Automated Pricing Tools
What are Automated Pricing Tools?
An Automated pricing tool will add dynamic pricing to your Airbnb listing. To calculate the price per night the tool will crunch a huge set of data to build a personalized pricing model for your listing.
Here’s some of the data it will be analyzing:
- 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 pricing tool uses a specific algorithm to crunch all of this data, and spit out fully optimised prices for the next 365 days. Not only that, but your prices will get refined and adjusted every 24hours to make sure you are competitive 100% of the time.
Let’s take a look at a quick example:
Jane has x3 different prices for her Airbnb apartment.
- Low 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 Low 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.
Sophie, on the other hand, is using an Automated pricing tool for her 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 days.
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 you might be 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 get more views, but more people will be inclined to book as she won’t be overpriced.
All of these things add up to increased occupancy, plus, she should see an increase in the average nightly price.
Sophie has 240+ unique prices for her Airbnb apartment. Here’s a rough look at her prices:
- Low season – $40-$65p/n
- Mid Season – $65 – $90p/n
- High Season – $90 – 140p/n
Sophie keeps really busy in the Low 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 Low season.
Low 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 dynamically generated prices can impact your bookings on Airbnb.
Below we’ll look in further detail at the best tools on the market:
Airbnb’s Smart Pricing Tool (Free)
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 from the opportunity to monetize unused space in their home. Likewise, Guests are given value with 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 issue with the Airbnb’s Smart Price Tips?
Ask yourself this, “Who stands to benefit from Airbnb’s Smart Pricing Tips?”.
Is it you, the Host? Is it the Guest? Or is it Airbnb?
With this question at hand, you can begin to see why Airbnb is not necessarily acting 100% in your best interests.
This is why I avoid using Airbnb’s Smart Pricing Tips.
My first trial of the tool gave pricing recommendations 40% lower than the previous year.
With Airbnb’s Smart Pricing Tips switched on you’ll likely have a great occupancy rate, but it may result in a net return drop.
However, the product is free, so it may be worth trying it out yourselves to generate your own opinion, but for a small investment, there are some much better alternatives.
Wheelhouse are 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 is certainly 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.
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 is different.
Everbooked is more than just an 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.
Airbnb Automated Tools Review Table
|Airbnb Smart Pricing||Wheelhouse||Beyond Pricing||Everbooked|
|Price||Free||1% Per Booking||1% Per Booking||$100p/m|
|Free trial||Yes||30 Day Free Trial||30 Day Free Trial||No Free trial but they do offer a 30 day money back guarantee.|
|Support||Lots of customer resources available. Actual person to person support very difficult.||Awesome support via Live Chat and Support ticket.||Support available via email.||Awesome support via Live Chat and Support ticket.|
|Coverage||Global.||Global. If your area is not currently supported they will add it to their system within two weeks.||Global. If your area is not supported yet you are able to add yourself to their waitlist and they will inform when your area is live.||USA Only.|
1 click from your Airbnb dashboard is all you need.
Beautifully designed. So easy to use. Clean elegant and simple.
|Conclusion||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. The price tag is very high for the average Host.|