--- title: How Airbnb Measures Willingness-To-Pay description: Airbnb has implemented an advanced algorithm to help homeowners optimize their prices. Read more about what that entails here. image: http://blog.pricebeam.com/hubfs/Blog/willingness%20to%20pay.png --- [Skip to content](https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay#main-content) [![PriceBeam](https://blog.pricebeam.com/hs-fs/hubfs/lead-flow-images/PBLogoTransparent%20(1).png?width=400&height=100&name=PBLogoTransparent%20(1).png)](https://www.pricebeam.com/) - Solutions ![RGM360](https://blog.pricebeam.com/hs-fs/hubfs/RGM360_Headlines.png?width=319&height=255&name=RGM360_Headlines.png)[PriceBeam RGM360](https://www.pricebeam.com/rgm360) is an end-to-end Revenue Optimization Platform, offering unmatched value by integrating market research, internal data with AI and next-generation simulation and optimization tools. 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[Newsletter](https://www.pricebeam.com/newsletter) - [RGM Pulse Survey 2026](https://www.pricebeam.com/rgm-pulse-survey-2026) - About - [Company](https://www.pricebeam.com/about) - [News & Events](https://www.pricebeam.com/news) - [Partners](https://www.pricebeam.com/partners) - [Press](https://www.pricebeam.com/press) - [Careers](https://www.pricebeam.com/careers) - [Contact](https://www.pricebeam.com/contact) ![Search icon](https://5018647.fs1.hubspotusercontent-na1.net/hubfs/5018647/Design/Icons/Font%20Awesome/search.svg) [All posts](https://blog.pricebeam.com/all) March 17, 2017 # How Airbnb Measures Willingness-To-Pay ![Picture of PriceBeam](https://blog.pricebeam.com/hs-fs/hubfs/Images/PBLogoBadge240x240.png?width=50&name=PBLogoBadge240x240.png)   PriceBeam  ·  1 minute read # ![willingness to pay.png](http://blog.pricebeam.com/hs-fs/hubfs/Blog/willingness%20to%20pay.png?width=765&height=548&name=willingness%20to%20pay.png) Not all pricing decisions are “strictly business”, where the main objective is profit or revenue maximization. In some cases, the price is set based on a goal that the price setter wants to meet. Maybe he just wants to break even and live a happy life, or make just enough to pay the leasing cost of his Mercedes. This used to be a problem for Airbnb. The homeowners would set their listing’s price according to personal financial goals, for example at a level that would cover their mortgage costs or pay their own holiday expenses. And typically, a price that was aligned with these objectives, rather than market prices or the willingness-to-pay of the users, was much lower - and Airbnb would lose out on a lot of revenue from their percentage-fee. To encourage “strictly business” pricing that maximized revenue, Airbnb launched a new pricing algorithm in 2015 that would provide homeowners with an estimation of the willingness-to-pay for their listing, based on factors such as location, dates, local happenings, and how much time the user was booking in advance. These are just a few examples as the algorithm takes hundreds of different factors into consideration, showcasing just how many factors contribute to determining willingness-to-pay. Read the full article about the Airbnb algorithm [**here**](http://spectrum.ieee.org/computing/software/the-secret-of-airbnbs-pricing-algorithm). **[Click here to learn how you can measure your customer’s willingness-to-pay](https://www.pricebeam.com/pricingprocess)** Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay) [twitter icon](https://twitter.com/intent/tweet?url=https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay) [envelope icon](mailto:?body=https://blog.pricebeam.com/how-airbnb-measures-willingness-to-pay) ## Related posts [![pricing psychology.jpg](https://blog.pricebeam.com/hubfs/Blog/pricing%20psychology.jpg)](https://blog.pricebeam.com/psychological-pricing-3-strategies-that-work-in-2017) #### [Psychological Pricing: 3 Strategies that Work in 2017](https://blog.pricebeam.com/psychological-pricing-3-strategies-that-work-in-2017) [![ipad-tablet-technology-touch.jpg](https://blog.pricebeam.com/hubfs/Blog/ipad-tablet-technology-touch.jpg)](https://blog.pricebeam.com/how-offline-retailers-use-online-data) #### [How Offline Retailers Use Online Data](https://blog.pricebeam.com/how-offline-retailers-use-online-data) [![shutterstock_116418451_S.jpg](https://blog.pricebeam.com/hubfs/Blog/shutterstock_116418451_S.jpg)](https://blog.pricebeam.com/creating-cost-certainty-predictability-that-pays-off) #### [Creating Cost-Certainty: Predictability that Pays Off](https://blog.pricebeam.com/creating-cost-certainty-predictability-that-pays-off) **Pricing Right, Made Easy** Almost all companies struggle to price right. They use methods such as cost plus a fixed margin. They use guesses and gut feel. They peg their price to a competitor’s. They price themselves too low, leaving money on the table, or too high, forsaking sales volume. They lose out on the profits they should be earning. PriceBeam changes all that. With a methodology that is confirmed to be accurate in thousands of projects, PriceBeam provides AI-powered market insights software that generates actionable insights into consumers' willingness-to-pay, competitive price positioning, packaging and assortment dynamics, promotional benchmarking, and opportunities from new product pricing. 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