Glossary
Dynamic pricing
Also called Demand-based pricing
Nightly rates that move with demand, season, events and booking pace instead of staying flat, usually set by a pricing tool or the platform itself.
Dynamic pricing means your nightly rate changes with demand instead of staying flat: higher for busy dates and events, lower for quiet nights and gaps in the calendar. It can run through a pricing tool such as PriceLabs, Beyond or Wheelhouse, or through the platform's own feature, like Airbnb's Smart Pricing. Airbnb also announced its own dynamic pricing in its fall 2026 host update.
These tools start from the market around you. PriceLabs' Market-Driven model, which it calls the best starting point for most users, begins with the average price of comparable nearby listings, then applies seasonal and demand factors (and, in some markets, a pacing factor) before your own minimum and maximum prices. The result lands close to the market average by design, and the tool judges your price by whether you book as fast as the market does.
For a host who prices flat, that is usually an upgrade: a 2021 study in Marketing Science found that Airbnb hosts who adopted Smart Pricing saw their average nightly rate fall 5.7% while average daily revenue rose 8.6%. What a tool can't decide for you is your floor price, your event strategy or what to do with your last open unit. Set the minimum from your own costs, and judge the result by RevPAN rather than by occupancy or nightly rate alone.