Pricing, smart pricing, and other magic?

[hypertokyo]

So what is your verdict on Smart Pricing?

[skylar]

@superhostnyc how did your smart pricing tweaking you shared earlier in July work or not work out? And could I ask for a few more clarifications about what you did… I just want to understand Smart Pricing a bit better before I experiment with it myself.

1. “I took my desired base rate for a two bedroom which is $160 per night, and I put that as my minimum.” By setting your Smart Pricing minimum to your base rate, you mean the base price you arbitrarily have entered under “Base Price” in your pricing settings OR Airbnb’s base price tip recommendation?

2. “I took my desired base rate for a two bedroom which is $160 per night, and I put that as my minimum.” You used your base rate as your minimum… why? Isn’t the base rate supposed to be somewhat of an average, mean or median? What would be the benefit of setting a base rate that is the minimum under Smart Pricing?

3. “I also set an extra guest fee for over three guests, so $20 guest fee.” So with Smart Pricing the original settings for additional guest fees remain in effect or can be updated? Hm so how does this work, Airbnb suggests pricing before or after they know you will charge extra for extra guests? Shouldn’t their suggested pricing factor in capacity? If so then I guess you have to indicate extra guest fees before you turn smart pricing on and then every time you change the extra guest fees, I’d assume their Smart Pricing should adjust accordingly?

4. “I put the maximum at $260, which is an amount way lower than the suggested “highest rate” (which is ridiculous)” … why would you set a maximum way lower than their highest rate suggestion? Wouldn’t you want to optimize your revenue and get the most they think you can get?

5. “I manually updated the pricing for New Years Eve week which is our biggest week in my area, as I don’t want to get caught with an assumption that Smart Pricing is smarter than me.” makes sense! You adjusted pricing for nights with super high demand manually…

[superhostnyc]

Hi @skylar Honestly, I don’t have any way to tell whether it’s an advantage or not to use Smart Pricing. My calendar is pretty booked for the rest of the year with exception of some weeks in November and December. I’m really going on a gut feeling of what Airbnb wants, and therefore what they likely reward in the algorithm. There is no way that I can verify that it’s worth it, but for me I want to take every single advantage that I can, whether it’s perceived or not. What I can say is that there hasn’t been any negative impact, so the worst case scenario is status quo.

1. Price tips and smart pricing are two different things that can work together, or not. You can take the suggested daily rate and use that as your minimum, but I found that too low. So I used my own minimum of $160. That means that the smart pricing will default to my minimum, and only change to go higher, never lower. Kind of like the surge pricing on Uber. If there is no additional demand, smart pricing is keeping my rate at the minimum of $160.
2. While I want to experiment with smart pricing, I don’t want to get screwed by it either. If the system knows that I want to be booked all the time, and I allow Smart pricing to set the price, the rate might be set as lowe as $80 a night. That’s too low for me, and I know that I’ll get booked at a higher rate, even if the bot doesn’t know it. The bot has to operate under “bird in the hand” rule, so they’ll try and fill the space at the lowest rate in order to get it booked, where I know that I’d rather hold out. The benefit of setting up a base rate that is the minimum under smart pricing is that I’m not de-valuing my property by running an experiment. If I let Smart Pricing go at it, no imposed minimums/maximums, I would for sure be booked right away, because they’ll set the price so low that it would attract every bargain hunter. Airbnb wants bookings, and they are not only after the service fee, they are after volume. They want to be able to say “1 zillion nights booked” or “one zillion users” and they don’t really care if the user books a shared couch for $20 a night or a penthouse for $1,000 dollars a night. They want volume.
3. Your current settings of extra guests, cleaning fee, etc. don’t transfer over when you do smart pricing (or didn’t for me) so you need to double check that you’re adding that. I think they estimate the suggestion based on capacity, but that’s a guess.
4. I think the maximum that airbnb suggests is as arbitrarily high as the minimum. I don’t think there is a chance in hell that I’d ever in a million years see the maximum suggested. I guess I could have left it as is, but it seems so ridiculous to me.
5. yes, you can still manually update the pricing even with smart pricing turned on.

[florbone]

I´m using Smart Pricing and not sure what to say about it. There are 3 things I still don´t like about it

1. At first you might get more bookings but at a cost per night that is so low that you better ended with 70% of occupancy at a higher price per night.

2. The other thing I´m not quite confortable is that the price changed on a daily basis and I believe guests note this so they will wait until they arrival date is very close in time to see a drop in your price. With Smart Pricing “on” I noticed that I have less bookings/request for stays that started 2 months in advance.

3. Your calendar looks messy. Each day has a different price. You start seeing like a gambler to the guest´s eye and he will never be sure if what he is paying to you is the right price for your place. This might affect you later when they rate your “value” rating. Another thing (and I experienced this a few times now) is that you seem to be willing to book every day of your calendar, no matter the cost, so you start getting requests for discount from guests (a lot more than before in my case). Sometimes you are requested to low you price when Smart Pricing is already working at the minimum rate you have set. You could say that the more you lower your price, the more they want a discount.

[anon67190644]

Smart Pricing Update

So, I was meandering around my calendar and thought, why not look at the smart pricing today. What a shock! Thy are suggesting prices that are higher. Pretty consistently. I have been re-evaluating my entire pricing scheme, and this throws my thoughts into the blender once again.

[jaquo]

As a fan of Smart Pricing, I want to say that the low price never goes below the minimum you set. Often, the Smart Prices are higher than I’d dare ask. As I said above, it takes a couple of weeks for you to ‘educate’ the system by manually changing prices and filling out the popup as to why you’ve done so.

It’s working perfectly for us and although we have a few gaps in October and December, we are fully booked for January, February and March at higher prices than I would have set.