Pricing strategies

I’m loving it so far!! So glad I finally made the switch, though I’d still like more help with setting my base price, and would be willing to pay for it. Still hoping @ianmchenry will chime in on the possibility of getting that service - an experienced analyst to check out comps and hotels and actually compare spaces.

My advice is to charge what makes hosting worth it for you. I would rather have an empty room and make zero than to put up with someone in my home for less than it’s worth. It’s stressful having to tiptoe around in the early mornings, smile and act professional as they come and go while you are trying to cook dinner, do dishes, etc., hang around all day in the room preventing me from blasting my sound system.

Charge what makes it worth it to you. I know it’s easy for me to say, but I have a day job and don’t need depend on the Air income to survive.

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We do the same thing, price what we think our house is worth, and that is higher than our competition, but we consistently get the price. I have found we we have lowered our price just to fill dates, we have gotten a lower quality of guests, that don’t ‘fit’ with our place.

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Right? I am not trying to market to the travelers who are just trying to find the cheapest deal they can get. I know that experienced travelers (who make much better guests) know that there is more to it than that. I am looking to attract guests who want a quality experience and are willing to pay a fair price.

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@jackulas and then still ding us for Value…LMAO

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Thanks. I’m finding I have a real problem asking a ‘real’ price for our place. I upped the price, Beyond Pricing upped it more, and I find when people book at that price I feel guilty.

So, there’s something for me to work out in my head.

I know all about that tiptoeing!!! Our guest space is under our kitchen, and I have three kids! So far no one has complained, but I’m sure the day will come.

@dcmooney we have our price on all our properties higher than other properties in the area, we continually get 4 or 3 (about 25% of time) star value ratings. I have come to terms with it, the reality is we continue to be booked solid, out flats are in posh parts of the city, and I don’t feel bad charging what I know I can get. However, I think I may be a colder person than you!

You can always up your price $5 and see how it goes, then add/decrease. This is a business, and you put in a lot of thought and effort, you should be charging what you and your house are worth. My 2 cents

True words! I just got home from a 12 hour shift, spent 3 hours laundering, cleaning, setting out fresh flowers, rearranging frig so there are two empty shelves cause I have guests arriving tomorrow who are staying for 3 nights. The price they booked at was slightly above ABB’s ‘price tips’.
But I have more guests next weekend, then the next one, and then comes Memorial Day weekend and my sis and her family will be visiting as well as a cousin or two.
Oh, and after that weekend, I work 12 straight days in a row. Have abb guests staying june 7-12, and again july 1st-4th.
I’m exhausted and none of this has even happened yet! So I just went in an jacked up my prices. To heck with ABB’s ‘price tips’!
When I first started I was getting MORE than ABB price tips are recommending! AND people were leaving me cash tips without any prompting!
It’s not worth it to me to share my space for what ABB is recommending. I can still offer a nice place to stay at a cost that is less than a hotel even with the raised prices.
I’ve got my place blocked off after July 14th until end of August cause my son will be stateside end of June after a deployment, he plans of visiting, just don’t know when he will be able to arrive.

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Wow! I am exhausted just reading this!

Yeah, totally, up the prices so it is worth your time and energy, because it DOES take a lot of time and energy. Unless you are doing this purely as a hobby, you need to get paid for your time.

And, for hosts in the States, don’t forget to up the prices for summer holiday weekends: Memorial Day, Fourth of July, and Labor Day…those are peak travel times, and you don’t want to end up getting the shaft.

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@dcmooney sorry for the slow reply here. It looks like the support team helped you out! You bookings are looking good and you’re pretty well booked up for the summer! Looks like we were able to get you some nice last-minute bookings, as well as a couple bookings well above what you were getting before.

@hypertokyo I think the others on the chain gave great answers about Smart Pricing. Overall, it sounds like everyone is seeing that they significantly underprice people’s listings. That seems like the consensus. Here’s a brief overview of some of the other differences and issues with Airbnb’s algorithm: www.beyondpricing.com/priceoff

@dcmooney that’s a great idea! You might actually check out Padlifter who help a lot of folks manage their Beyond Pricing account if they need a little extra help: http://padlifter.com/

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@ianmchenry Way to add stats!!! Going to cancel my Everbooked subscription now, sorry @dross.

Thanks @ianmchenry… my takeaway from your article is, to paraphrase, > Airbnb optimizes for bookings, but hosts should optimize for income. In other words, airbnb wants guests to be able to book quickly at a low price and wide selection, so that means Smart Pricing skews towards the low side.
It would be interesting to see how/if air tweaks their algorithms in response to your post.

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Yes, I’m loving the service; thank you! I still need to work on that base price, though - I’ll look into padlifter.

Hi all,

I am the Founder and CEO of Padlifter.

One of the services we provide are price optimization reports that ensure that you hit your ‘pricing sweet spot’ on Airbnb. Both over-pricing and under-pricing represent missed opportunities and will impact your ability to maximize your full earning potential.

As rightfully pointed out in many of the comments above, a critical dependency of developing an effective go-forward pricing strategy is simply understanding what your appropriate base nightly price rate should be.

There are a number of factors that go into that. Whilst this list is far from exhaustive, some of the key considerations include:

  • Listing capacity
  • Room type
  • Number of bedrooms, bathrooms and beds
  • Minimum Stay requirements
  • Amenities
  • Market competition (supply of comparable Airbnb listings)
  • Concentration in variance of pricing
  • Ratings and reviews of your place
  • Supply of alternative short-term rental options (eg. hotels)
  • Average cost of other short-term rental options
  • Seasonal trends in pricing for your location

We research all of this for our customers to come back to them with a base nightly price for each month of the year. Click here to see an example Price Optimization report.

As pointed out above, Airbnb hosts need to balance higher prices with the highest levels of occupancy that ensure they command the maximum possible price for their place.

So that you are not penalized by Airbnb’s search algorithm for drastically increasing your prices, we ensure that our monthly price recommendations also gradually ease you into your new optimal prices. Our experience has indicated that this strategy will enable commanding better prices without getting penalized with inferior search result placement that impacts the number of bookings you receive.

Getting your base nightly price right gives hosts the comfort and confidence to then execute a successful go-forward pricing strategy. Often dynamic pricing services will then play an integral role in the day-to-day running of an effective pricing strategy. Whilst this is a service that Padlifter do not provide, a large volume of anecdotal sentiments and stories shared by our customers have indicated that many have found great success with Beyond Pricing (with comments on this thread already provided by their CEO @ianmchenry).

I think this kind of program works great for those with heavy volume in major cities where there are many comparisons. For someone like me, who only wants to rent 3-6x month in a very rural area (although it’s a great tourist destination), I don’t see how this can be cost effective for me. The seasons, which seem to be so fleeting (except for dead of winter which lasts about 14 years) determine demand. I closely monitor the listings around me, and there is one who has 3 bedrooms for rent in their lovely home in an affluent neighborhood, and for 3 years, every room is $95/night every night no matter what. She maintains a good rate of renting from her reviews. My destination is more rural but yet the town is more charming, and I’ve yet to command that price unless I rent the whole house. I’m glad to see that these types of tools do help some people.

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Hi @brook2adks, you are correct in your observation that comparative insights and recommendations work best when there is a larger sample size to compare to.

Not every listing finds itself in a market where that is possible or optimal.

We do our best to cater towards this, however this is where there are limits to automation and success on Airbnb comes down to the perfect blend of art meets science.

We use our experience in having seen what does and doesn’t work in a wide variety of markets in the same way you use your own experience and exposure to understand the intricacies of the market you operate within in a way that an outsider simply wouldn’t be able to do.

With a lot of these insights, it’s often a case of “relative” value. For someone operating in New York City with tens of thousands of comparable listings, it’s much easier to establish a “reliable” base nightly price and market averages.

Does that mean it’s of no value in places of lessor competition? No. Simply that there are other methodologies and considerations that need to go into the process. Often in these scenarios, the “art” element of successful Airbnb pricing gets a boost as the “science” element slightly decreases due to inherent limitations like the ones you point out.

However simply being conscious of this operating reality is the first step to overcoming the limitation - so the very fact that you have an awareness of this already places you head and shoulders above many other Airbnb hosts.

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I know Pillow Homes and other sites use optimal pricing through sophisticated analytics. It is not geared for just occupancy or just absolute max rate, but both. Whatever achieves the highest return for the owner, whether it is through maximum occupancy, higher rates, or a combination. It also takes into account similar properties across a range of booking channels, not just Airbnb. It also includes seasonality and local factors.
Pillow’s advantage over individual users is that it can afford to charge less and rely on higher occupancy, without it being a hindrance as it would be with an individual owner. They deal with all bookings and guest communication, and even the hassle of changing sheets and cleaning is taken care of. Something to consider if you are declining one night stays because the clean-up and prep make it not worthwhile. There are certain benefits that a property management company can give you.

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