One of the most important things to know about pricing on Airbnb is that you, the host, are in complete control of your pricing. You can price it as high or as low as you want.
But with freedom comes responsibility.  Responsibility to the health of your local short-term rental market and the health of your bank account!
But, I’m guessing you already know that since you’re reading this blog post.
Airbnb does have its own dynamic pricing system.
Dynamic pricing just means that you are keeping your pricing flexible to meet current market demands.
Airbnb’s product is called Smart Pricing. Here is how Airbnb defines Smart Pricing:
Smart Pricing lets you set your prices to automatically go up or down based on changes in demand for listings like yours. You’re always responsible for your price, so Smart Pricing is controlled by other pricing settings you choose, and you can adjust nightly prices any time.
Airbnb’s Smart Pricing tool does take into consideration what’s going on in your local short-term rental market, but, if I’m being honest, not enough to keep you ahead of the curve and keep your profits healthy.
However, I will say, if you’re a new host I recommend turning Smart Pricing on until you’ve got 5-10 5-Star reviews on your listing. I believe that Airbnb will give your listing a little extra love if you use their Smart Pricing product. They’ll serve up your listing to more potential guests than if you’re not using it. Once you have several 5-star reviews you can now rely on that fact that your Airbnb is trusted among travelers and you can turn off Smart Pricing and replace your pricing efforts for another third-party pricing system, which we’ll talk about in more depth below.