How to set up your base price?

Setting your base price

What is the base price?

  1. Base price is the average rate you would charge across the year.
  2. We use the base price as a starting price and apply all market factors, demand patterns, and customizations on top of this.
  3. The base price includes the quality of your listing. So, a two-bedroom with high-end luxury décor will have a higher base price than a basic two-bedroom.

Base Price Help

Using market data, the Base Price Help tool helps determine a good starting point for your listing's base price. This tool analyzes a few hundred listings nearest to yours, and the number of bedrooms can filter the results to match your competition.

To start using the Base Price Help tool, click "Help me choose a base price" from the Review Prices page of your Pricing Dashboard.



IdeaPro-tip: You can now access the Base Price Help tool from the Multi Calendar under the More Actions column!

Picking up your base price

1.  Imported base price:

  1. If the listing is newly imported, we do not recommend a base price at first. Instead, to keep your prices at a constant pricing level while you transition to PriceLabs, we show an 'Imported' option. Imported base price is based on the prices sent to PriceLabs at the time that the listing was connected. This is an estimation of your base price so that PriceLabs recommended rates are, on average similar to your imported prices over the next two months.
  2. New listing, but the prices from the PMS/OTA are inconsistent: If the listing's previous prices do not make sense, we do not show the “Imported” option for the base price. The market-based price can be used in such a scenario.
  3. When choosing to use this 'Imported Base Price', it's important to consider how well the listing has been performing with this price. For example, if this listing has been in the market for a significant period using these prices and has performed reasonably well, it's safe to adopt the 'Imported Base Price' as the first base price. On the other hand, if this is a new listing, and it's uncertain whether the imported base prices are competitive, it's recommended to use the 'Market Based Price' instead.
  1. If the listing has been consistently synchronizing prices in PriceLabs, a ‘Recommended Base Price’ is generated after 14-21 days. This is based on the performance of the listing with regards to the market, the listing's occupancy, and its past base prices observed for a maximum of 60 days. Note that a higher weight is given to more recent trends. 

  1. The algorithm evaluates occupancy trends as well as base prices to come up with a new recommendation.  
  2. Sometimes, a change in the listing’s base price can render the existing "Recommended Base Price" irrelevant. The recommendations are based on your listing's performance with the current Base Price. If the base price is recently updated, the Recommended Price may appear blank and should be able to generate a new recommendation within a few days.

Seasonal Base Price

  1. If the listing uses a seasonal base price or has used it recently, we recommend a percentage change to the base price instead of giving an absolute value. To implement the Recommended Base Price Change it should be applied to each Seasonal Base Price
  2. Once the Seasonal Base Price has been turned off, it takes 14-21 days for the algorithm to start recommending an absolute base price. 

How was this price calculated?

In the blue card below, we give reasons and show how these reasons impact the price (on a scale of 1 to 3). For example – if we suggest increasing the price for any given reason, we show it by green upwards pyramids (1 to 3 pyramids, depending on how much we grow it). For a decrease, we use red downward pyramids.


Recommendation in the presence of blocks

Blocked dates are currently considered booked to calculate listing's occupancy except for select PMS/Channel Managers where the calculations are only applied to actual booked nights

For integrations with block support, the listing's occupancy calculations account for blocks in the past 60 days or the upcoming 30 days, at the time of generating recommendation. If a significant number of dates are blocked, the occupancy comparison between the listing and the neighborhood is not feasible, hence the recommendation is unavailable. As the blocked dates start clearing up, the algorithm starts generating a recommendation again.

3. Market Based:

Set your base price based on the market data. The factors considered when using the Market Base Price are:
  1. Property Category: Select the price level you want your listing to be positioned in, either Economy, Midscale, or Upscale, which correspond to 25th, 50th, and 75th percentile prices, respectively.

    2. The "Midscale level" is often a good starting point, but other factors might justify a higher or lower price. For example, if your listing is new and has no reviews yet, it might make sense to set your price below the median to attract more guests. On the other hand, if your listing is very high-end, it could be safely priced above the median.
  1. Bedroom Categories: Select the bedroom categories to fine-tune the market data used to calculate the market-based price. Select the size of the listings that you consider your competitors. In some cases, even though a listing has 2 bedrooms, it might still compete with 1-3 bedroom listings in its area.
    1. Selecting a set of bedroom categories with a good number of listings (at least 30) is recommended. Otherwise, there isn't enough data to draw a reasonable conclusion about the market trends. Experiment with different bedroom categories to understand how the price distribution changes!
    2. Listings considered for this compsets are listing that are active for the last 6 months and next 6 months. If a listing is new or is no longer active, it is not included in the data used for this section 

Market Map

The map shows the listings considered for the market-based base-price and the percentile calculator. The square shows your listing. Hovering over a listing will show the average price, the bedroom count, and the listing ID. The listings are colored based on the price. 

The price averages are based on the mean prices observed for any listing in the past 6 months and the upcoming 6 months, leading to an average price across the year. Note that any listing that has not been around for at least six months will not show up for comparison.

Fine-tuning the market area

You can fine-tune the market area considered to calculate the market-based values and percentile calculator by selecting an area on the map.


4. Custom base price:

Select the 'Custom' button to input a base price manually.

Market percentile calculator

This indicator shows in what percentile of the selected market the newly selected base price will be. The market is affected by both bedroom category selection and map selection. For market-based, this will always be 25th, 50th, and 75th, but recommended and custom will show what percentile it will lie in.

Please note that when selecting the market base price, we use Percentile Score. Meanwhile, we use Percentile rank for custom base price.
  1. Percentile Score: This score sets a benchmark based on the market. If it tells you that $250 is the 75th percentile, it is the price point that separates the top 25% of listings from the bottom 75%. It's a kind of standard for the market.
  2. Percentile Rank: This rank looks at your specific price compared to all other listings. It tells you how your price stacks up against what others are charging. Here, if it shows that $250 is the 75th percentile, it means that it is higher than 75% of the listings but lower than the top 26%."
The percentile score is about where the price stands in relation to all listings in the market, while the Percentile Rank is about how your price compares to other listings when you set it yourself. The same dollar amount can mean different things depending on how you’re looking at it.

Seasonality Graph

The last step is reviewing your selected base price before confirming it. To help confirm the impact of the base price selection, you can review what will be the average monthly prices across the year. Note that these averages are there as a reference only - the final recommended prices during high and low seasons might differ substantially from these due to customizations (such as Far-out Premium) and market effects (such as Demand Factor).


Base Price Nudges

With the Base Price Nudges, we keep a close eye on your base price and notify you if we detect a more than 5% difference between your current base price and our recommended base price. By receiving timely updates, you can ensure that your base price is always set at the most optimal level, helping you to maximize your earnings and stay competitive in the market.

Please note that these nudges don't automatically change your base price. You have the option to accept or reject these nudges. Also, you can click the "See recommendation in Base Price Help Tool" link, which will lead you to the Base Help Tool and allow you to tweak the recommendation we have provided.



Info
To learn more about nudges, check our guide here.

Base Price Override

To override the base price for a particular duration, we have an option to set a base price in Date specific override section. Once you apply this setting, it overrides the default base price set for the duration you select on your calendar. 

It appears under Price settings under Date specific override. You can also check for more details in Date Specific Override.


Other things to consider:

  1. Do not overthink the decision as you start. Instead, simply refine and improve what you have set over time. Several factors in our algorithm auto-adjust rates up or down based on your listings' performance.
  2. Revisit the base price every couple of weeks and then every few months to ensure you are considered within the market.
  3.  If you've been using a base price for more than a few weeks and want to make an adjustment, opt for small incremental changes (5-10%) from your current base price over time rather than a significant one-time change. This helps to determine the impact on your revenue safely.
  4. Before confirming the base price, also consider your listing's occupancy. In general, if your occupancy is low, increasing from the current base price is not a good idea. Conversely, if your occupancy is already very high, decreasing your base price is probably unnecessary.
  5. Once you have set up your base price, click “Save & Refresh,” then head to the neighborhood data tab, filter for your bedroom size, and see how your prices compare to other listings in your neighborhood. Adjust the base price up or down to fluctuate within the 25-75th percentile, depending on the desirability of the listing.
  6. If you are not setting any additional markup, Airbnb Host fee, or OTA service fees, the base price includes the service fee. So keep in mind that your net payout would be a little lower.
  7. Also, when thinking about base price, do not include taxes. Those are usually charged above your nightly rate.
  8. Do consider entering minimum and maximum prices for your listing(s). While all the calculations to determine your daily rates are based on your base price, the min and max prices act as stopping points. Setting minimum and maximum prices ensure your rates don't drop too low or spike too high. 

Frequently Asked Questions  

Q: How often should I change my base price?
A: By definition base price is considered to be the average price that works for a listing throughout the year. Any seasonal impact or demand changes in the market are already taken into consideration while pricing your listing. The Base Price Help algorithm assumes that once a base price is set up, it wouldn't change frequently or significantly unless something fundamentally changed about the listing. With this assumption, the algorithm evaluates the occupancy trends over a period of the last two months, giving higher weightage to more recent trends to see if the base price needs to be adjusted slightly to stay competitive with respect to the listings in your market in terms of occupancy. 
You can look out for any Base Price Nudge for your listing to see if the base price really needs a change. 

Q: Why does the recommendation say low historical listing occupancy even though my current performance indicators show higher occupancy than market?
A: The recommendation is based on the listing’s 30 day occupancy observed over a period of maximum 60 days, and not just the current performance with respect to the market. Moreover, the recommendations are refreshed once every week and reused for 7 days before the algorithm re-evaluates the occupancy trends and the recent base prices to generate a new recommendation. This might create a lag in accounting for the most recent occupancy trend changes in the recommendation.

Q: Why is my BP recommendation not changing?
A: Sometimes you may observe that the “Recommended Base Price” is the same as your current base price. If the listing's performance is reasonable and not too different from the market occupancy trends, the algorithm would recommend staying at the current base price.

Q: Each time I change my base price on my own, then that is what the Pricelabs “Recommended Base Price” is changing to. The recommendation just follows what I'm doing.
A: If the base price has been recently updated, in order to adapt to this changed base price the algorithm will sometimes recommend staying at the current base price until it learns the occupancy trends at this new base price. If the changes to the Base Price are very frequent, it becomes difficult for the algorithm to recalibrate and the algorithm is designed to reinforce the base price set by the user in such a condition. To make the best use out of the algorithm, we would recommend leaving the base price unchanged for 2-3 weeks to allow the algorithm to evaluate the occupancy trends at this base price. 

Q: Why is my “Recommended Base Price” so high(or low)?
A: The goal of the Base Price Help tool is to nudge the user gradually towards finding an optimal base price for their listing by observing occupancy trends. However, for this to work, it is important to have a good starting point. If you feel that following the Recommended Base Price is causing your prices to be too high or too low, it would be a good idea to use the Market Based/ Custom option to set your base price. After 2-3 weeks, the algorithm will recalibrate itself to generate recommendations keeping this updated base price in mind. 

Q: Base Price Help suggests that my base price is already slightly below the median market price, but I am not getting any bookings. Should I increase my base price?
A: In general, no. Base Price Help is only considering market prices, which is a good starting point, but what matters, in the end, is maximizing your listing's revenue. So, for example, during very low-demand periods, it might make sense to market your listing below the market median.

Video Tutorial



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