Airbnb Pricing Automation Software - WHAT YOU NEED TO KNOW

Summary

This video offers an in-depth look at pricing software for Airbnb hosts, debunking myths and explaining the importance of dynamic pricing. The host, with experience managing over 100 properties, shares insights on software like Wheelhouse, PriceLabs, and Beyond Pricing, discussing their automation features and costs. They highlight the benefits of automation for error prevention and efficiency, especially at scale, and touch on the need for market research to set optimal prices. The video promises future content on finding the right starting price and the impact of rule sets on pricing strategies.

Takeaways

• 💡 A pricing software is an algorithm that considers factors like supply and demand, peak days, and holidays to recommend price adjustments for properties, such as Airbnb listings.
• 🆓 Most pricing software offers free access to their data and insights, but charge a fee for automation services.
• 🤔 The necessity of paying for pricing software depends on whether a host is already adept at manual pricing strategies and understands the principles of dynamic pricing.
• 🛠 Pricing software can automate price changes based on market conditions, but may not account for proprietary pricing strategies like overcharging or rule sets.
• 💰 Pricing software costs vary, with some offering a flat rate per listing and others charging a percentage of revenue, impacting the decision for larger or smaller properties.
• 🏠 For hosts with many properties, automation can prevent clerical errors and ensure consistent pricing adjustments, which can be crucial for maintaining occupancy rates.
• 📈 Automated pricing can also capitalize on opportunities to raise rates during unforeseen events or peak times, potentially increasing revenue.
• 🔄 The effectiveness of pricing software can be limited if it doesn't sync with a host's specific pricing strategy, such as removing discounts at certain price points.
• 📊 Pricing software provides suggestions based on a 'base price,' which may not align with a host's intentionally inflated or discounted prices.
• 📈 Hosts who are new to pricing strategies can see significant increases in revenue by using pricing software, while experienced hosts may see more modest gains.
• 🔍 Future videos will cover market research and determining the optimal starting price for listings, which is crucial for effectively using pricing software.

Q & A

What is pricing software and what does it do?

Pricing software is an algorithm that analyzes factors such as supply and demand, the number of days until a booking is no longer possible, peak days, and holidays to recommend price changes for properties like Airbnb listings. It can also automate these changes for a fee.

Can you use pricing software for free?

Yes, almost every pricing software allows you to plug into them for free to view their data and insights. However, automation of price changes typically requires payment.

What is the purpose of using pricing software in managing Airbnb properties?

The purpose of using pricing software is to drive revenue and increase profit by dynamically adjusting prices based on various factors to achieve optimal occupancy.

What are some examples of pricing software mentioned in the script?

Examples of pricing software mentioned include Wheelhouse, Price Labs, and Beyond Pricing.

How does pricing software handle automation costs for different types of properties?

Pricing software may offer different cost structures for automation. Some charge a flat rate per listing, which is beneficial for expensive properties, while others may charge a percentage of revenue, like 0.7% for properties with 10 or more listings, which can be more attractive for smaller revenue-generating properties.

What is the significance of understanding pricing strategy before using pricing software?

Understanding pricing strategy is important because it allows you to make informed decisions about dynamic pricing. If you know why prices need to change to hit 100% occupancy, you can better utilize the software's recommendations and automation features.

What are the drawbacks of using pricing automation according to the script?

Drawbacks of pricing automation include the inability of the software to understand custom pricing strategies like overcharging or the use of rule sets, which may lead to a disconnect in how prices are adjusted and discounts are applied on platforms like Airbnb.

What is the advantage of manual pricing over automation in the context of the script?

Manual pricing allows for the application of specific rule sets and strategies, such as overcharging and length of stay discounts, which can be adjusted intentionally and may not be accurately reflected when using automated pricing software.

Why might a host with many properties consider using pricing automation?

A host with many properties might consider using pricing automation to prevent clerical errors, ensure consistent price adjustments, and avoid missing opportunities to spike prices during events or high-demand periods, thus improving efficiency and revenue.

How can pricing software help hosts who are new to pricing strategies?

For hosts who are new to pricing strategies, using pricing software can result in significant increases in revenue, as the software provides recommendations based on market data and dynamic pricing principles.

What is the importance of market research in determining the starting price for pricing software?

Market research is crucial to determine an optimal starting price for your listing. It helps you understand your competitors, market conditions, and the appropriate nightly rates for different types of stays, which in turn allows pricing software to provide accurate and effective price adjustments.

Outlines

00:00

💡 Introduction to Pricing Software and Its Necessity

The video script introduces the concept of pricing software, which is an algorithm that considers factors like supply, demand, and special dates to recommend price adjustments for properties listed on platforms like Airbnb. The speaker, with experience managing over 100 Airbnb properties, aims to clarify myths around pricing software and educate viewers on its utility. The script discusses the free and paid aspects of such software, with the paid version offering automation features. The importance of understanding pricing strategy is emphasized, as it aligns with the automated suggestions provided by the software.

05:01

🔍 Deep Dive into Pricing Automation and Its Costs

This paragraph delves into the specifics of pricing automation, discussing the costs associated with different pricing software services. It compares flat rate per listing with percentage-based fees, highlighting the benefits of each for different property sizes. The speaker shares personal experience with Wheelhouse as a reference point and explains the importance of understanding pricing strategy to effectively use these tools. The potential disconnect between automated pricing changes and manual rule sets in Airbnb listings is also explored, emphasizing the need for a nuanced approach to pricing.

10:01

📈 The Impact of Pricing Strategy on Software Interpretation and Automation Pros

The speaker discusses how their specific pricing strategy, which includes overcharging and rule sets, affects the performance of pricing software. They explain how these strategies can lead to discrepancies between the software's recommendations and the actual desired prices. The benefits of automating prices are also outlined, such as avoiding clerical errors and ensuring consistent pricing adjustments, especially beneficial for large-scale property management. The importance of market research and setting an optimal base price before using pricing software is mentioned, with a promise of a future video on this topic.

Keywords

💡Pricing Software

Pricing software is an algorithmic tool designed to analyze market data such as supply and demand, peak days, and seasonal trends to recommend price adjustments for properties listed on platforms like Airbnb. It plays a central role in the video's theme by illustrating how it can automate and optimize pricing strategies to increase revenue. The script mentions that while these tools offer free data insights, automation services come at a cost.

💡Dynamic Pricing

Dynamic pricing refers to the practice of adjusting prices based on real-time market conditions. In the context of the video, it is a key concept where pricing software analyzes various factors to suggest optimal prices, aiming to maximize occupancy rates and profits. The script explains that understanding dynamic pricing is crucial for effectively using pricing software.

💡Occupancy Rate

Occupancy rate is the percentage of available property nights that are booked by guests. The video emphasizes the importance of achieving a high occupancy rate for profitability. Pricing software can help in hitting a 100% occupancy by suggesting price changes that attract bookings.

💡Seasonality

Seasonality is a concept in the script that refers to the time of year when demand for a product or service is at its highest. Pricing software takes seasonality into account when recommending price adjustments, knowing that certain times of the year, like holidays, may require higher prices due to increased demand.

💡Automation

Automation in the script refers to the feature of pricing software that can automatically adjust prices based on the algorithm's recommendations without manual input. It is presented as a potential time-saver and error-reducer for property managers, especially those with many listings.

💡Revenue

Revenue is the total income generated from a property or service. The video discusses how pricing software can help drive revenue by optimizing prices to attract more bookings, which is essential for maintaining profitability in the short-term rental business.

💡Rule Sets

Rule sets in the context of the video are predefined conditions or scenarios that can affect pricing decisions, such as removing discounts after a certain price drop. The script mentions that while pricing software can automate price changes, it may not be able to apply rule sets automatically, requiring manual adjustments.

💡Overcharging

Overcharging is a pricing strategy mentioned in the script where property owners set prices higher than the market rate, particularly for one-night stays, with the intention of offering discounts for longer stays. This strategy is used to manipulate guest behavior towards more profitable bookings.

💡Length of Stay Discounts

Length of stay discounts are price reductions offered for guests booking for more than one night. The video discusses how these discounts can be strategically used to encourage longer stays and how they may require manual adjustments when using pricing software.

💡Market Research

Market research is the process of gathering information about competitors, market conditions, and customer preferences. The script suggests that understanding market research is essential for setting a baseline price before using pricing software to optimize further.

💡Pricing Strategy

Pricing strategy in the video refers to the systematic approach to setting prices for properties to maximize revenue and profitability. It includes understanding market dynamics, competitor pricing, and the use of discounts and overcharging to influence booking behavior. The script emphasizes the importance of a well-thought-out pricing strategy for effective use of pricing software.

Highlights

Pricing software is an algorithm that considers supply and demand, days until booking, and peak days to recommend price changes.

Most pricing software allows free access to data and insights, but automation features require payment.

The necessity of pricing software depends on the host's understanding of pricing strategies and whether they can manually adjust prices effectively.

Dynamic pricing based on principles like seasonality and lead time is quantified by pricing software to suggest optimal prices.

Wheelhouse, PriceLabs, and Beyond Pricing are examples of pricing software with different pricing structures for automation.

For properties with high individual revenue, a percentage-based pricing software fee may be more cost-effective than a flat rate.

Pricing automation can prevent clerical errors and ensure consistent price adjustments, which is crucial for large property portfolios.

Automating prices can lead to increased efficiency and revenue, compensating for the cost of the software service.

Pricing software may not understand a host's specific pricing strategy, such as overcharging or rule sets, leading to potential discrepancies.

Manual price adjustments allow for strategic implementation of rule sets and discounts that align with a host's goals.

Pricing software assumes the base price provided is optimal and suggests deviations from this base, which may not align with a host's true desired price.

The benefits of automation include avoiding mistakes and ensuring daily adjustments, which can significantly impact occupancy rates and profits.

For hosts unfamiliar with pricing strategies, using pricing software can result in substantial revenue increases.

Pricing software can provide insights and correct long-term mistakes in pricing strategy, leading to sustained revenue growth.

Market research and understanding one's own pricing goals are essential before using pricing software effectively.

Future videos will cover how to determine the optimal starting price for listings and the importance of market research.

Different pricing software platforms offer unique features and services that may influence a host's choice.

The video promises in-depth reviews of major pricing platforms to help hosts make informed decisions.

Transcripts

what exactly is a pricing software and

do you even need one and how to use it

if you do this video has been long

awaited multiple years you've asked in

the comments for a review on pricing

softwares and finally let me bring it to

you my expert opinion with over 100

airbnb properties and my long journey in

pricing strategy i will teach you what

you need to know about pricing software

in this video let's jump in hey welcome

back airbnb family so this year we are

going to start talking about a lot of

stuff that you want to talk about

channel managers pricing software going

multi-platform um different technologies

that can enable you to run your property

better because you need to stay

competitive in 2022 and one of the

biggest parts of driving profit in an

airbnb property or short-term rental is

driving revenue the more cash you can

pump into your property the more profit

you can keep right if you make zero

dollars per month it's kind of hard to

make any profit don't you think so

pricing software is pretty interesting

but there's a lot of myths about pricing

softwares and at least people with an

incomplete solution and can sometimes

even hinder you if you don't know what

you're doing so first off a pricing

software is a algorithm that will look

at things like supply and demand it'll

look about at like how many days you

have left before your you know before

you can no longer get a booking it'll

look at like peak days like holidays and

stuff like that and it will recommend

that you change your price based on that

information it can also automate it for

you for a fee

almost every single pricing software

that's out there will let you plug into

them for free and look at their data and

their insights for free but if you want

it to be automated it'll cost you money

now this is the part where we have to

ask ourselves well do we really need to

pay for it you know is it really worth

the squeeze if you've

paid any attention to my pricing videos

you'll notice that the stuff that they

that they do for you or the stuff that

they factor in like seasonality whether

it's a weekend weekday supply and demand

lead time which is how many days into

the future the day is all that stuff is

stuff that we talked about in the free

pricing strategy videos in this youtube

channel now they look at that stuff and

they quantify it into a number and they

can spit out a number for you so what's

great about this is if you understand

pricing strategy understand dynamic

pricing and know why prices need to

change in order to hit 100 occupancy

then you're already on board for this

and take your pick you could use

wheelhouse price labs beyond pricing

and there are other software's out there

like beyond actually beyond is beyond

pricing but they changed their name to

beyond actually recently so you can use

any of these softwares and they will

give you a different interpretation of

the same concept which is dynamic

pricing based on these principles now i

personally use wheelhouse as my point of

reference for stuff like this if i ever

need

a second opinion now a lot of you know

that i have over 100 properties and i've

been managing my own prices for a long

time i've always done it manually i

don't even automate it now this is the

part where we get into the should you

automate your you know prices the three

softwares have different costs for that

service the automation and they have

some upper tier level analytics too that

they can sell you as well which is kind

of you know kind of fun but we won't get

into that yet we need to do a deeper

dive into each software and what they do

in order to talk about you know say what

beyond gives you or what price labs

gives you or what wheelhouse gives you

for the money but when we talk about

just price automation which is the first

level of service that some people you

know they want looking at their

different pricing structures is

important

one offers a flat rate per listing now a

flat rate per listing is great for big

expensive properties right so

other ones they'll charge one percent or

wheel house if you have 10 or more

listings they'll charge point seven of a

percent right seven tenths of a percent

so with apartments small properties that

make little individual revenue something

like wheel house that charges under one

percent of your revenue becomes perhaps

a more attractive option where if you

have larger properties that you know can

make 15 or 25 000 a month than one that

only charges you say twenty dollars per

listing per month um becomes more

attractive because sharing say one

percent of twenty five thousand dollars

becomes rather expensive just to

automate your pricing strategy so i

would say with bigger properties go the

flat rate one if you're going to pay to

automate at this point in my

you could call it a career as a business

owner in the airbnb space i am starting

to see the value of pricing automation

but there are some drawbacks i teach how

to use rule sets as a key portion of my

pricing strategy i also teach you to

overcharge as a key like approach to my

pricing strategy now this will affect

how your pricing software spit out your

data we want to overcharge 30 35 percent

over market on that way people when they

go to book a one-night stay would have

to pay a huge premium because we don't

believe in making a two-day minimum or

three-day minimum our thing which you

still could do but if you follow my

pricing strategy all the way which also

goes in line with seo optimization we

allow one-night stays but like at an

extremely high cost and we use two three

four and five day discounts baked into

airbnb's profile in order to then drop

you know prices for multi-day stays

whatever it is that you really want your

minimum truly to be and those you know

20 off for a three-day stay may seem

generous but it's only because we

overcharged and thus we're bringing it

back down to a normal price so with

these we start to use things called rule

sets where rule sets will take away that

three-day discount if we start to

discount the property even more and i

teach this all in my like my premium

course this isn't something that i teach

for free it's actually pretty

proprietary but you need to understand

that um rule sets um are something that

we do use a lot and overcharging is

something that we use a lot so it

affects my review of this video when we

drop our prices on a property let's say

we make our rate 150 bucks and we really

want to sell it for 110 or 120. well the

moment that we drop that down to 100 we

no longer want to give a weekly or

monthly discount because we're already

at that rate so we use a rule set to

remove the length of state discounts now

this will create a slight disconnect

with a pricing software if you automate

it if you have wheelhouse or pricelabs

or beyond pricing automate these changes

for you they will change the price from

150 down to 100 for you but they can't

go into airbnb and then add a rule set

right so you'll still have to manually

go in and add a rule set if you do

something like that um if you don't have

length of state discounts built in like

even weekly or monthly then this type of

implication no longer becomes a concern

to you but if you do use length of state

discounts this disconnect this two-step

thing will be of concern and what will

happen is some listings might have a

price change and even catch it and so

you won't know where price labs or

wheelhouse are beyond pricing you won't

know where they went in and changed what

exact prices you may not be able to

track that so doing everything manually

allows you to drop a price for a reason

and then add a rule set that fits for a

reason so that is one side of it now

when you over price this also changes

the way that any of these softwares spit

data at you so for example wheelhouse

will take your base rate they'll have

this rate that you put in and say this

is going to be my nightly rate and

wheelhouse will then like suggest that

you increase it or suggest that you

decrease it and they can automate it to

increase or decrease but as a deviation

from your base prices so what they're

doing is they are assuming that whatever

your base price is is going to be an

optimal rate and from your optimal rate

they'll then suggest that you increase

your price or decrease your price by a

percentage or by a fixed dollar amount

based on different factors so if there's

an event they might say hey you should

raise your rates by 120 this night

because there's an event now if your

optimal price is already baked in to be

50 or 60 dollars more expensive

um then you would actually only want to

raise it 70

right if um the listing says hey you

want to drop your rate uh 80

from your 200 price because last minute

discounts and all this stuff in supply

and demand and seasonality we think that

your rate should be 80 less than optimal

and your rate is listed at 200 but

you're secretly trying to get booked at

130 well then if you went and changed

your price to a no discounts price you'd

have to take 80 off of 130 to get your

change from optimal um the same thing

would be done with percentages if they

say drop your rate by 20

instead of using that over inflated

price that we discussed you'd actually

take your optimal like what am i

actually trying to get on a three-day

stay and then you would take that rate

and give 30 off or 20 off of that based

on wheel house or price lab suggestions

so i know this gets a little sticky but

wheelhouse

for example and this is what you need to

know will deviate from whatever price

you tell it to start tracking from and

they will assume that that's a good

price it won't understand that you are

actually over charging

so you'll take the discounts or

increases and just retrofit it to the

price that you're actually hoping to

collect and deviate from your true price

instead of the one that wheelhouse has

been now what are the pros of automating

your your prices now at my size it

begins to be a really big deal in in

some ways even with these conflicts

where i can't run my perfect manual

pricing strategy if i automate there are

some properties we have automated

because

we cannot afford to make mistakes um

let's say you go to change your prices

and you've got a property that is a

a night property and you go to change it

to 380 and then you accidentally make it

38 dollars right that kind of

the clerical error can be super

expensive or if you got a property

that's 140 and you want to make it 110

and you make it

1110 or something like that that it

won't get booked and you may not catch

it those types of little menial mistakes

can add up to a lot of trouble

in addition you may not change prices

because you miss a day or miss two days

or you get busy and you forget and i

went and traveled the world for a while

and it was really hard for me to go in

and change prices there's a solid three

weeks that you i said you know what i'm

just going to drop the ball and not

change prices and see how my baseline

prices um

like work without dynamically dropping

them and we went from a 95 92 occupancy

down to a 68 occupancy by not

dynamically changing prices

that is a 20 plus percent change and

that's a huge change because that's a

lot of your profit if you break even

it's a 40 occupancy or 45 occupancy then

the difference between 45 and 90 is is

like all of your profit as opposed to 45

and you know say 65. so

automating can make sure that you do the

little things correctly every single day

and at scale with 100 or so properties

those start to add up so now

if you include the fact that they will

raise your rates for you when there's an

event which is something that a lot of

people can miss especially if you're

multi-city see if we're in dallas and

philadelphia and houston and other

places and how we change prices should

deviate from each one but a lot of times

people who manage prices manually will

kind of get into a flow and they won't

discriminate between a dallas property

and a philadelphia property they'll just

go you know they'll click a whole box an

airbnb go let's drop all these prices

all at the same time to the same amount

that's inefficient you're actually

cutting a corner to save you time you're

not actually getting a true price out of

that change that you just made so that

kind of laziness can actually cost your

business money so between that kind of

laziness and the inability to catch all

the times that you should um spike your

prices which was really the point that i

was getting at initially that increase

in price from their predictive ai saying

hey you should raise your rates for this

holiday or for this event that's not a

holiday that you didn't know about

well those will make you more money and

now paying your 20 bucks a month for

listing or your 0.7 tenths of a percent

per listing can get paid for

by the increased efficiency of their

systems now i will tell you people who

have absolutely no clue what pricing is

they plug into something like wheel

house price labs beyond pricing and

they'll get an increase in revenue 20 30

40 sometimes so they'll advertise this

on wheel house or on price labs and i'll

tell you that for the average airbnb

host that knows nothing

those numbers are not false they're

advertising any 30 increase in revenue

you should believe it if you've never

adjusted your prices on your own in your

life but if you're a host who

meticulously looks at the numbers and

makes adjustments based on the pricing

strategy of this

channel you'll get

similar performance you might get

slightly larger performance but you'll

also get some insights if you're making

a mistake on a listing you might be able

to make a key adjustment

for years to come that'll actually

increase your top line for years to come

now we did not talk about one thing but

we will talk about in a future video

which is that optimal price versus your

inflated price see you need to put in

a price based on some form of metric and

you need to come to a center on what you

think your price should be and so a lot

of people have asked me hey how do i

know what i should charge for my listing

we're going to cover that in a future

video because you need to do market

research you need to look at your

competitors you need to look at

circumstances

and then you'll choose if your nightly

rate for a one bedroom apartment should

be 90 or 105 or 150 for a weekday and

then what it should be for a weekend as

well

this is the stuff that you'll need to

know and then you'll decide well am i

friendly to one night stays and not

really need to inflate that or am i

going to try to get a three-night stay

and i'm going to try to manipulate it

with a three-day discount these are the

kinds of things that you'll need to

figure out on your own by doing market

research and so when you plug it all in

something like wheel house or beyond

pricing can do its job effectively

and you'll know that they're deviating

and giving you suggestions based on

what's actually a truly optimal number

because they will increase and decrease

price for you based on seasonality but

you need to know where you are and where

to start so stay tuned for a future

video on market research and finding the

price to start with and uh thank you so

much guys for watching this video if you

have questions um please leave it in the

comments and i will leave

a link down below um so that way if you

want to sign up for wheelhouse which is

what we're using currently um you can

sign up for it down below i will be

doing uh deep dive reviews for all three

major pricing platforms in the future

because like i said they all do do

different stuff slightly their

algorithms are generally the same

baseline but the extra services and

features might change your mind on who

you want to work with so of course

thanks again guys and i'll see you on

the other side

[Music]