Airbnb Pricing Automation Software - WHAT YOU NEED TO KNOW
Summary
TLDRThis 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
💡 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.
🔍 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.
📈 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.
Mindmap
Keywords
💡Pricing Software
💡Dynamic Pricing
💡Occupancy Rate
💡Seasonality
💡Automation
💡Revenue
💡Rule Sets
💡Overcharging
💡Length of Stay Discounts
💡Market Research
💡Pricing Strategy
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]
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