Airbnb · Strategy · Mid · 45 to 60 minutes

How should Airbnb guide host pricing?

Airbnb is an online marketplace where people book places to stay from hosts who list homes and rooms. Answer this product management case and get it graded line by line against a weighted rubric.

Product strategy
Marketplace thinking
Prioritization
Metrics
User empathy

The situation

You are a PM on Airbnb's hosting side, and the VP of Host Product has asked for a recommendation on pricing. Many hosts struggle to set nightly rates, especially when demand changes quickly across seasons, weekends, and local events. Some hosts likely price too high and miss bookings, while others price too low and leave money on the table. At the same time, guests can be discouraged by prices that feel inconsistent or out of step with similar options, which can hurt conversion and overall marketplace health. Leadership believes Airbnb may be able to use marketplace data to help hosts make better pricing decisions, but the path is not obvious. Hosts value control and may resist anything that feels like Airbnb is telling them what to charge. If recommendations are hard to understand, trust could fall. If guidance pushes prices in the wrong direction, Airbnb could hurt host earnings, guest value, or both sides at once. You need to decide whether Airbnb should invest in a pricing guidance product now, who it should serve first, and how to balance marketplace performance with host transparency and trust.

What to produce

Write a 1 to 2 page strategy memo.

Your answer must

Define the core problem in marketplace terms, including the host problem, the guest problem, and why pricing is hard on Airbnb.
Make a clear recommendation on whether Airbnb should invest in a pricing guidance product now, and specify the initial target users or use cases.
Explain the key trade-offs, including host control versus guidance, host earnings versus occupancy, and supply-side optimization versus guest experience.
Propose 3 to 5 success metrics, including at least one host metric, one guest or marketplace metric, and one trust or guardrail metric.
Describe how the product should make recommendations understandable to hosts, including what information or explanations you would show.
Outline a simple rollout or experiment plan that could validate the strategy before broad expansion.

Constraints

Hosts, not Airbnb, ultimately set the listing price.
The experience must protect trust on both sides of the marketplace, not just improve short term bookings.
Any recommendation system will rely on data patterns that may be hard to explain fully in a simple host interface.
You are recommending a product strategy, not a full pricing model or algorithm design.

Format

Use short section headers such as problem, recommendation, trade-offs, metrics, and rollout.

How Airbnb actually played it

Describes how Airbnb suggests prices to hosts based on demand and market data, with benefits to hosts and guests. Shows pricing guidance as a product feature that balances both sides of a marketplace.

Pricing tools help the supply side while keeping guests served
Data inputs should be explainable to hosts

Built from Airbnb's Dynamic Pricing Strategy: Product Analytics Case Study by HelloPM.