25 Jan Why You Should Never Use Airbnb Smart Pricing – Part One
Airbnb Smart Pricing Is Really Bad!
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.
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.
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**
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!
Join my Airbnb Host Community Email List. I will send you Airbnb hosting best practices and tips to increase your operating margins. Sometimes, I’ll even surprise you with an awesome giveaway!
DeanPosted at 15:22h, 08 February
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.
SamPosted at 16:05h, 08 February
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://www.passiveairbnb.com/never-use-airbnbs-smart-pricing-part-two/
DANA ANDREW DONCASTERPosted at 16:26h, 08 February
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,
SamPosted at 20:34h, 08 February
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!
Sara DomijanPosted at 12:54h, 12 March
There is a problem with “smart pricing” that doesn’t seem to be addressed here. Smart pricing can be bad for guests too, not just hosts. It can be a scam method for hosts. Since smart pricing means demand makes the price go up, hosts can drive up their prices by intentionally declining reservation requests to artificially create demand. I think this just happened to me. The host declined then asked me to send another request and when I did, the price went up. Whether or not she is scamming, I can’t say for sure but the point is that the “smart pricing” features enables this type of scam.
Sam ZuoPosted at 01:35h, 14 March
Sorry to hear that. yes, there are bad hosts out there who are price gouging…
To be clear, that’s not how smart pricing works. Next time, try to stay with hosts with “instant book.” You save time and there’s no “approval” process where a host can raise the prices.