Bandgap tunability of lead mixed-halide perovskites makes them promising candidates for various applications in optoelectronics. Here we use the localization landscape theory to reveal that the static disorder due to Iodide:Bromide compositional alloying contributes at most 3 meV to the Urbach energy. Our modelling reveals that the reason for this small contribution is due to the small effective masses in perovskites, resulting in a natural length scale of around 20 nm for the “effective confining potential” for electrons and holes, with short range potential fluctuations smoothed out. The increase in Urbach energy across the compositional range agrees well with our optical absorption measurements. We model systems of sizes up to 80 nm in three dimensions, allowing us to accurately reproduce the experimentally observed absorption spectra of perovskites with halide segregation. Our results suggest that we should look beyond static contribution and focus on the dynamic temperature dependent contribution to the Urbach energy.