Anyone using Automated Pricing Tools?

Question

I have experimented with Beyond Pricing and Wheelhouse. Anyone using other automated pricing tools they really like? I believe these tools help with the placement algorithm's of the listing sites by continually updating my pricing. The issue I am finding is that most of them claim to adjust rates based upon "events" by market but I'm finding that not necessarily true. I do end up overriding their pricing at times, especially in my low season. There is certainly a convenience factor that is worth a few bucks, but is it worth 1%? May not seem like a lot of money, but as my portfolio grows, so grows the 1%. Thanks for the feedback....

Mike

Ian Walsh · Answer

I have not seen technology that can accurately pin values every time beyond what a human can do.  In regards to filtering potential deals, that exists.

Michael Greenberg · Answer

@John D. @Ian Walsh I concur, human element and broad-stroke analysis is the best methodology, but I learned from running my own business for 25 years, it is best to work on your business instead of in your business.  The biggest thing for me is time value of money.  Is it worth capture a few extra bucks by combing through listings to maximize my revenue, or is my time better strategizing how I can make a bigger impact or exploring another expansion/property?  I lean towards the latter and why I use these tools.  I just think the tools are lacking some of this "tech broad-stroke analysis" and would like to see a more robust, empirical solution.

John D. · Answer

@Ian Walsh I think there's an analogy here.  Technology may be able to get you in the ballpark some of the time (for both rates and deals) but in both cases you are best served with human oversight and analysis after the tech broad-stroke analysis.

John D. · Answer

I'd love to see a better solution as well, but for now, not manually tweaking wheelhouse's rates would cost me close to $100k a year.  And most of that falls to the bottom line.

John D. · Answer

I am using wheelhouse with some success, and they have lots of rules-based over-rides that help me tune my prices by season and weekend/weekday since their algo isn't all that sharp.  Unfortunately they still handle holidays, long weekends, and special events poorly.  Their ability to discount our large homes when they are not rented "last minute" (for us last minute can mean weeks or even months ahead) is definitely helpful, although I suppose I could do that manually myself with spreadsheets.

Their software seems better suited for a 1 bedroom condo, as compared to a large house, as it seems they weigh a fair amount of data that is scraped from hotels.  Hotel pricing and occupancy may help you price a small condo, but it doesn't seem to by very helpful in pricing a large vacation home.

Kevin Lefeuvre · Answer

@Michael Greenberg what I tried to say would answer your exact question this way:

Yes it's absolutely worth the 1% they ask for IF (and only if) they do solve the problem you described. IMO they don't. That's why I said even free I won't use them.

again, just my 2 cents.

Kevin Lefeuvre · Answer

Yes @Eric Hiam . Waste of time IMO. Here's one obvious logic: I, like most of us here, am present on several sites, mainly vrbo/HA AND airbnb and then my own bookings. How could you possibly get my occupancy rate by only digging into airbnb data? At a minimum they should identify each host on each platform and add them up. It's too challenging and none of them is doing that. Without a correct occupancy rate the pricing strategy can't be right.

Another example much easier to do, they still fail: On Beyond Pricing i connected one listing on two platforms. So I taught their system that it's me , those 2 listings one on vrbo, one on airbnb. Their system is not able to cumulate the two links and give me my real numbers such as occupancy rate leading to pricing. Isn't this a basic easy thing? Tech support confirmed the feature is not there.

On mashvisor try comparing cap rate for regular rent vs. STR/VR. At least in LA, they show similar rates. We all know this is not true. Then their costs are not realistic. You can customize though, but then what's the benefit? If I want to customize, then my own Excel is doing the job. And the data is the one I collect from real comparable properties in my neighborhood.

So you need to identify your own comps, by checking on each site, similar properties; drop all the guys with no reviews (because they are doing something wrong or are brand new, so their data is not relevant nor useful), keep those older hosts with a lot of reviews, make sure you have a reasonable number, like 5-10 or more, (increase the radius to get enough); this way you learn a lot more, and your data is real.

Kevin Lefeuvre · Answer

Mike as we spoke I had tried Wheelhouse and just a couple days ago, tried beyond pricing.

Wheelhouse connector for vrbo was out of service, confirmed by customer support, and beyond pricing data collection was just plain wrong for LA. I'm not even talking about their recommended pricing.

As we are on the subject,  airdna, mashvisor and a few other analytics tools I tried : none of them are reliable for data or optimization. They do nice things, with great intentions based on wrong or partial data, and many people don't realize that because it's hard to verify their data.

I didn't use them in operation during free trial, which means even if they were free I wouldn't use them.

And the future is dark for them, IMO, because of the constant changes in airbnb,  vrbo, their processes and their  APIs.

John Underwood · Answer

I just check out 5 or so similar properties on VRBO. I have them in a spreadsheet with hyperlinks to their ads. Then a couple times a year I check their calendars and pricing.

I average them in my spreadsheet to see about where I need to be. I also sometimes see some special event pricing that I may have missed and can adjust my price for any special events.

I also check the news for announcements of any events like a fishing tournament that I didn't know about.

When I started out I tired to undercut most every ones pricing for a similar property. Now that I have 55 Five Star reviews I keep my pricing on the high side.

Now if I don't block off time for "maintenance" Homeaway / VRBO gets in rented.

I would also look at Airbnb the same way if it is popular in your area, but it is not widely used in my market. I have an account but it just doesn't do much for me.

It only takes me 15 minutes to look at comparable rental prices and make any adjustments. I wouldn't trust my pricing to any automated system and it takes so little time to do and I occasionally like to check out the competition.

John D. · Answer

@Michael Greenberg just a handful or properties, our average property will do ~$200k future 12 months.  The difference between pricing the Coachella Festival, or Thanksgiving, or another holiday or event correctly or not makes a huge difference.

If I literally just took wheelhouse's recommendations without touching them at all I'm sure it would cost us way more then $100k (or 10%) thinking about it further. I probably earn an extra $100k quickly just re-pricing a few of the largest periods, and then close to another $100k really diving into more detail with less popular holidays, events, tweaking how we last minute discount, and changing our minimum stay requirements for different time periods.

Sounds like a lot but a few hours a week is probably sufficient for me to get that done once I have the baseline.

Anyone using Automated Pricing Tools?

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