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.
If you’ve already automated your guest communication and automated property management but you’re still manually setting your prices, your priorities are off.
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, 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.