Why Airbnb’s Smart Pricing Tips Sucks.
The “1 click solution to automate your Airbnb pricing to optimize your listing for maximum earning potential”.
As many who’ve tried already know, Airbnb’s pricing tips sucks.
You see, Airbnb is a two-sided marketplace, relying on both Hosts and Guests. For the platform to work, there has to be a value proposition for both sides.
A Host is given value by having the opportunity to monetize unused space in their home. Likewise, Guests are given value by having the opportunity to stay in great accommodation at a fraction of the cost of more traditional choices like Hotels etc.
Win | Win!
So what’s the problem with the Airbnb’s Smart Price Tips?
You’ve got to ask yourself this, “Who stands to benefit from Airbnb’s Smart Pricing Tips?”.
Is it you, the Host? Or is it the Guest?
With this question at hand, you can begin to see why Airbnb is not necessarily acting 100% in your interests.
This is why I stay well clear of Airbnb’s Smart Pricing Tips, and you should too.
My first trial of the tool gave pricing recommendations 40% lower than the same dates the previous year.
40%! That’s Crazy.
Yes, I’m sure with Airbnb’s Smart Pricing Tips switched on you’ll have a great occupancy rate, but you’ll also be literally throwing money down the drain.
Are all automated pricing tools crap?
Quite the opposite in fact.
There are paid pricing tools on the market that are vested 100% in you as the Host maximizing your occupancy at the best possible rates.
Below are some of the guys at the forefront of automated pricing on Airbnb:
This is my go to automated pricing tool for Airbnb and for good reason.
Wheelhouse is the new kid on the block and offers some insane tools to help build a pricing strategy to get exactly what you want from your Airbnb property.
All hosts have their own unique financial goals, and Wheelhouse’s suite of tools and pricing structures helps builds a strategy to get you there.
Whether you want to aggressively shoot for maximum occupancy, or you’d rather forsake a high occupancy rate for premium prices, Wheelhouse can structure your prices to give you the best chance of achieving your pricing goals.
With most hosts only setting 1-4 unique rates for the year, users of Wheelhouse will have over 240 unique automated prices, updated 365 days a year. Doesn’t get much better than that.
They are growing rapidly, and their coverage is improving exponentially. So if you’re City/area is not yet covered, you can get in touch with them via email@example.com and they’ll run it through their data models and have you up and running with fine-tuned optimized pricing within two weeks!
If you’re worried (like I was) that you don’t like it and want to revert back to your old pricing, worry not. At the click of a button, all your prices can be reverted back to their original state. Simples!
How much does it cost?
Super competitive prices, especially for Hosts with multiple listings.
Up to 10 listings:
1% of the booking total.
eg. If your home rents for $300 per night, Wheelhouse will charge just $3.
Wheelhouse is growing fast. I mean really fast! Their customer service is top notch too.
The guys at Wheelhouse have been super kind and have offered all of my readers the opportunity to trial their package with the first 10 bookings free of charge. To take advantage of this offer click here.
Beyond Pricing is a dynamic pricing software solution that helps vacation rental managers price with the same real-time supply/demand sophistication that hotels and airlines have used for decades.
The software receives updates from Airbnb, VRBO, and Homeaway on a daily basis, so they are able to track available listings vs. blocked off listings vs. booked listings on the various sites. This is done on a city (market) basis, but additionally, also by a neighborhood basis within the market, as well as by number of bedrooms.
The pricing algorithm works from three main bases: Day of the week, seasonality, and local events.
All three variables are different for every market, and each market they operate gets broken down into specific neighborhoods so that pricing is carried out on a hyper-local basis. They even take into account traditional accommodation industry factors such as last minute discounts, orphan nights, etc although these variables have a much smaller impact.
Once the software has worked its magic, you’ll have optimized prices set for the next 12 months that will be automatically updated for you daily.
With Host’s boasting up to 40% revenue increases after using the software it’s well worth looking into.
How much does it cost?
Beyond Pricing charge a 1% fee for all booking earnings. Here’s how it works:
2 night reservation at $125 a night, $50 cleaning fee
Booking Subtotal: (2 x $125) + $50 = $300
Airbnb Payout: $300 – (3% x $300)* = $291
Beyond Pricing Fee: $291 x 1% = $2.91
*Airbnb host fee of 3%
Everbooked came onto the scene a couple of years after Beyond Pricing and they use a very similar model. They are great for those living in the USA, but for elsewhere their service is somewhat limited.
How much does it cost?
They operate a slightly different pricing structure to Beyond Pricing, which may well be advantageous for Hosts with multiple listings.
Basic Package: $20 p/m
Up to 5 listings
Standard Pricing Fee of 0.75% of gross revenue.
Whether you choose to manually monitor your pricing or choose to utilize one of the Airbnb automated pricing tools above, the main thing to take from this is that optimizing your prices is the simplest, fastest way to boost your Airbnb income.
How do you keep track of your pricing on Airbnb?
Do you have a different strategy?
If so, chuck it in the comments, and get involved.