What is Airbnb Smart Pricing and How it Works

Right now, Airbnb is almost a global phenomenon; it’s taken the travel industry by storm and many predict it will continue to dominate for many years. Airbnb is so successful for a number of different reasons – people earn revenue from renting out their home, travelers can book accommodation easily, and Airbnb makes huge profits from their 3-percent commission.

So, considering Airbnb depends on hosts and hosts depend on Airbnb, it makes sense for the platform to enhance the features they offer hosts. One of those features which Airbnb developed to improve the overall experience for hosts was Smart Pricing. It’s one of the newest tools, but it’s arguably the most popular, due to the advantages that it provides.

What is Airbnb smart pricing?

Essentially, Airbnb designed Smart Pricing to give hosts freedom with the rates that they charge. But, it does it in a way which is passive to the host, meaning that the Airbnb platform does all the work.

Once you’ve enabled this feature, you can go ahead and select the minimum price you’d be willing to charge, and the maximum price that you’d never want to exceed. This aspect is brilliant, as the host can rest assured knowing Airbnb will never allow their property to be undervalued, while never jeopardizing their chance of bookings by pricing it too high.

Another piece of information that the tool gathers is how often you want to make your property available. This is necessary because otherwise, the Airbnb pricing algorithm won’t be able to function properly.

Are you wondering what the Airbnb pricing algorithm is?

Well, here is a behind the scene look at what it takes to run the Smart Pricing. You see, a host that performs well on the platform is a host that conjures up an effective Airbnb pricing strategy. With Smart Pricing and its intelligent algorithm, the host can adhere to that strategy without having to worry about forgetting to reduce or increase their rate.

After inputting your minimum and maximum prices and inputting how often your property is going to be available, the algorithm will have everything it needs to adjust your prices for you. So, depending on special occasions, seasons and guests activity, Airbnb will alter your prices to ensure that you get the maximum amount of bookings possible.

For instance, if you have a property in London, the UK near Wembley Stadium while the FA Cup Final is on, the algorithm will assess the data and suggest a nightly rate which reflects the supply and demand. Long story short, people flock from far and wide to watch the FA Cup Final, so Airbnb will most likely recommend you increase your rate.

That type of activity will occur unceasingly once you’ve enabled the tool, meaning Smart Pricing will help you to stay in tune with market fluctuations. But, this feature is advantageous to both parties – hosts will always have their pricing about right for the market, so they’ll have a higher chance of bookings and Airbnb will generate more revenue from the commission.