Airbnb Pricing Tools: What Do They Do for Hosts and What Are Your Options?

As an Airbnb host, setting the right price for your short-term rental is key to attracting guests and maximizing your revenue. Setting your rate too low will reduce profits; if you put it too high, you’ll lose bookings.

Since market conditions fluctuate, figuring out a competitive price for your Airbnb listing can be challenging and time-consuming. It requires ongoing research of the local market and your competitors, as well as keeping track of trends in travelers’ behavior.

Fortunately, you don’t have to devote hours to collecting a ton of data, analyzing the market, and manually managing your rental property pricing. You can use an Airbnb pricing tool to help you automate the process and optimize your nightly rates based on numerous data points to strike that perfect balance between occupancy and revenue.

You’ll save even more time and enhance operational efficiency if you streamline your operations using vacation rental software like Hospitable. Our STR super app can help automate 90% of your daily tasks and put your business on autopilot.

What Is an Airbnb Pricing Tool?

An Airbnb pricing tool is software designed to help hosts set up automatic dynamic pricing for their vacation rental properties. Dynamic pricing applies variable prices for a product or service based on evolving market trends, primarily supply and demand. It’s used in many industries and is effective for short-term rentals.

Airbnb dynamic pricing tools rely on artificial intelligence, big data, and machine-learning algorithms to analyze a wealth of data and recommend the most appropriate nightly rates based on market dynamics. They consider supply and demand trends in the local vacation rental market, including seasonal leisure and business travel changes and local events. They also look at the nightly rates charged by other short-term rental hosts in the area.

The nightly rates proposed by the best dynamic pricing tools are tailored to the specific characteristics of your rental property and allow you to maximize occupancy and monthly rental income. Moreover, dynamic pricing tools can automatically push suggested rates to Airbnb and other platforms without you lifting a finger.

What Are the Benefits of an Airbnb Dynamic Pricing Tool?

Using an Airbnb dynamic pricing tool, you can stay ahead of market trends and ensure that your vacation rental performs up to its potential and that no money is left on the table. It gives you a competitive edge by ensuring that your prices are attractive to potential guests and your rental is still profitable.

A pricing tool saves you time and effort by automatically adjusting your prices based on real-time market data. So instead of crunching numbers, you can focus more on other important aspects of hosting, such as providing an excellent guest experience that leads to great reviews and repeat bookings.

You’re still in control of your Airbnb pricing. A dynamic pricing tool does the market analysis for you and provides insights and a great starting base. However, you can manually adjust the suggested rates and change your rules to ensure you get the most out of your STR property.

Airbnb Pricing Tools: What Are Your Options?

Essentially, there are two options:

1. Airbnb’s built-in Smart Pricing
2. Third-party dynamic pricing tools

Airbnb’s Smart Pricing tool is free for all hosts. They can turn it on or off for each of their listings. You can enable this feature by entering the minimum and maximum nightly prices. Airbnb will adjust your nightly rates to maximize bookings within the selected price range based on local demand.

However, the problem is that Airbnb Smart Pricing is designed to optimize reservations and occupancy rates. So the tool may underprice your property just to attract guests and increase your booking rate, which can reduce overall revenue. And as an Airbnb host, your goal is to maximize income, not just occupancy.

Besides, Smart Pricing operates only within the Airbnb platform. It has no integrations with property management systems, so controlling your nightly rates will be challenging if you list on multiple channels.

So many hosts and property managers prefer to use third-party dynamic pricing tools that work with Airbnb listings, integrate with vacation rental property management systems that hosts use, and better align with their financial goals. These pricing tools use proprietary algorithms to recommend the optimal nightly rates based on a comprehensive analysis of current market data and historical trends.

Most importantly, third-party dynamic pricing tools may offer more lucrative rate recommendations because they are designed to boost revenue and not only bookings. However, premium pricing tools come with costs, which can vary from one tool to another and can be calculated as a flat rate per property or as a percentage of booking revenue.

Hospitable users can now take advantage of our new in-built Dynamic Pricing solution that automatically adjusts your prices to maximize revenue and maintain optimal property occupancy based on real-time market data. The best part is that Dynamic Pricing is included in our Host, Professional, and Mogul subscription plans, at no extra cost.

If you’re currently using a third-party pricing tool, you can switch to Hospitable’s Dynamic Pricing and stop overpaying for solutions included in your Hospitable subscription. Dynamic Pricing is easy to start using. Just select a base price strategy that aligns with your revenue goals and set your minimum and maximum daily rates.

Hospitable’s proprietary pricing engine automatically analyzes millions of market data points and adjusts rates based on market demand and competition. Our system will push prices to all your connected booking channels, including major OTAs, such as Airbnb, Vrbo, Booking.com, and Agoda, as well as your direct booking website.

Final Thought

A dynamic pricing tool is now a must-have for savvy Airbnb hosts and property managers who want to maximize their properties’ potential. Such tools automate adjusting rates, helping you stay competitive. A good dynamic pricing tool will help you enhance the performance of your vacation rental and achieve your revenue goals.