What If Smart Pricing Sets Your Airbnb Rates Too Low?

Since the inception of Airbnb in 2008, it has become a dominant figure in the travel industry, and it’s progressing every single year. That’s because the company continues to tweak, develop and improve things to ensure hosts and guests have a great experience. Moreover, following the introduction of the Smart Pricing tool, it’s had a wonderful reception on the platform due to the multitude of advantages it offers.

Although, there’s a minority of users that have concerns with the feature. But, before we get into that, let’s just delve into the purpose of the tool for those that aren’t aware…

The ins and outs of Smart Pricing

In a nutshell, Smart Pricing is Airbnb’s way of ensuring hosts make the most of possible bookings depending on the situation of the market. Once you enable the tool, you can then set the minimum price that you’d accept, and the maximum price which you’d be willing to charge. In addition, you can also input when you want to make your property available.

Using those 3 things, along with data from the platform, the Smart Pricing algorithm will adjust your rates within the boundaries of your minimum and maximum. Basically, it will suggest an optimal rate which will give you the best chance of making a booking, without you needing to stress over deciding your own rates.

Anyway, let’s explore the problems that some hosts encounter with the feature…

Airbnb smart pricing too low

Some hosts simply state that Airbnb smart pricing not working, but the main issue is the algorithm setting their prices too low. You see, Airbnb wants you to make a booking, and that will most likely happen with lower prices. However, that means hosts are generating less revenue, especially when you take expenses and taxes into account as well.

There are different theories as to why this actually happens though. Some believe that it’s down to your location. If there are more hosts in an area than guest activity, the algorithm will reduce the rates. Whereas, others think that the algorithm is programmed to increase overall bookings, rather than focusing on a host’s income.

But, if you did find yourself in a position where Smart Pricing is setting your price too low, there are 2 methods you can adopt to combat it:

  • Disable Smart Pricing and take the time to set your own rates after assessing the state of the market
  • Increase the minimum price that you would accept to ensure the algorithm can’t keep your prices too low for your liking

Do you need help?

Whether you want to utilize Smart Pricing, or set your own prices, it can be difficult to find the time to monitor, update and keep on track with your pricing strategy. Therefore, a great idea is to seek out an Airbnb management software. One of those is Hosty, which is a brilliant app that manages all of your listings and gives you automated Airbnb pricing.