PriceMethod Is the Newest Dynamic Pricing Software for AirBnB

By: George Hancock Jr.  |  May 5, 2015

Property Owners who list their rooms and homes on AirBnB don’t have to manually decide on and set prices anymore. There’s software for that. PriceLabs, SmartHost, and Beyond Pricing are companies that offer automatic pricing software, which uses  supply and demand data available from AirBnB and similar websites (VRBO, HomeAway), to price available rooms.

PriceMethod is the newest dynamic pricing application to the market and it’s available for 60 US cities, including San Francisco and New York. Joe Fraiman and Andrew Kitchell, its creators, say the dynamic pricing market is still full of unserved demand. Their research found that 60 percent of San Francisco P2P rentals used just one price for the year, and 80 percent used three or fewer prices per year. Owners who use those two models are not using dynamic pricing, which adjusts prices based on more factors than just season. In fact, PriceMethod’s algorithm takes seasonal demand, local events, current supply, and the time between reservation and check-in date into account. Fraiman and Kitchell say their system is similar to those used by major hotel chains.

So, what’s the news here? Is it the software or the legal and social environment around it? I would argue that it’s the latter. Cities are struggling to settle on how AirBnB and its competitors should be regulated. In San Francisco, only permanent city residents can offer their homes on Airbnb and entire homes can only be offered for 90 days per year, according to Wired. What’s more, much of the traveler market might be put off by hotel-style pricing, right? PriceMethod is said to enable owners to earn up to 40% more. That seems to imply that they’re missing out on that income now, which means travelers are saving. What traveler wants that advantage to disappear? What segment of AirBnB-friendly travelers want their rental spots to feel more like hotels, even if only in terms of pricing? I assume it’s not a large percentage, although I can’t know for sure.

 

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