How to avoid common pricing mistakes with Anurag Verma of Pricelabs

For those we very briefly mentioned Priceline, but for those who have never heard of a pricing tool, because there are a couple of companies out there that do it. The reason why I reached out to you is that I believe that you are the best at it. If you could just explain to someone, explain to me, I've never heard of it before. In, say, simplistic terms, what do you do and how do you benefit? Like short stay, accommodation owner.

We started off there to say, hey, at least everybody should be doing seasonal price, care, property and work. So that was like, we started off there to say, hey, at least everybody should be doing seasonal pricing. But then there's a lot more to it. Like, weekends usually have a lot more demand than weekdays. There might be a big holiday or an event coming up where you can increase prices or maybe if nobody is booking, you should reduce your prices. So what we tend to say is don't keep prices static. Even if you have seasonal prices, weekend prices go in often and change those. And what dynamic pricing services do is do that on your behalf. You still get to set controls. You still get to say, in high season, don't drop my prices this even in low season, but let some automation do the work for you.

I like the AI aspect of it, the automation aspect of it, because you're 100% right. Hello, my name is Mark Simonson and welcome to the Boostly podcast. We are in season seven, episode six and today we're talking about pricing. Sam, Like me, but for years I have manually updated the pricing for my family business, the Granary. I sit every Monday and I look at the prices and I adjust, go up or go down accordingly. And there are times then I really make a mistake here and I either price is too low or I price is too high. I may be missing an event that's coming up now. The reason why I've got Price Labs onto this episode is because they offer a dynamic tool that will help you with this based on their AI and also their member feedback. Now you may be thinking, well, I just use Airbnb for this. Well, Airbnb's model, I don't like it. Booking.com used to offer this. They've stopped doing it now. Price Labs have come in five years into the business. They got a lot of really good feedback and have got a real, really good reviews. Danny, a good friend of mine from Optimize my B and B, he recommended Price Labs to me. So I really wanted to get them on the podcast. We are very lucky to have them on today because they are super busy putting plans together for their future projects. I got the co founder Anurag on and he's based in Chicago. We had a great chat. We talked about the most common pain points of Price Lab members. We look at some of the strategies that you could adopt and how you can bring it into your business. And also as well, there's a free download for everybody that is listening or watching this podcast. All you need to do is go to boostly.co.uk forward/pricelab P R I, C E L A, B Go there, Check out the blog that they did for the Boostly website. In there is a link to the free download that will help you get started with your pricing strategy. So without further ado, let's flip over to Anurag of Price Labs and we're talking all about pricing.

A little bit of background. We started Price Labs about five years back. Before that I was doing the same dynamic pricing and revenue management stuff for United Airlines. So my background is in math and statistics. It was sort of a natural fit to do revenue management and pricing for an airline which uses a lot of that stuff. But a couple of my co founders figured out that at some point that they were hosting on Airbnb and it made sense if Airbnb also had something similar and it didn't. That's how we started off. Like we were like, maybe we should build something that will help short term rentals and vacation rentals build pricing as well as a large company like United Airlines or any other big company can do, right?

Price Labs have been going for five years. I guess it's always nice to kick off with this one. What is the one bit of advice that you wish that you had before starting Price Labs and starting up this huge business?

The biggest one is the value of user feedback in some ways, right? So when we started early on, from our background for my background, it was very easy to get user feedback in my previous role because we were working with the people, for example, at United Airlines, we would build stuff. We would meet these people every day or every week and get feedback from how things are going, what do they want built next and things like that.

For those we very briefly mentioned Price Labs, but for those who have never heard of a pricing tool, because there are a couple of companies out there that do it. The reason why I reached out to you is that I believe that you are the best at it. If you could just explain to someone, explain to me. I've never heard of it before in very simplistic terms. What do you do and how do you benefit short stay accommodation owners.

We started off there to say, hey, at least everybody should be doing seasonal pricing on property and book. So that was like we started off there to say, hey, at least everybody should be doing seasonal pricing. But then there's a lot more to it. Like weekends usually have a lot more demand than weekdays. There might be a big holiday or an event coming up where you can increase prices or maybe if nobody is booking, you should reduce your prices. So what we tend to say is don't keep prices static. Even if you have seasonal prices, weekend prices go in often and change those. And what dynamic pricing services do is do that on your behalf. You still get to set controls, you still get to say in high season, don't drop my prices this even in low season, but let some automation do the work for you.

I like the AI aspect of it, the automation aspect of it, because you're 100% right. I know. Speaking from personal experience, I used to be on our PMS every single Monday of every week and looking at what was coming up and I was always manually doing that. And sometimes you would just miss something. It's very easily done. Whether there was a big event coming up nearby or whether there was just a sudden spike in demand, quite easily missed. And for those that have never heard of this sort of software, and specifically for those that have got guest houses or short term rentals in touristy areas, having a pricing tool to aid them is only going to benefit them in the long run. So if you're listening to this, I'd love for you to interact. Go onto Twitter, you can ostlyuk, you can price labs and you can just say what are you doing with your pricing? The show is what is the one common mistake that you see owners make when it comes to pricing price and their property. But I believe that static is probably going to be the main answer. But is there anything else that you see mistakes that owners are making and.

It gets you almost all the way there in terms of making sure you're always up to date in some ways there's like you said, if you're doing it manually, you'll still miss a few things, but at least you're going to do way better than if you set something in the beginning of the year and then just never touch it the other. So when we are talking about pricing, but we tend to think of this as revenue management, like which is a little more wholesome and it includes other things as well. So for example, minimum stays is a Super important factor when it comes increasing your revenue. So it's not just setting the right prices, but also making sure right minimums.

I guess where I look at it now, you will know this and everybody knows this. Airbnb offers something similar where it's like dynamic pricing within their model. The reason why I look to Price Labs is because I believe that you just take that model and you just throw a bit of Popeye spinach on it and you make it amazing. So where did the idea come from for this with Price Labs? Was it born out of the frustration of models like that? And what. What did you try and do to make it better?

It actually didn't come out of Airbnb's smart pricing. I think Airbnb launched smart pricing somewhere in 2016. We started price Labs a couple of years before that.

So they saw that you were doing really well and trying.

It's hard to say. They might have been independently working on it. The thought that we had about why we want to do this is one of my co founders, Richie. He was hosting. He was a student at that point in grad school, and his roommate had gone off for an internship, and he had this extra room, and he's like, hey, let me put this on Airbnb. And he noticed that one Airbnb was suggesting a price, but it was the same price for every night of the year. And he knew that's just not what it should be, because, of course, I mean, he had a very technical background, and he and I used to speak often when I was working at United. And he was like, hey, summer in Chicago is definitely like double the. Double the demand as winter. Nobody comes, nobody want. I mean, some people do come to Chicago in winter for business, but very few people come for travel in Chicago in February. So we figured that definitely there's some need for doing this in Airbnb as well. And that's where we started off.

Nobody knows their local area and the local pricing better than the local person. And I guess by amalgamating the two, it comes up with a real nice recipe. So we're five years in Airbnb. Love what you do. They tried to model it. Obviously not smashed it as well as what you guys have done.

I wouldn't want to say that they looked at what we did and why.

This is my opinion, but I'm going to say this like, you've obviously done really well. You've come on my radar. Danny from Optimize my B and B was the one who really pushed me towards you. Guys. And so there's been a lot of things right, but not everything goes right in businesses. And this is a question I love to ask everybody. What was your favorite failure in the last five years for Price?

As engineers, I think one of the things we undervalue, or we tend to undervalue is how important marketing and sales is. We don't do as well on marketing and sales and stuff like that. Yet it's something definitely that we have improved over, over time.

So what is the plan for the next four years, five years, six years of price labs?

There are two or three things, major things that we are always looking to work on. It might look from the outside that hey, this product is complete, but for a lot of users there is still a lot of functionality that they would like to see that would help them a lot. I think for the next couple of years, product roadmap is pretty full in what needs to be done from our perspective. And as time goes by, it's a never ending process. It's always about improving on what you already have.

Well, I know that you've recently just partnered up with xivu. I'm a massive fan of xivu, so that's good to see. And like you say, there's a ton of other PMS's for you to reach out to. So it's exciting to see what comes up in 2020. And Price Lab kindly put a blog together for Boostly if you want to go and check that out. It's boostly.co.uk Pricelab but in that blog, and I'm going to yourself, Anurag just mentioned about this, there's a free download that people can go and get hold of right now that will help them with their pricing. Could you just explain and just give a bit more information about what that is, please?

The download consists of two parts. One is an Excel file which has a tab that comes in pre populated with sample data in there, but it's just five columns you can paste in and it's an Excel file. You're not giving this information. The file stays with you. So you're not giving this away to anyone else. You can paste in your reservations for the last one year so listing ID and you can leave that blank if you want. Start date of each reservation, end date of each reservation and you can see the format in there and what it does is it plots out these five really nice charts that show what kind of trends exist in your booking data.

And I think this is the key thing here, is that you are in complete control of what the minimum price is and what the maximum price prices. So you will never go below what you set the rate as. And it will just mean that there is something in the background that is automatically taking care of your pricing. So it can go higher or go lower, depending on what the local or the county level demand is. And I think that is the key thing that we're getting across here is one of the big things that I noticed, the big pain points in the hospitality community, the boostie academy, is that still short Stay Academy owners try and do everything themselves. They try and juggle all of these spinning plates at once. And with pricing, this is where your profit and your loss margins will be won and lost. Because of how you price your property. You could be just being static the whole way through. You set it in January, you leave it till December and you do nothing about it. You are leaving money on the table here. Or even worse, you're not going to be booking out your property because you're too high or you're just not being seen. So I do think that doesn't matter when you listen to this because podcasts are podcasts. They stay evergreen and people can find them at any time. Whether you listen to this in December 2019 or if you're listening to this in 2020 or 2021, if you act now and if you act now on dynamic pricing and don't just go on Airbnb and tick that box, because that is not what we're saying. Look at somebody like Price Labs. There are a ton of other companies. It doesn't have to be Price Labs. This is the one that I recommend. I like. I've got them on the blog, like Danny, who I trust massively from Optimize. My B and B is recommending them. And I've looked at everything and I think it's a super simple setup. Start to look into it. So I'm going to be talking about this a lot more. Boost the Academy members. You're going to be hearing me talk about it a lot more. The podcast. We're going to be talking about pricing because I believe this is something that is going to be really important. But Anurag, I just want to say thank you so much for tuning in today. Now, I know you don't do much sales and marketing, but is there a social media of choice that you like to hang out at? Is it Twitter? Is it LinkedIn? Is it Facebook? Is it Instagram? If someone wants to reach out and ask any questions to you after this, where would be the place to go.

They can do Twitter, Facebook and LinkedIn, but the fastest answer will actually come if you email us at SupportRice Labs co. There you go. That's what we monitor every minute and every hour. Facebook LinkedIn also work, but if you want a really quick, thorough answer, email is the best. But yeah, our Twitter is I think Pricelabs Facebook is Pricelabs1. And I don't know what LinkedIn's URL is, but if you search for Price Labs you'll find it in the show.

Notes in the blog post that come with this interview. We'll have everything in there and we'll also include URLs on how you can go find the blog that you put together for the booster website and also as well output blogs and links in there on how you can find out more about the Boostly Podcast if this is the first time that you have tuned in to the Boostly podcast, I just want to say thank you very much. You've got tons of episodes to catch up on. You can go and rate, review and subscribe whether it's itunes or Spotify or wherever you catch your podcast. So thank you very much for tuning in. This has been season seven Episode seven six coming back very soon with season seven Episode seven. But in the meantime if you have enjoyed this, like I said, please go leave it a five star review. It just helps it climb up the ranking. I want to thank hostfully who are the Boostly Podcast sponsors and I thank you for tuning in and we'll speak very, very soon.