** Should you follow smart pricing on AIRBNB? **
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Hello and welcome to the channel I display Complete. I hope you're doing well. Today we're talking about a question that was asked to me yesterday by Romain, who was present in yesterday's live, and I said to him: "Listen, very good idea, we're going to talk about that during the live of tomorrow. » The question is: should we use the smart pricing that we have on Airbnb? I will tell you about it in more detail, so that you can avoid the pitfalls associated with this smart pricing, whether you should use it or not. If this interests you, stay with me. If you are not yet subscribed to the YouTube channel I display Complete, click on “subscribe”, and also click on the bell so as not to miss any of the Lives that I do every day from Sunday to Thursday. Also, if you are not yet a participant in the private Facebook group seasonal rental prices and maximization of turnover, then join us. You will receive the free bonus of the six mistakes not to make when determining your selling prices.
To talk about this subject, intelligence pricing.
− Hello Romain, welcome. As you can see, I'm doing live on the subject we discussed yesterday.
− Hello, Michael, or Mary Sorry, excuse me. I imagine it’s Michael: “Hi Élise. Top, your channel. Keep it up. »
Thank you so much. It's super nice.
If you are currently marketed on the Airbnb site, you have most likely noticed a setting that is in the pricing section. I'm going to tell you precisely how to find this setting, so you can see it on your Airbnb interface. You have to go to “announcement”. You click on your ad, and there you have a number of parameters that appear. And in “rate”, you have the category “nightly price”, “smart pricing”. And there, what do we offer you? We suggest that you activate or deactivate pricing that will be designed for you, which will fluctuate depending on the period. You have two items, in fact, to configure, if you are interested in smart pricing. You can activate or deactivate it, I just specified it, and then you have the possibility of setting a base price, which in fact will be an annual price on which the reducing or multiplying coefficients of the Airbnb algorithm will come apply to be able to have a sale price which will be marketed on Airbnb. What Airbnb tells us about this smart pricing, and I have the window in front of me to make sure I tell you things correctly, is that smart pricing allows us to automatically adapt our prices based on fluctuations in demand housing like ours. We are always responsible for choosing the base price, but in fact, by activating smart pricing, the tool constantly adjusts our prices per night, respecting the range we have defined. Smart pricing takes into account the type of accommodation, its location, the season, demand, and other factors.
This question often comes up: should we use this smart pricing or not? There are several points to keep in mind. Besides, I'm opening a parenthesis: if you are interested in the pricing algorithm system, you have systems which are chargeable, moreover, but which can have the advantage of applying to all sales sites . These systems that exist, that you can buy, which will create a pricing algorithm for you. There are several problems with this, and it is reflected in the Airbnb pricing algorithm. The first thing is that we must determine a base price. Which means that if you make a mistake once in determining the base price, excuse me for saying clearly, but in fact, your mistake will be spread across the entire calendar. So that’s the first point that bothers me, especially when we say to ourselves: “I’m going to take intelligent pricing instead of learning how to make my prices; instead of learning how to do revenue management, that is to say the science of getting your prices right. » The risk is that you suddenly make a mistake from the start, and that your mistake is spread all over your calendar.
The other problematic point with these algorithms is that in fact, they are often incapacitated, I am not going to say "never", because there is perhaps, one day, an algorithm which will come out , and who will respond to this type of problem, but they are often unable to predict things correctly. Besides, I made a video on this precisely. I don't remember the title, unfortunately, but it should be put in the info bar in this video. In fact, I explain that all these startups which make pricing algorithms, it is a first base, but it cannot live properly, it cannot extract the maximum turnover from your activity if you do not don't add a layer of human intelligence. For what ? I have the easiest illustration to understand: when there is an event in your city. I am originally from Cholet. As for Cholet, the most important event of the year has been postponed, it is certain that the managers of Price Labs, in the United States, will not think that in Cholet, the international fair has shifted. However, to increase your turnover, consider the fact that the international fair, the major event of the year, has been postponed, it is essential, because on the date which no longer has events, we will give normal prices, and on the date which now has an event, we must very quickly put significant prices, because we have an opportunity to increase our turnover. This kind of thing is extremely difficult for algorithms to understand.
Another point is that algorithms, in atypical situations, are completely incapable of reacting. And that's normal. What is an algorithm? It is a computer system that has been pre-programmed with a number of different scenarios. If now there is a completely new and atypical scenario that happens, well the algorithm does not know how to react. This is why many people in the community or among our clients have alerted us that before working with us, they worked for example with PriceLabs, during the confinement situations and during the pandemic, Price Labs did not at all knew how to manage. This was the case for other algorithms too. Because it was totally atypical, and there was no computer equivalent to react properly.
Another important point: I had the opportunity to test it when I was a seasonal renter. I saw this smart pricing proposed by Airbnb, and at first, I said to myself: “Élise, don't react on this subject. Be a good skeptic, and try this smart pricing. Maybe you'll be pleasantly surprised, and you'll see that it's a great thing that saves you a lot of time. » I tested, and in reality, it made me rent almost 40% per night compared to what I managed to rent without the pricing algorithm. So, when I did this test; I said to myself: “Obviously, this algorithm is not going to allow me to maximize my turnover; what I do on my prices is much more efficient. » So, it broke my confidence in Airbnb's pricing algorithm, that's for sure. And in fact, the conclusion that I made is also that this intelligent pricing works to guarantee the promise that Airbnb makes to its customers, the travelers, that is to say to have in all place and at all times access to quality housing at affordable prices. It’s true that this is the promise of Airbnb. So, at the same time, it's quite consistent, and we can understand that in their pricing algorithm, they don't have a system that constantly raises prices, because for them, that wouldn't allow them to guarantee their promises. to travelers.
So this smart pricing, that's the conclusion I came to, it wasn't working for me as a host, it was working for the guests. So, you will probably have understood, basically, this intelligent pricing, for me, is not at all the best way to price. Nothing beats having in mind a few simple methods and good practices to know how to establish the rental prices of your apartment or apartments. Moreover, one point that I did not specify is that in the end, intelligent pricing, if ever, despite all that, we say to ourselves: “No, but I still want to take intelligent pricing” , the problem, in the end, is that it is only based on Airbnb. That is to say, in the little text that I read to you earlier, Airbnb tells us that they adapt to demand, but in fact, they adapt to the demand that they observe on airbnb. They adapt to the availability that we give to Airbnb, so it is extremely partial. This is not an overall performance. This too is a point of reluctance for me. So. So overall, you will have understood that for me, this is not, I think, the best way to allow you to maximize the turnover of your activity. It may be a way that will cost you zero euros, and which will save you time, but in terms of results, in terms of maximizing the turnover of your activity and profitability, it is not is not a tool that will help you. The best way is simply to know some good revenue management practices, to implement them in your activity, to watch the videos from the YouTube channel I display Complete, that's clear, and above all, to put them in place. Because there are a lot of things that we listen to, that we hear, and then in the end, we don't give ourselves the time to put them in place. So, here it is: training, learning revenue management, putting in place the best practices of the profession, which are not rocket science, but which work, it is in my opinion much more profitable than using and implementing this smart pricing recommended by airbnb.
− Hello Gladys. I hope you're well. Welcome.
− Hello Marie-Jo. I hope you are doing well too.
Look, I don't particularly see any questions about all of this. I guess it was clear. If you have other topics, like Romain, who very rightly suggested this point to me, and once again thank you, Romain, because even if in the end my opinion on this dynamic application is not very positive, you did well to ask this question, because it is extremely shared, and many people ask it. So, thank you. If you have any other questions like this, definitely don't hesitate to ask. There are no wrong questions. Personally, I would really be happy to make videos on these subjects which bother you a little or which worry you, because sometimes, we have subjects which worry us in our activity as seasonal rental, sub-rental, or seasonal rental concierge.
− “It’s very clear, thank you. »
Please. I'll see you tomorrow for the next video.