MEET the Founder of the Industry's Most Powerful Dynamic Pricing Tool!

Well, welcome back everyone to the Short-Term Rental Riches podcast. I'm really excited for our guest today. He's one of the co-founders of one of the companies that we talk about a lot on this channel because they handle dynamic pricing. So, today we're with Anorog Verma. He's one of the co-founders of Price Labs. How you doing, Anorog? I'm good, Tim. Thank you so much for having me here again. Yep. Yep. Fantastic to see you. Uh, I was searching my email uh just to get a little bit

more about your bio and I found an email between us from 2017 actually. So, we've known each other for quite a while. I know we've seen each other and met up at a bunch of the conferences. Uh, and we've been users of Priceel Labs for a long time. Yeah. Tell us where where is Price Labs today? I mean, you guys are massive. You're worldwide. just give us the the background. Where are you guys at today? I'll I'll go there. But before that, like 2017 was eight

years back. It's uh it's been a ride for I think the entire industry, right? Like a lot of the companies that are out there today, barely existed back then. Uh including us, right? And uh that's true. Things have changed so much. Yeah, they have changed so much. Yeah. and I'm excited to dive in today to see where you think things are are headed as well, but we'll we'll get to that in uh a few minutes. No. Uh absolutely. So, uh in terms of where Price Labs

is, uh we we started in 2014, I want to say. So, like you were like one of the uh started in 2014. uh built out a beta, put it out in the world to see is anybody interested in pricing the short-term rentals uh dynamically. Uh turned out they did and when that happened, we like oh maybe we should like register a company and and do this for real. Uh so 2016 is when we actually started uh for paid product or paid version of the product. So

like uh 2017 is when you showed up. You're pretty early. Yeah, pretty cool. Now, uh we manage or not we manage but uh we price about 450,000 properties around the world or units around the world. Uh which wow if you had asked me or anybody else in our team back then uh it the number just seems crazy now. Uh but uh we integrate with like 150 different property management systems. Uh I think back then I didn't even know that many property system property management systems exist.

There weren't that many. There weren't that many. No. I maybe there were that many that said like we we didn't know. Uh like you get to know about some of them. Of course a lot of new ones have also come up right. So that's totally the case as well. Um yeah and we our team is spread out around the world. So we started out in Chicago uh and were like pretty well mentally the entire product team needs to be in one place philosophy kind of folks

till co hit and then we're like oh now that we're doing remote might as well like spread around everywhere and uh so now we have uh presence in US for a little bit in I want to say a couple of folks in South America uh in Europe uh a lot of folks in India, a lot of folks in Philippines. So like uh spread all over the world. So uh yeah and started out just as a pricing system and over time uh we've been adding more and

more layers uh with the philosophy that our core expertise is in why revenue management and then to the data that powers revenue management. So we we scrape a lot of data, we collect a lot of data. So uh even if it is adjacent to revenue management, if the data is helpful, being able to say okay, how can we make this uh how can we solve a problem for a customer, right? So started with dynamic pricing. One of our big push was dynamic pricing by itself is

not enough. like uh every everybody has preference of what they want out of pricing. So you should be able to make the algorithm work for you if you want to. So went through that uh then rolled out like internal reporting, rolled out market dashboards and then last year rolled out revenue estimators as a product. So like if you're looking to invest in or if you're a management company and owners are coming to you to say how much can I make here like instead of that process

taking four hours can we make it take five minutes essentially like so well okay so yeah way back in 2016 when you guys started fast forward to today 450,000 properties using price labs around the world uh a team spread around the world and a tool that does so much more than it did back then. Um, including the revenue estimation which you just mentioned and I know our teams used quite a lot. Um, how I'm just curious how big is your guys' team now on? I mean,

how many people are supporting Price Labs? About 250 uh folks. Uh, one of our biggest teams is customer support. I think we have about 50 people in that team. uh about about a 100 people between engineering, data science and product development. So like a pretty large team there as well uh given how many moving parts there are to uh everything involved. Uh so yeah like a much larger team than I yeah yeah and your background or before you you started Price Labs you were working in

the airline industry. Yes. Uh can you tell us I mean a lot of times you know founders they start companies to solve problems where where they see them right and so it sounds like you sort of were working in this area and you brought it into the short-term rental space when it didn't exist. So that's the I had the benefit of having co-founders I want to say. Um so my background was like my background was strictly in like statistical modeling dynamic pricing those kinds of things

and I was doing it for United Airlines. Uh one of my and I had no intention of starting anything. uh one of my close friends from undergrad was managing an a short-term rental uh in Chicago and uh him and I were talking and he's like hey is going to get the going to be a big thing right like but there's nothing doing pricing here uh you know how to do pricing like should we figure out how this can be done for Airbnb and we got talking

and it's like okay like does look like something should exist here so let's let's give a step kind of a thing and so from that sense there was somebody who was in the industry as a middle first who had the problems uh my co-founder then we found a third person who uh used to work at orbits like had the travel technology experience at orbits okay I had an engineering background to say okay how does distribution work how do how to make the platform work so that

it's connected to everything and all of that so uh So yeah, so it was kind of a needs from the industry and then some skills that were useful for the industry uh broad industry I want to say. Well um yeah it's definitely a useful tool and you know that's evident in the 450,000 properties that are currently using it. Um and I know it's it's changed a lot you know um since we first started. I mean, yes, you guys are just releasing new features all the time,

but it's because things are getting more advanced, they're getting more detailed, the industry is getting more competitive. And so, I know that, you know, someone someone can turn on Price Labs and it can certainly help them in a lot of ways. Uh, and take away, you know, when we first got started, I mean, dynamic pricing was amazing. You didn't have to adjust weekend prices every week, you know, and do all that. But now there's like so many settings that it's almost could be overwhelming sometimes. What

What would you say to uh people out there that um are maybe just using it like turning it on but not really getting to the settings versus like the super users? So I want to say there is probably a happy medium somewhere in between. Uh so we we because we see both ends of the spectrum like we have customers who um set things up and then don't log on again for a couple of months. Uh and and then we have folks who are in there every

day and making small incremental changes up or down. Um like I said like you know for every weekend and our general thought process is uh okay you should not have to uh go in every day and do this tech and again it depends. We have customers who have 2,000 properties and three domain managers and they are in the system like that's their daily job, right? So we expect them to be in the till all day every day. But if you have one home for example, uh

the thought is you shouldn't up like you shouldn't be going in every day but it should be more of once a week once every couple of weeks kind of a thing. Of course, if you have 50 homes or 100 homes, then you will be in there a lot more. Uh but there is a happy medium like you can the hard part of pricing is you never know what's the right answer. Uh so if there is a date in future that's let's say there is some event

happening and and you haven't gotten booked yet you can start thinking oh the maybe the price is too high like let me see if I can lower it uh and maybe you lower it by 50 bucks and you and you get it booked 3 months out and then you'll start thinking did I lower it too much did I get booked too quickly like uh so you can very easily argue for both sides to say hey it's okay or it uh so the the thing that we

uh want to do uh like we have put in a lot of like made a lot of data available in the platform to be able to say to be able to be a better judge of like is this price too price too high or not or like should I change it right now in most cases the answer is maybe not uh but uh if If you have compelling evidence like and human beings have information that no computer might have or no algorithm might have. So there

are going to be times where you know absolutely no like I know exactly what's going on and I need to change this price but in most cases we when you look at this event and like is this price too high when that question comes up and some like folks email us to say hey like why is the price here so much higher than every weekend around it? uh we essentially go into your account and look at the same data that you have access to uh to

say hey look we are seeing this spike that is unnatural for this time of the year this far out these many bookings indicate something big is happening also for for this time of the year 3 months out 80% of the demand is yet to come so uh being priced a little higher than the market is is Okay, like if if more than half the demand was already booked and you were priced quite high and worried, that's a different story. But when most of the demand is

still yet to come and we are seeing a spike, maybe it's okay to hold. So uh what you have been doing I want to say in the last 3 4 years uh one we have been improving the algorithm but two you have been making a lot of this data available to say how can you answer that question of like should you worry right now or not uh essentially if that makes sense right right yeah I know yeah that definitely makes sense we've we've seen that on

our end like your market dashboards for example do a really good job of presenting data uh in in a really great way, you know, I think, you know, if you want to be like a super user, you you still have to know what data to look at, you know, and and you have to understand it. And it seems to me, you know, correct me if I'm wrong, but, you know, Price Labs helps out tremendously. Like, it's a tool. It's an essential tool in my opinion for

any short-term rental owner, vacation rental owner, boutique hotels. Um, but the job of a revenue manager is quite complicated, you know. I mean, people dedicate their careers to it and it's and it's one of the positions that a hotel will pay more for than almost every other position in a hotel. Um, and and so yeah, like how much extra revenue would you say? I know this is a really hard question, but like how much more do you think like a professional could squeeze out of this

tool just really understanding the data behind it? So we see two kinds of uh professionals. So I want to say actually before I get to this question I I want to go back to the previous one where there are so any pricing system like it it doesn't operate in in vacuum like we know quite a bit about the market or each market and how demand fluctuates and things like that but each property is unique right so like there are going to be things that you know

that you set up in uh in price labs uh and give it as an input and then you fine-tune those inputs over time. So like that's that's also like that is one of the things that like when you're starting off uh that is required that you do come in a little more frequently uh and if you have 50 ohms then uh you're probably adding one and losing some or all of that stuff is happening. So you're probably in the system quite a bit. So like it

is like it is totally okay to be in the system all the time. uh if you have a larger portfolio or in the beginning when you're setting this up when you're running attribute when it comes to professional managers um definitely like there are two ends of the spectrum where one we have some uh revenue management partners where they understand the system really well their first thought is not to say how can I make the system do exactly what I want to do. Their first thought is

like okay why is the system doing what it's doing now once they figure that out then they go in and say okay the system is doing this because of that but I know that that's not happening let me do let me bring in my own insights opinions and uh sort of in in the form of settings to to make it work better. Mhm. In those cases we see like a revenue manager can bring in quite a lot of uh value like uh a good revenue manager

might uh it's very hard to quantify I don't know how to put a number on it but a good revenue manager I want to say is as important as a good revenue management system. Um give us some numbers just for fun, you know, just a range. Um so we did a sort of a study uh where we looked at new customers who are joining Price Labs. And then we said, and we have all kinds of customers joining Price Labs in any given month, larger ones, smaller

ones. Uh across the board we saw something like by month three on average the rev bar was up by somewhere between 20 to 25% for folks who were small hosts. Okay. On the larger host or larger PM side I want to say the number was smaller. It was more in the 15% 10 to 15 percentage. But you could also see that they were already doing some dynamic pricing in in the sense that even before starting price they were doing something in the in the PMS or

on Airbnb right so it depends like how do you then say one thing you can say is like okay like the reason why they didn't see the lift of 20 to 25% is because they were already getting some lift just because of revenue there. So you can kind of say maybe that's the value that they bring like 10 to 15% is automatically the value that the revenue manager is bringing. But I also want to say a good revenue manager with a good tool is probably going

to be doubly effective because especially as a portfolio grows doing it manually is like the revenue manager spends more time numbers in than uh sort of using their uh their smarts to get uh get the most out right. What is 20% like a five to do some some guess is random guess like I right right there's no exact science for sure but but uh definitely there are a lot of very good revenue managers in the industry I want to say if you went back 10 years

revenue management tools didn't exist and revenue management as that discipline in short-term rentals was kind of almost it was there there were people who were doing it but even the distribution was so sort of difficult in a lot of PMSs you would say here's my summer rate here's my winter rate here's my snowboard rate and that was sort of the revenue management that was possible if you go back 20 years you had to send out like nobody was working online a lot of For larger PMs,

bookings would come from travel agents. You would print out your rates for each week and send it out to to travel agents to say, "Uh, here are my rates." And what do you do in that case, the revenue manager gets to decide rates once in the beginning of the year and that's it. Uh, right. Uh, now as technology is getting better, like they distribution is not even a question. They can change rates multiple times a day. uh they have all of the tools available to be

able to see what's happening in the market what's happening in their own portfolio. So uh yeah just both the human part and the technology part have just exploded in the last 10 years I want to say. Totally. Yeah. Well we we've been enjoying all of the new features that you guys bring on. Obviously you've brought them on for reasons you know and and there's good use for them. I'm just curious, do you know just off the top of your head, I mean like how many features

are in Price Labs if if you had to guess? I mean settings there's got to be just tons and tons, you know. No. So settings or so features like a checkbox to start showing some data of features. Um I would say more of like setting configurations config. Uh I think we have somewhere between 20 and 30 uh what we call customizations. Um so for example I'll uh by default last minute you want to discount rates uh given the structure of the industry discounting as we come

up with what the right discount should be for your market but you now can say hey I maybe you don't want last minute bookings for whatever reason or you don't want to discount as much last minute that's a setting what happens when there is a gap uh does a gap filler come in for minimum stays. That's a setting. Uh do you want far out prices to be slightly pumped up a bumped up a lot? Not bumped up at all. That's a settings. Like uh these are

like price settings and there are cosmetic settings. Uh like there are folks who say I don't want prices being all over. Just round them out to the nearest 10. It just makes my brain work a little better. That that's a setting. So um something like that we have about uh between 20 to 30 settings on but we don't want you to be using every one of them right like it's it's right it should be like I have this need and so I'm doing it uh what

we don't want is for you to go in and say oh there's a toggle let me turn it on uh uh in in most cases I want to say those those settings are not you don't need to do anything with those settings there are say five or six that we highlight to say hey here are the basics like if you want to play around to see what exists uh this is what you can play off with. Yeah, you you guys have done a really good job

on the platform with education. You know, there's I mean, if someone wants to, they can really really dig into things and learn them really well, but those sort of essential settings, you guys have done a really good job at just laying those out and explaining why things are happening. The education piece 100%. Right. Like if you think about revenue management systems uh or pricing systems, the other place that they exist in is hotels, airlines. And in both those cases, it's somebody's full-time job to be sitting

on that management system. Like they are trained for it. They get degrees in statistics or whatever else to be doing those roles. Whereas in this industry, in our industry, if you're a homeowner who's listing on Airbnb, you still want to use uh and so that's somebody's job then to to be able to give the right training. So like I think uh that's where like we said okay like we have to do this like because if we don't do the right kind of training then management systems

can be complex or a little daunting. So, as much as we do on the education side, I want to Yeah. Yeah. You guys have done a really good job. Question for you, Anorog. I I know, you know, a there's a wide range of people that tune into the show. You know, some people are just getting started, some people haven't gotten started, some people have large portfolios or boutique hotels. What's like one feature or setting that you think more people should take advantage of that maybe they

don't? Got it. So the central like if everybody who comes to price herbs if uh if I could tell them like one thing and we try to tell them that one thing in many many ways is of course you know this get the base price right. Right. So uh and to get the base price right, the base price, think of it as your average price per night across the year around which we'll say what to do on when there's an event, what to do when there's

a high season, when there's low season, last minute, fall out, all of that, right? But now like the the question is like how do you get every home is unique like how do you get this right? There are multiple places where you can look at data. Like somebody comes and asks us, we say, "Okay, um how does the market price for homes that are similar to you?" You can you can use that as a starting point. If you're an existing short-term rental, uh we also pull

in your uh reservation data and the there is a screen there's a tab in our next to our calendar called neighborhood data where we show you with your current settings what are your prices looking like in a chart. What are the markets prices looking like? You can also add show me how my last year's bookings look like on this chart. Right? Then you can say okay like if this is the base price I go with I would be like 40% higher than my last year's bookings

and at that point like most people should say okay that either I was underelling in which case I should have sold out everything uh but if I wasn't if I wasn't selling out everything then maybe this base price is too high like so uh so there are there's a lot of data available in neighborhood data and in base for you to be able to say okay what's a good starting point and then don't like you said totally with that don't set and forget it uh come

in every week and say am I getting enough bookings or not if I'm not getting there are indicators in the system to tell you that uh hey you've not been getting enough bookings but you also know that you have not been getting bookings so like you can say okay maybe set this base price too high uh when a new property comes in we autom autoatically try to include all of this information and come up with with the right base price. But um there is enough available

that I I would say if if everybody could go look at that, they would still perform really well. Yeah, those are um those are great features you guys added. Again, I mean, you know, all this stuff you guys just been adding and adding and it's been really really helpful. So, okay. So making sure someone has the base price right uh is is a massive first first step there. I think I said it more because you said there are folks who may not have their first short-term

rental yet is like the biggest lift you'll get is from getting the base price right and nobody gets it right in the first go but knowing that you fight it over the first few weeks to get to the sweet spot where you're getting just the right number. Awesome. Good stuff. All right. Well, what would you say to to someone out there? You guys just have access to so much so much data. It'd be amazing to see the the back end with you there sometime, but what

would you say to someone that is out there? You know, we work with a lot of different properties in a lot of different places and sometimes our partners that join us, they have their own opinions on their prices, you know, what a minimum should be and things like that, which of course, you know, it's their property at the end of the day. We'll we'll listen to what they say, but you know what we found is that the more variation you can have in your prices, the

more flexibility, generally the more money you're going to make. Would you agree with that? And if not, what what would you add to that? Generally speaking, very true. Like uh if you if you try to set a minimum price that is too high uh compared to the base price for example our system will give you sort of warning to say like hey uh for last minute booking is for low season like this doesn't give the algorithm the flexibility to go uh go around enough. Now people

have an opinion on their prices because they they know something right like it's those opinions don't come from vacuum they know something and it's okay to have those opinions. Uh what I would say is like then also look at sort of evidence in some case right so let's say you said I have a two-bedroom in Chicago uh and I never want to sell below 400 bucks a night uh and maybe this is coming from some knowledge that I heard some friends say that they sell their

twobedroom for 500 a night all the time right so I say they sell it for 500 why should I sell for anything below 400 at all it's okay like to start there but if you're going through February like right right now and your occupancy was 10% or 20%. um if at all. Uh February is pretty lenient, you know, with all the code. Uh then use that as evidence to say, oh, like maybe this 400 number was too aggressive, right? Uh let me see if I lower

it what happens. So go in there with your opinions, but also with an open mind to learn from from experiences. And you don't have to wait for like time to pass. uh like for February to pass to realize that uh you can also look at your forward-looking calendar like hey March is coming up all my prices are sitting at the minimum price because I set the minimum quite high. I don't have too many bookings. The market seems to be at 30% occupancy. Uh looks like I

could be gaining something by lowering my minimum price. Uh so it's it's okay to start with those opinions but if there is maybe you are that fantastic property that sets 400 and keeps getting booked across like February and March in which case you say I actually see what I said was true like I'm still getting bookings I don't need to change a thing. Uh and that's okay like uh as long as you I think when you said the revenue managers professional revenue managers I think the

number one thing they do and know is they know something but every day they're trying to gather more evidence to say okay if I change this rate lower it by 5% across my portfolio do I suddenly start seeing a lot more bookings or not? If the booking pace doesn't really change, they go back and understand, okay, by lowering by 5%, it's not like I got new bookings. I got the same bookings, but not 5% less. This was not a good move. So, so yeah, those are

the kind of things that uh many managers take a look at and sort of learn every day from from what they seeing in the system. Yeah, that that's a great point. um just using data to back up, you know, whether the decisions were were good or not. You know, unfortunately, we we see sometimes when people are just getting into managing their prices, trying to hold out for like, you know, the best Thanksgiving price or the best Christmas price, for example, where they actually risk not getting

booked at all. And if they don't get booked at all and they look at their overall profit like on a year-over-year basis, like maybe just not booking that New Year's Day makes you worse, you know, performing worse than the whole year before because you know we were trying to hold on to tidy. So the other thing like with new homes and I think this is like common knowledge in some ways with new homes that are coming onto an OTAA you haven't built the reputation on the

OTAA yet like the home might be great the property might be great but the listing is still new the listing doesn't have reviews right so uh to recognize that there is in the guest's mind there is a distinction between the property which maybe they fall in love with once they see it, but all they get to see is a listing and the listing if it has zero reviews, it they can't tell if it's a luxury property that you should pay a lot more for, right? So,

so understanding those pieces as well to say, okay, like you're selling nights on a physical home, but through a listing, so like what's happening on the listing is also important, essentially, right? That's a that's a great point and and we see that you know that it's highly correlated between you know the performance of a property the review performance and how much money it can charge. Um and and you guys have done great you know by adding the ability for us to to make some of those

filters and adjustments between properties so that we can compare properties at a little a little more uh or more similar much more similar versus just kind of against the general market. Awesome. Well, let's see here. Anorog, I I I could chat with you for hours. There's, you know, um you don't know this, but we talk about price labs all the time on this channel or I do, you know, and pricing because it's just really important, you know, uh it's super super important. Yeah. It's a topic

that's evolving. I want to say like there is something always happening. Uh yeah. Yeah. Yeah. It's and it's always changing and and it's changed so much since you guys started. So I'm curious to know um I I really want to ask you like where you see the industry in five years but I feel like that's like too far from now because so why why don't we go with like three years like where do you see the dynamic pricing industry what you guys are doing uh in

three years from now um so one access to data has become a lot better uh I think I think over the many years just the kind of data that's available across the board in the industry is just a lot better and that's kind of what's driving a lot more of the uh improvements that that we have been coming in with right and with that improvement in sort of available data just algorithms our algorithms should keep getting better and better that's one piece like for for any

any validate system like how good are the recommendations. The other is like okay how easily can somebody interact with the systems right and on that front uh I want to say there is always I in the last 10 years we have revamped our UI twice uh I think in the last 6 months we rolled out our sort of new UI to improve speed and everything but one of the things that we are we are seeing a little bit is also with the whole generative AI or

chatbased interface uh there is potential potentially an opportunity where like a lot of interactions that somebody has with the system can be made easier by allowing them to be typed in to say increase by base price for all threebedroom homes by 10%. Right? So you don't have to go to each three-bedroom property and do it by yourself. But potentially you could do that. So in 3 years maybe that becomes a thing. uh maybe sooner like don't know the answer. So uh and this is not necessarily

about our industry and pricing like uh where is user interface going or UX going in the next three years broadly in the uh web software is uh is uh TBD I want to say based on what what I'm seeing uh the other things that we are beginning to look a little more closely at is not just looking at and I hinted on this a little bit. Not just looking at prices in vacuum. Uh but also saying what is h like there are two parts to revenue

management setting the right prices setting the right restrictions but then also making sure your distribution is is fine like just um if you're not showing the right channels on the right channels you're not showing up on the search. So we are not going to get into channel management. Uh but can we help you sort of audit how good your channel management is right now or how good your listings are set up right now. Uh those are the kind of things that we are beginning to look

at to say okay it is a part of the whole story and we have a lot of data to support uh what's good what's not good and help our customers figure out those kinds of things as well. Yeah that's awesome. Well, we'll be excited to see those changes. We know that, you know, if you have 55 star reviews on Airbnb and you have 20 star reviews on Brbo that you should be pricing differently on those platforms. So, excited to to see those changes. Then the sad

part here is that the the 21st star reviews on Verbbo will mean that changing your perception of Verbo gets so much harder because you it's hard to get bookings that um all the bookings will come via Airbnb if you share reviews are that that far apart. Yeah. Yeah. Your BRB will just completely fall off. Well, uh Anor, I can't believe we're we're almost up on time here. Um, it's been awesome to see just everything you guys have done. So, congrats to you and and your team.

Uh, you know, 450,000 properties under using your software is no small task. Uh, and we've been happy users. So, we appreciate everything you've done. We're excited to see where where it goes. You know, as your algorithms get better, we'll have better tools. So, we're really excited for that. One one last quick question for you. uh the the name of the the show is short-term rental riches and so a lot of people naturally just think about the financial sense behind the word rich but we know there's

a lot more to life than that. So curious if you've changed something or you know a new habit or something's changed in your life recently that's enriched your life in a in a non-financial way. Very very recent the one the first thing that came to my mind was been paying more attention to exercising in the last week I would say. Uh so it's almost like you start seeing a benefit almost right away. So, uh that's one I've also as a new year resolution uh been said

to myself no more than one drink a week. So, I didn't go completely zero. I said, "Okay, one a week is good." Um don't know if that's having any effect just yet. I'm not missing it necessarily, but I'm I'm not also like, you know, waking up with all of this like you know energy that uh I've read sometimes people say that this is going to happen. Uh so TVD on that one how that goes but exercising is definitely helps me. Um I say I have two

young kids so I don't really have time for hobbies or anything. So you got your hands full. You certainly got your hands full. Well, hey, thank you so much for coming on and yep, you know, would love to have you back on. Things are changing quickly. Um, so until then, take care on it. Thank you so much.