One thing the highest-performing Airbnb hosts share is having an effective and dynamic pricing strategy. Hosts who don’t update their prices regularly based on seasons, trends, or special events are losing money. And you can easily do so using an automated Airbnb pricing tool. Today, we’re going to compare the best Airbnb pricing tools available in 2019.
As we know, pricing is by far the most complicated and headache-inducing part of Airbnb hosting.
Airlines and hotels have entire departments with mathematicians and data analysts to calculate the prices they charge.
As an Airbnb host, you may be tempted to post the same price every day of the year. Avoid this temptation. You do not need to be a data scientist and you don’t need to spend hours deciding your prices for the next year.
Even if you did that, prices fluctuate, and if your Airbnb pricing strategy isn’t adaptable and dynamic, you’ll leave money on the table.
So let’s take a look at all the available tools.
What is the current Airbnb pricing model?
You may be wondering how Airbnb pricing works.
One of the main issues with using the Airbnb pricing strategy is that Airbnb’s smart pricing tool is based on both the guests’ and the hosts’ needs. That means it’s stuck between keeping the prices low for the guests but trying to make it profitable for the hosts. Airbnb, looking out for two conflicting interests, ends up being a poor pricing advisor.
In doing so, it always ends up having lower prices than optimal.
When you set your Airbnb pricing strategy, a better idea is to use an external dynamic Airbnb pricing tool.
What is dynamic pricing?
Dynamic pricing, also known as real-time pricing, is pricing that changes based on fluctuations in demand caused by seasons, competition, events and other factors. It does not always mean discounting. Compare this to a static or ‘flat’ pricing method, which is when the Airbnb hosts sets the same, baseline price for their listing across the whole year. It’s important that your listing on Airbnb has seasonal pricing: your 2-bedroom piste-side apartment in the Alps won’t be valued the same in the summer than in the winter.
The set-and-forget method leaves a lot of money on the table. In a report by Beyond Pricing, hosts with dynamic pricing strategies can increase their revenue by 43%. For instance, if there’s a big event in the area with thousands of people coming to the city and looking for lodging, a dynamic pricing tool would automatically increase your prices for that weekend.
That way, you can stay fully booked and keep your revenue high.
And with automated pricing tools, you can easily keep your prices up-to-date and competitive.
What is an Airbnb pricing tool?
You may be wondering why pay extra for a tool that just slaps prices on your calendar and calls them “smart”? You know your listings better than anybody; how could a tool do that better than you?
But there are factors which, unless you’re a super data scientist with access to a ton of different databases, would influence pricing and is safe to say is impossible for you to know on a daily basis. A good pricing strategy should also leverage the numerous data points that are constantly changing every day:
- Day of the week
- Special events (and the ones you’ve never heard of)
- Hotel prices and availability
- Vacation rental prices
- Flight demand
- Amenities and listing quality
- Number and quality of your reviews
- Time left to book
- Other vacation rentals being added to the marketplace
- Competitor occupancy
- How far away is the booking date
- Competitor prices
- Trip Advisor
The Airbnb pricing tools use sophisticated algorithms to calculate prices based on these and more factors. And it doesn’t only set and forget for the next 365 days. They get updated every 24 hours (also keeping your listings fresh) so that you always have the best price.
This means that your calendar is always updated, which helps rank your Airbnb listing higher in the search results. The reason is that Airbnb wants to avoid “unavailable date” booking rejections. These create a really bad customer experience, so “updated calendar” is one of the Airbnb ranking factors that Airbnb’s search algorithm looks at.
Instead of wondering and guessing how to set your nightly price, you can use data to keep your listing up to date. Below we’ll present automated pricing tool that sets dynamic pricing based on these price-influencing factors.
Best Airbnb Pricing Tools 2019
Below you’ll find my review and report of the best Airbnb pricing tools for 2019. While it’s standard for them to charge based on a percentage of your bookings, some of them charge a flat-rate fee or a monthly subscription. Find out which one is best for you.
Airbnb Smart Pricing Tool
Airbnb has its own smart pricing tool that may look attractive to new Airbnb hosts, but it sucks and I don’t recommend you use it.
Because Airbnb has the guests’ interest in mind on top of the hosts, it sets the prices way lower than it needs to. It claims that hosts that set their prices within 5% of their price tip recommendations are nearly 4x as likely to get booked, but I’ve found that simply isn’t true.
Yes, you may get more bookings. But that’s mainly because it recommends lower prices. We want to optimize profit, not occupancy. I’d rather be booked 80% at $200 a night than 100% at $100 a night. Lower prices also attract lower quality guests.
If you look in the photo above, you can see the supposedly smart pricing tool trying to set my prices for every night at $17/night, when using other pricing tools I consistently and easily book this listing at $25-$35/night. Doesn’t sound very smart to me.
This means that over a year, if I were fully booked, I would’ve lost nearly $5,000 in potential profit if I had used Airbnb’s Smart Pricing. That’s a lot of cash.
Another downside of the Airbnb smart pricing calculator is that it lack customization options. You can set a minimum price, but you can’t set a base price. This means that if your minimum price is higher than what the tool recommends, it will set the price the same for each day. That obviously isn’t optimal.
What you really want, is to vary prices around a base price (that you can set), so that the lower bound of the range is roughly your minimum price. That’s why third party tools use this method.
Finally, the Airbnb smart pricing tool doesn’t really vary prices much. As you can see in the screenshot above, it sets the price the same for each day.
Hopefully I’ve convinced you that even though this tool is free, it’s better to use a different one. Let’s take a look at them below.
Most of you are probably already aware of AirDNA — they’re the #1 source for vacation rental data and analytics. If you’re looking to research Airbnb data on your market, find your next investment opportunity, compare cities side by side, or benchmark your property’s performance, their MarketMinder platform will be your go-to tool.
However, MarketMinder now includes Smart Rates, their Airbnb pricing tool that helps hosts and property managers price their properties to perfection. Here are some of the best things we love about AirDNAs Smart Rates.
1) It’s powered by the world’s most trusted name in vacation rental data. If you’re serious about pricing your properties according to true market demand, this is the tool for you. AirDNA gets data from over 10 million properties in 120,000 global markets, so it’s extremely accurate and comprehensive.
2) It considers the most important metrics for daily rates. Events, seasonality, booking lead time, day of the week, how many other properties are already booked — MarketMinder takes each of these factors into account when calculating each nightly rate for your property.
3) Smart Rates integrates with their benchmarking tool. Within MarketMinder you can also create a custom comp set, essentially a hand-picked list of your closest competitors. Looking to only compare your listing to 3-bedroom properties with a pool? Done. Smart Rates then easily allows you to see how your competition is setting their rates, and act accordingly.
4) It leaves room for customisation. Smart Rates has an aggressiveness setting that allows you to choose between balanced pricing, higher occupancy, and higher price. You can also create settings for orphan day discounts and set min and max parameters.
5) It automatically publishes rates for you. Through an integration with Futurestay, Smart Rates users can now push rates directly to their live listings on Airbnb, Vrbo, Booking.com, and Google Vacation Rentals — all without lifting a finger.
The first dynamic Airbnb pricing tool that I ever used is Beyond Pricing. This application calculates the optimal price for each day in your calendar, based on the following criteria:
• Historic performance of your listing
• Performance of nearby listings
• Daily demand (based on hotel prices, flight data, and conferences)
The best thing is, the app connects to your calendar and updates the prices automatically. You can use this to go in and adjust your rates on over 100 properties in minutes if you needed to, which is a little more complicated through other PMS software.
Beyond Pricing allows you to set your own base price. It will then vary your prices around that price, based on the demand factors. This means you can still control the level of your overall pricing.
In the screenshot above, you can how this works for a listing I manage in Cape Town (which is why prices are in Rand). My base price is 1100, but due to May being low season in Cape Town, the algorithm subtracts R380. Also, Tuesday’s aren’t very popular, causing the price to drop another R32. However, since my minimum price is set to R700, it raises the price by 12, to prevent it from dropping below R700.
So how do you set your base price?
Beyond Pricing provides great guidance on what your base price should be. It calculates a “health score,” based on how many days you are booked in the next 30 and 90 days. If you’re booked more than what the demand curve would predict (roughy 50% for the next 30 days and 30% for the next 90 days), it lowers your health score. This indicates that you should raise prices.
You can see this in action in the screenshot above. It’s booked 53% in the next 30 days and 36% in the next 90 days. This means I’m pretty close to what’s optimal, which is why my health score is 88 out of 100.
From the 1000s of listings that I have personally reviewed, I can tell you that most hosts actually underprice their listings. They are booked too much. Remember, the goal isn’t 100% occupancy, it’s to maximize profit. This is why hosts who start using Beyond Pricing typically see a 10 to 40% increase in their profit, even though their occupancy may not change much.
Beyond Pricing is the first ever vacation rental pricing solution, and it’s the only solution built by a team that actually has experience doing pricing before. I certainly saw an increase in my revenue after using this tool. Readers of my blog get $60 in BP credits on top of the one month free trial via this link.
Beyond Pricing integrates with PMS systems like Hostfully, Your Porter and others.
Wheelhouse is an interesting pricing tool because not only does it change the pricing based on the above factors, but it also personalizes its pricing based on the rental. It’s unique selling point is that it doesn’t take the one-size-fits-all approach that its competitors apparently do. With Wheelhouse, if you don’t make any more money using it, you don’t pay anything.
You can fine-tune it based on whether you’re a host, owner, or property manager and you can adjust it to recommend prices based on your business goals.
They don’t claim to know more about your unique rental and business goals more than you, but they do help empower the host to set prices that will help them increase their revenue. It also has a sophisticated algorithm that shows you on your calendar when events are coming up and what their impact is.
Wheelhouse lets you make custom last minute discount tiers, or make seasonality / weekend adjustments. If you have fewer than 10 properties, Wheelhouse starts at 1% per automated booking.
Wheelhouse integrates with PMS systems like Hostfully, which allow you to push its pricing recommendations to numerous channels like Airbnb, TripAdvisor, Booking.com, HomeAway, VRBO, and more. You can directly link the pricing to Airbnb and Tripadvisor.
While most Airbnb pricing tools charge a percentage of your booking, PriceLabs only charges a flat fee. Also, it varies in daily rates more than the other software. With PriceLabs, you can specify base, minimum, and maximum prices. Then edit customizations to set pricing and min-stay rules to suit your needs, in case you want to override their recommendations.
It tracks supply and demand in the area, so when more people are coming for special events it uses this algorithm to increase prices accordingly. Pricelabs is also integrated with Lodgify.
The last tool on the list is Vayoo. It also has a unique pricing approach: instead of charging a percentage or a flat-rate fee, it charges a monthly subscription fee. Also, it’s the first mobile app for daily pricing recommendations.
It tracks your listing so you’ll always know what search position is shows up on sends you reports on your economic performance compared to other hosts in your area.
Dynamic, automated pricing for growing hosts
Automating pricing on Airbnb using a dynamic pricing tool is not only convenient, it’s how you can stay competitive. It decreases your workload and increases your profit.
Of course, you know your listing best and you can always override them when needed. But otherwise, you should be spending your time doing more important things than just setting your prices for your multiple listings daily.
Airbnb Smart Pricing
US, Canada and Europe starts at $19.99/month/listing and reduces as listings increase.
All other countries start at $9.99/month/listing
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