True sadly…
Smart pricing is 3 to 4 times lower than actual rental rates in my area. I only look at it for a good laugh.
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Why would you set your base rate 3 or 4 times lower than the actual area rates?
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Since Smart Pricing is based on other hosts’ prices, it does not do a good job predicting prices a long ways out or for special events. I personally price high and drop my prices if I don’t get a booking so that I don’t accidently miss out on taking advantage of a major conference that has come to town that I didn’t know about. For something as huge as the Superbowl, you’d just have to pay attention and be aware it’s on the horizon.
AirBnB will also give you a boost in the search results if you use Smart Pricing or something close to it. “Competitively priced” is one of the major variables in the search ranking.
I watch my market closely and notice my smart-pricing tips drop when one of the STR apartment buildings slashes their prices from $99 to $49 a night. One day Smart Pricing will recommend $64 for a weeknight, the next day it will suggest $43. Smart pricing does not seem to account for their $65 cleaning fee in comparison to my $30 cleaning fee.
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Wow, yeah, that seems crappy. Hopefully, it factors into the average guest’s length of stay or something. Otherwise, hosts will migrate to huge cleaning fee and low nightly rates similar to the way eBay sellers have low prices and huge shipping fees.
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I do think we’re headed that way. In my own city,the cleaning fee is no longer included in the price when you search for listings. So, I’ll occasionally see places listed as $39 a night on the map with a $150 cleaning fee. This change prompted me to raise my cleaning fee from $20 to $30, while I notice the other listings in my price range are charging $60 or more.
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If Airbnb is going to go down the road toward being like hotels (as I suspect) then I wouldn’t be surprised to see them eliminate the cleaning fee option. This would hurt hosts who try to make a one night stay more costly but Airbnb could compensate by giving hosts more options in setting prices. Lack of pricing transparency needs to end. Places that show they are $10 on a search with no dates inputted and then $85 when you put in a date shouldn’t be allowed.
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AirBnB does seem to be of two minds whether it wants to be a hotel service or a vacation rental service without any internal consistency. Guests are not accustomed to paying a cleaning fee for a hotel, but traditional vacation rentals typically have a cleaning fee that is $100 or more (and an actual deposit for that matter). My parents’ generation is appalled that my cleaning fee is only $30 because they’re used to traditional vacation rentals, which they used to book through travel agents in the pre-internet days.
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The VR’s I’ve rented (all two of them!) had zero cleaning fees. One was $135 a night (Airbnb) the other $750 a night (VRBO) so I don’t think it was related to the price. We shall see. It’s still a newish platform.
I tested the smart pricing with no base rate first. It suggested around $43 a night. My market will get more. I could set the base rate at $75 but then smart pricing with suggest $75. Do they calculate there suggestions based on square footage? without taking into consideration other factors?
According to airbnb they take 70 different factors into account. The market, i.e., other hosts prices, certainly must be one of the factors. Here in my town they’ve tried to tell me I should price as low as $19 as recently as last winter. There are places in town that cheap but if there weren’t why would a “smart” tool think that was an acceptable price? Because other hosts are booking rooms at that price.
Why do you think it’s not based on other host’s prices?
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Where I live they recommend £18 - £68.
Absolutely no-one prices under £24 and absolutely no-one prices over £50 
And I agree I price a bit more than my competitors because that’s the income I need to generate to make it worthwhile for me.
So you think it’s not based on other host’s prices due to how it works in your market. And I think it is based on other host’s prices because of how it works in my market. LOL. It just makes sense to me that the pricing in the market has to be one of the 70 factors. And maybe if I was a business school grad I could make a persuasive argument. Not that I really care very much.
I used to advise people not to use it but I would now say that it’s fine as long as you make sure to set a base price you can live with.
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It’s not that I don’t think it’s based on other hosts prices but that there are a multitude of factors they take into account. So how much bearing other host prices have I am really not sure.
I agree I set a base price I am happy with for SP, but they have never got me higher than it in the last year so seems pretty useless.
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Feeling a bit left out here, we don’t have Smart Pricing 
What we have is Price Tips though!!!
Comedy gold.
JF
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My observation is that if one of the STR buildings in my market slash their prices, the price tip amount drops. So, I concluded that the price of other unbooked listings is a variable price tips are based on. Price tips also based on what rate “successful” listings have been booked at. Cheaper listings are booked first, so that drives the price tips down. I wish the price tips were based more on scarcity because I might be the last bargain place in my neighborhood and it’s still telling me to drop my prices.
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Not for us. Their SP has been the same for the last year at least.
I think he may be talking about the price suggestions? Which are a joke.
RR
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