Airbnb Pricing Tools | Which One’s Best?
What's the easiest way to increase your profits as an Airbnb host?
Optimized prices, that's how.
But how do you know if your prices are competitive? And how do you know you're not losing bookings because of it?
It's almost impossible.
Sure, it's possible to go through lengthy competitor analysis to work out an accurate pricing model for the next 365 days, but what happens if those prices fluctuate? What then?
As you can see, pricing your Airbnb listing correctly can be a big headache. And when it plays such a pivotal role in your end of year profits, unfortunately, it just can't be ignored.
Fortunately, Airbnb pricing tools are here to save the day.
Not only that, but they're going to automate the whole damn process!
What is an Airbnb pricing tool?
An automated pricing tool for Airbnb will add dynamic pricing to your listing. To calculate the price per night the tool crunches a huge set of data to build a personalized pricing model for bespoke to your listing.
Here’s some of the data it will be analysing:
- Day of the week
- Special events
- Local hotel occupancy
- Competitor occupancy
- How far away is the booking date
- Competitor prices
- Trip Advisor
Just to name a few.
Each of the different pricing tools for Airbnb uses a specific algorithm to crunch all of this data, and spit out fully optimized prices for the next 365 days. Not only that, but your prices will get refined and adjusted every 24hours to make sure you are super competitive 100% of the time.
Airbnb pricing tool vs No pricing strategy
Example 1: No pricing strategy
Jane has x3 different prices for her Airbnb apartment.
- Off season - $50p/n
- Mid season - $70p/n
- High Season - $100p/n
Jane gets fully booked for High Season months in advance (40 Nights). She is super happy about this and thinks she’s killing it!
She does ok Mid season, she gets another 40 Nights booked.
Things don’t go so great in the Off Season and Jane gets just 20 Nights booked.
So all up Jane gets 100 Nights booked (occupancy rate of 27.39%) at an average nightly price of $78p/n
Yearly Total: $7800
Not too bad on all accounts, but lots and lots of room for improvement.
Example 2: Airbnb Pricing Tool in action
Sophie, on the other hand, is using an automated pricing tool for her Airbnb apartment. Her pricing structure looks a little different.
Sophie lets her dynamic pricing tool set all of the nightly Airbnb pricing for her. She has over 240 unique prices for the next 365-day horizon.
Because Sophie’s pricing is dynamically generated, her prices are highly competitive for every single date range for the next 365 days. This has some huge knock on effects.
As I’m sure you’re aware, price is a very important Airbnb ranking factor (probably the biggest). So now that Sophie's prices are hyper-competitive she now appears higher up the Airbnb’s search results pages, and her listing views increase.
Not only will she be getting more views, but more people will book as she won’t be overpriced.
All of these things add up to increased occupancy, plus, as well as an increased average nightly price.
Sophie has 240+ unique dynamic prices for her Airbnb apartment.
Here's a rough look at her prices:
- Off season - $40-$65p/n
- Mid Season - $65 - $90p/n
- High Season - $90 - 140p/n
Sophie keeps really busy in the off season, she gets a few late bookings at her minimum base rate of $40p/n but she also picks up some good weekend bookings at $65p/n. She gets 40 nights booked in total for the Off season.
Off season average nightly rate: = $58p/n
Mid season is good too. Sophie gets booked a long time in advance for an event she wasn’t even aware of, she gets $90 a night for the whole week. The rest of the nights get booked at $75p/n. She manages to get 60 nights booked in total.
Mid season average nightly rate: $80
Sophie doesn’t get booked up quite so far in advance as Jane. Her pricing tool knows that it is peak season, so hold prices at their peak until much closer to the time. The result? Sophie gets about 30% booked up 6 months out, gets another 60% before the last month (all at peak price), and then her prices are reduced to make sure she gets 100% occupancy for the last month. The last 10% of nights are booked at $90p/n.
Hight season average nightly rate: $129
The prices will fluctuate depending on demand, but Sophie can rest well knowing that she’s getting the best rates possible.
Sophie ends the year with 140 nights booked (occupancy rate of 38.35%) at an average nightly price of $87.70
Yearly Total of $12,280
Obviously, the two examples above are purely fictitious, but it does give you a very real insight into how much of a difference an automated pricing tool can make to your end of year Airbnb returns.
What is the best Airbnb pricing tool for me?
Airbnb’s Smart Pricing Tool (Free)
Have you tried Airbnb’s Smart Pricing Tool? Me too, and it sucks!
Do you wan’t to know why?
Well, Airbnb doesn’t just want you to make more bookings, they also want to offer the cheapest prices to their users. So, whilst you will almost certainly see your booking rate increase, you’ll also likely see a dramatic drop in the average nightly price.
I’ve tried it, and I’ve ditched it. I’d almost (almost), prefer to have Janes pricing strategy.
You get the picture.
Try it out yourselves, and generate your own opinion, but for a small investment, there are some much better alternatives.
Wheelhouse is kind of the new on the block, and they are growing fast. Launched by one of the founders of Beyond Pricing, they are now in direct competition.
Competition is great in this space, and Wheelhouse aiscertainly at the forefront.
These guys are growing rapidly and are pushing the whole sector forwards.
If your area is not covered, no big deal. They'll input your area into their data cruncher, and in under two weeks you'll have super optimised prices for your Airbnb rental for the next 365 days.
I've written an in-depth Wheelhouse review here.
Founded in 2013 by veterans of revenue management in the airline and hospitality space, Beyond Pricing was the world’s first revenue management and dynamic pricing software exclusively for vacation rentals. Driven by big-data machine learning and predictive analytics, Beyond Pricing has grown rapidly and now dynamically prices over 120,000 listings in more than 1,000 markets worldwide.
Prior to founding Beyond Pricing, CEO Ian McHenry was an advisor for large airlines and hotels around the world on revenue management and pricing.
Being the first to market gives Beyond Pricing a head start in the big data game, the more data you crunch, the more accurate their pricing models will be.
Over the years the product has been refined, with newer and more relevant data sets being fed into the pricing algorithm pumping out ever more demand driven prices.
The cool thing about Beyond Pricing is that they don't just pull data from Airbnb, but also VRBO, Homeaway and TripAdvisor.
Having access to all of this booking data and pricing gives these guys a huge advantage.
Everbooked are different.
Everbooked is more than just a automated pricing tool for Airbnb, they also offer a whole data suite for users to make data driven decisions when it comes to buying real estate to let exclusively on Airbnb. They call it "Market Intelligence".
This isn't the type of product that the average Airbnb host would need, but for those of you who are in this a little more seriously, then this could be hugely lucrative for you. If you live in the USA that is.
The biggest thing that will put off the average Host is the cost at $100p/m
They say that price is very different to value, and that is clearly illustrated in this case.
It's not cheap. But it could make you a heap more money?
Certainly food for thought...
Airbnb Automated Tools Review Table
Airbnb Smart Pricing
30 Day Free Trial
30 Day Free Trial
Lots of customer resources available. Actual person to person support very difficult.
Yes it's free, but it fails in it's objective to improve revenue for Hosts, which is the whole reason why we're even looking at these tools in the first place.
Getting set up is so easy. The user interface is simple and elegant. This is the tool I use personally and would definitely recommend.
Design lets them down a little as does their pace of adding new areas. But if your area is already covered then they are well worth looking into.
Great for big players in the industry and investors. Shame it's only available in the USA. Price tag is very high for the average Host.
As you can see, using a dynamic pricing tool to manage your Airbnb prices can decrease your workload and increase your profits.
If you've been using a dynamic pricing tool or have anything else to add to the discussion, chuck it in the comments below.