One of the most daunting challenges that new hosts can face is knowing how to appropriately price their space.
If you’re new to the world of short-term rentals, pricing your space can be a completely overwhelming challenge. You might not have any idea of the market trends in your area. Perhaps the only thing you have to go on is your own intuition, which – if you’ve not had short-term rental hosting experience – is likely going to be way off.
Airbnb likes to say that they have a solution for you – it’s a feature on their platform called Smart Pricing, and it’s supposed to automatically adjust your prices based on supply and demand. Airbnb pushes it really hard when you’re creating a listing.
Let me go ahead and tell you: Smart Pricing doesn’t work.
It consistently seriously undercuts booking prices. I have a space that regularly rents out for $120+ a night, and Airbnb is constantly trying to tell me to turn on Smart Pricing so that I can get $60 a night! No, thank you.
According to my research, this is a pretty consistent trend among people experimenting with Smart Pricing. I would just go ahead and say stay away from it, across the board.
But there are other third-party tools out there that can help you price your space – and actually do it quite effectively
I’m currently using a tool called Wheelhouse, and I’ve been so happy with it.
It recommended a base price to me, according to other similar listings. I set my settings, told it how aggressively I wanted to price my listings, and let it go. Just last week, I received a 7-day booking at $150 per night – where the base price had been set to $90! Guess the market was hoppin’ that week. Wheelhouse gave me a 66% markup without me having to do anything at all.
The cost for using Wheelhouse is between .75% and 1% of all booking fees, depending on how many listings you have. But shoot, when I’m getting nearly 70% markups, I’ll pay 1% of that any day! Put simply, Wheelhouse is an intuitive, economical, and effective tool to help you maximize your rental income. I’d highly recommend it.