Why You Should Never Use Airbnb Smart Pricing – Part One

Airbnb Smart Pricing

I said it before and I’m going to say it again.

Smart Pricing is a scam. I’m a huge advocate against it and I am very clear in why a host should never use smart pricing when I’m educating new hosts.

Smart Pricing lets you set your prices to automatically go up or down based on changes in demand for listings like yours. It is based on the type and location of your listing, the season, demand, and other factors.

This all sounds great because it saves you the headaches of knowing how to adjust your pricing strategy, but it comes with a big problem.

 Airbnb Smart Pricing

The big problem is that smart pricing’s software will often underestimate the demand, thus pricing your property below the actual market value.

Here’s the bigger problem with Airbnb Smart Pricing.

Airbnb is doing a huge push to compete with hotels. In order to attract new customers, it is in their best interest to slash prices to compete with the hotel chains. While this strategy is great for Airbnb, the hosts are left to eat the costs.

Airbnb Smart Pricing

When I first started hosting back in February of 2017, I was doing it the manual way. I logged into Airbnb every day to adjust my pricing and apparently, Airbnb awards hosts who regularly update their calendar by showing their units first.

This manual method was great, but it doesn’t scale. As soon as I opened up my second unit, I was spending hours a week doing this… Nothing is wrong with this if you’re happy spending the time.

If you’re wondering if there’s a better way, then you’re in luck. Yes, there is! 

I will talk about it in my part two. Stay tuned for that!

Airbnb Smart Pricing Updated**

Airbnb Smart Pricing

Do you see the confusion?

She thinks that by setting her minimum price really high, she’s able to avoid her listing being underpriced by Smart Pricing.

There are two issues. One; there’s a maximum ceiling that I’ve talked about in my response to her. Two; how do you know your “high minimum price” is low enough where you are still getting bookings?

I can set my minimum price to 500 dollars, but obviously, that is not going to get me booked because my competitors are charging less and my place is not nice enough where I can justify charging 500 dollars per night.

This is How you Can optimize your Airbnb Pricing Strategy

When I first started hosting back in February of 2017, I was doing it the manual way. I logged into Airbnb every day to adjust my pricing and apparently, Airbnb awards hosts who regularly update their calendar by showing their units first (one of the many SEO factors that will help you rank higher).

This manual method was great, but it doesn’t scale. As soon as I opened up my second unit, I was spending hours a week doing this… I started to research on third-party pricing tools.

I came across 3 different companies, Everbooked, Wheelhouse, and Beyond Pricing. I will talk about their differences in Part two of this series. But if you’re curious, you should definitely read up on Part two.

Also, I wrote a detailed analysis of the differences between Wheelhouse and Beyond Pricing. I did a 2-week experiment and I lost $968 using this one tool.

I hope you don’t lose money as I did!

4 Comments
  • Dean
    Posted at 15:22h, 08 February Reply

    We started out listing our unit for what we thought was a fair price, and got reservations immediately. It has been nearly a year since we started, and I am seeing Smart Pricing suggestions well below what we got last year. We will stick with setting our own prices, knowing that we will earn way more than with Smart Pricing.

    • Sam
      Posted at 16:05h, 08 February Reply

      Hi Dean,

      Thanks for sharing! You hit the nail on the head. It’s not at all optimized for hosts and based on my research hosts lose hundreds even thousands( if you have multiple properties) a month. There’s a better way to automate pricing and maximize your income. Check out Part two here: https://passiveairbnb.com/never-use-airbnbs-smart-pricing-part-two/

      Cheers!
      Sam

  • DANA ANDREW DONCASTER
    Posted at 16:26h, 08 February Reply

    Agree with you,
    Its just a way for them to fill up their pockets, at the hosting expense,

    Let’s remember the difference between hotels and Homes, one word FREEDOM, comes to mine, so we should never be affaired of competition,

    If its the slow season then i will adjust my pricing to suit my bottom line,
    Plus Smart pricing will lead to a price WAR with your neighbours, we are not a supermarket,

    • Sam
      Posted at 20:34h, 08 February Reply

      Hi Dana,

      Yes, you got it. Airbnb is marketing it as a tool that is doing good for the hosts, but in actuality; it’s disguised as a competitive tool to out-compete the hotels at the expense of hosts.

      I love your last point. Their goal is to get everyone to use it so that they can slowly control the market however they want.

      Thanks for your insights!
      Sam

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