airbnb Smart Pricing tool to your maximum benefit.
What is Airbnb Smart Pricing?
To start off, Airbnb Smart Pricing is a feature that Airbnb rolled out with the goal of increasing bookings. First, Smart Pricing requires you to set a minimum and maximum price. Then, Airbnb factors in a vast array of different variables (over 70!) in order to set a price for your listing. These variables can range from your listing details to upcoming events to market popularity.
To give you a little more background, here are a few of the things Airbnb takes into account when calculating Smart Pricing:
- Local supply and demand
- Details and amenities of your listing
- Amount of potential guests that view your listing
- Previous bookings, frequency of calendar updates, and future availability
- The frequency at which you’d like to host guests
- Amount of searches for listings similar to yours
- Your review history
- Whether it’s high or low season
By adding all of these variables into the equation, Airbnb is able to get a more nuanced look at your listing. According to Airbnb, Smart Pricing was created in order to reflect aspects of your property that you can’t discover on your own.
How does Airbnb Smart Pricing work?
As we mentioned above, the main goal of Smart Pricing is to increase bookings. Airbnb makes a profit off of both hosts and guests. In the case of hosts, Airbnb earns 3% as a flat service fee for each reservation. But for guests, Airbnb earns more: up to 20% of the subtotal for the reservation.
Because of the way profits are earned for the company, an increased number of reservations leads to increased money for Airbnb. Thus Smart Pricing is designed to increase bookings, sometimes at the detriment of the host. As a host, you typically want to book less nights at a higher rate to increase your own earnings. However, Airbnb does better if you book more nights at a lower rate.
As a result, Smart Pricing typically selects prices that are lower than your listing’s market value. While this may lead to more bookings, it’s something to keep an eye on. Of course, other than accounting for increased bookings, Airbnb also factors in dozens of other variables. By using such a wide range of factors in the equation, Smart Pricing allows you to be flexible and adaptable.
How do I set the parameters for Airbnb Smart Pricing?
In the setup process for Smart Pricing, you’re asked to set two parameters: a minimum price and a maximum price. Firstly, the minimum price makes up the bottom end of your price range. When using Smart Pricing, Airbnb will never set the price lower than the minimum you choose. In the case that there’s very low demand for your property, prices will drop down to the minimum you’ve selected.
On the other hand, the maximum price marks the top end of the range of possible prices for your Airbnb listing. Even on nights with the absolute highest demand, your property’s price will not rise above the maximum that you’ve chosen. As a host, you should note that your maximum price is not displayed on your listing. At the highest, your maximum price can go up to $10,000 per night.
Of course, the minimum and maximum prices are completely up to your own discretion. It may sound obvious, but you should never set your minimum price lower than you’d be comfortable with charging. At some point in time, chances are Smart Pricing will set your price to the minimum you’ve selected. You don’t want to be disappointed or feel cheated by the amount of money you bring in!
As far as the maximum price goes, you can really set it as high as you’d like. If the demand for your property is there, you want to allow for your price to rise accordingly.
What are the pros and cons to Airbnb Smart Pricing?
One great thing about Airbnb Smart Pricing is that setting prices becomes one less thing to do every day. If you’re a host with multiple properties, the time spent adjusting prices each day can really add up! In addition, Smart Pricing factors in variables that you as a host don’t have direct access to.
While some Airbnb hosts report that they’ve found success through using Smart Pricing, there are many hosts out there who have had negative experiences. Unfortunately, as detailed and complex as Smart Pricing is, it can’t take absolutely every factor into account. For example, Smart Pricing often misses out on potential profits that could be earned as a result of local events that increase demand for your listing. Holidays are another instance in which hosts complain that Smart Pricing misses the mark. Plus, hosts of especially high-value listings complain that their properties are undervalued by Smart Pricing.
Even though Smart Pricing comes with its drawbacks, some hosts choose to use it intermittently. For instance, they turn Smart Pricing on during regular times and off for local events, holidays, and other periods of increased bookings. Luckily, Smart Pricing can be turned on and off as frequently as you’d like. This means that you can essentially customize Smart Pricing to fit your schedule, adjusting your price manually as needed.
Pricing Tools beyond Airbnb Smart Pricing
Since Airbnb Smart Pricing leaves a lot to be desired, we checked out several other pricing tools that could benefit you. Take a look at the pros and cons of each pricing tool below.
Wheelhouse Pricing
One of the great things about Wheelhouse Pricing is its simple dashboard design. It allows you to easily get an overview of your properties and their prices along with occupancy rates. Prices are set using a base price of your choosing.
Pros
- Personalized pricing based on individual rental
- Free if you don’t experience an increase in profits
Cons
- On the more expensive end of pricing tools
- Support could be improved
According to the Wheelhouse Pricing reviews, an area that needs improvement is support. The online chat can be slow. In addition, the help center doesn’t contain all the answers to common questions.
Beyond Pricing
The first step is to select a base price. Then Beyond Pricing will set your daily price, taking in different factors. These include the performance of your listing in the past, the performance of listings close by, and daily demand.
Pros
- Connects to your Airbnb calendar and automatically updates prices
- Provides a “health score” based on how much your listing is booked
Cons
- A bit difficult to learn as a beginner
- Many advanced features can be overwhelming for new users
Overall, the Beyond Pricing reviews reveal that it’s a great choice for Airbnb hosts. It’s especially awesome for those who have a lot of properties and want to save time on the price setting process. Even the downsides to Beyond Pricing are really pros in disguise! Once you get over the learning curve, the advanced features won’t be an issue.
Pricelabs
In contrast to the other pricing tools, Pricelabs charges a flat fee rather than a percentage of your booking. It also allows you to set more pricing parameters. These include a base price as well as a maximum and minimum price.
Pros
- Tracks supply and demand in the area
- Lots of available customizations to suit your needs
Cons
- No app available
- Website not compatible with cell phones
In regards to the Pricelabs reviews, users have reported frustration when trying to access the website from a cell phone. Otherwise, reviews are great, praising functionality and customer service.
Vayoo
One way Vayoo differs from the competition is that it charges a monthly subscription fee. It’s also an app rather than a website, which some hosts prefer. According to these hosts, Vayoo is extremely user-friendly and easy to navigate.
Pros
- The first mobile app for a daily pricing tool
- Very information-oriented and provides lots of insights
Cons
- No website available, just the app
- Can be time-consuming to take action on suggestions
As the Vayoo reviews show, feedback is overwhelmingly positive. Even as a beginner, it’s simple to find your way around the app.
AirDNA
Finally, the last pricing tool we’ll examine is AirDNA. AirDNA provides custom data solutions as well as information on the market in general.
Pros
- “Investment Explorer” that gives insights on your market
- Simple design with lots of information for hosts
Cons
- Data for cities varies in accuracy
- Some generic data provided may not be applicable to every property
Generally, the AirDNA reviews are filled with praise for the pricing tool. For many users, the MarketMinder pricing data is a valuable resource. Plus, the dashboard provides you with a great market overview.
Important Takeaways for Smart Pricing
As an Airbnb host looking to save time and increase profits, a price setting tool is a great choice! There are lots of price setting tools available. While Airbnb Smart Pricing is free, it tends to undervalue properties. Now that you are aware of this, you can use the information above to use Smart Pricing to your maximum benefit. However, there are many other high-quality pricing tools available. These include Wheelhouse Pricing, Beyond Pricing, Pricelabs, Vayoo, and AirDNA.
If you need to go back a step and want to gain a better understanding on how to set your price, please refer to the article Airbnb Pricing: How to set your best Price.
To conclude, pricing tools are a wonderful addition to your Airbnb host toolbox! If you want to cut back on time spent setting prices and increase the money you make, be sure to check them out!