‘Tis the season to get moving.
Ready to dive into the deep, deep world of hosting an Airbnb? Figuring out an exact Airbnb rate can be more art than science. Such is business!
At the very least, it should cover a few base principles. Like your costs.
Pricing can be as easy or as hard as you want it to be, and while Airbnb's Smart Tool pricing does a pretty decent job of getting the ball rolling, we are always superfans of breaking it down. It makes you a better, stronger and, most importantly, a more profitable Airbnb host.
The math can get complicated. But it's completely manageable.
If you have no idea where to get started, we've included a super handy worksheet for figuring it out.
Cover the base expenses
Because, what is the point otherwise?
Our suggestion is to figure out what the daily base rate is, including utilities, and then divide that number by 30 (not 31, and February is strange!).
Then once you’ve got that number, multiplying that by 30% (or 1.3) should account for some extra profit without being straight up unreasonable. (I mean, who furnished the apartment? 🤔)
To make things slightly more complicated, Airbnb also takes a 3% transaction fee from hosts.
Though there's a lot of variables—like using a different number of days in a month and a different profit multiplier—here's the base formula that we think should be used:
Here's the formula:
((Daily rate + Utilities / 30)*1.3)*.97
For those a little lazier, we've taken the guesswork out by providing an Excel spreadsheet that calculate lots of these things for you and more.
(It will also let you easily figure out and see daily, weekly, monthly rates at a glance.)
This dynamic Excel worksheet will help you figure out what base rates should be (and if you’re listing either a private room and/or entire home). Not only will it account for utilities, there are also options for the changing the days of the month and profit multiplier.
Once you’re done plugging in all of the numbers, it should give you a good idea of what a good daily, weekly, or monthly rate would be, and what these numbers add up over time.
NOTE: Viewers have the ability to download, print or copy the worksheet.
Adding small, thoughtful touches
Personally, I've never been a big fan of lowering the base rate—a girl knows her worth—but if for whatever reason, I have always been a big fan of adding VALUE.
For easy wins, consider adding unlimited coffee and tea, and any other little extras to make a guest comfortable such as business security cameras. There are tiny of inexpensive touches that go a long way.
Got a top-of-the-line cooking gear and a stocked pantry full of oils and spices? Make sure that's pointed out in the listing (although you may need to let go of your babies, and realize the copper fry pan will be FINE).
If you want to go the extra mile, invest in decent furniture like a desk and/or a travel crib. These are the things that will set you apart as a host from many others.
Though these are more expensive investments, these may not be worth it until you have a few reviews and reservations under your belt. See what the demand is like first.
The cleaning, extra guest and incidental fees
Quick Note: Airbnb has made it slightly more difficult to set these fees. Go to this page, and then select the appropriate listing. Select Pricing and go to Standard fees and charges to find the options available.
This is where you can get a little bit more creative with the pricing. Every place is different, and every host has their own prices and/or needs.
I doubt a 2,000 square-foot apartment would cost $30 to clean, though that may be sufficient for a 400 square foot place.
The three main fees, in our opinion, are the cleaning fee, extra guest fee and security deposit (technically, not a fee, but it does affect how much interest a listing may get).
In general, it's our suggestion to set the cleaning fee at cost with a little padding for margin (like $10). Keep the security deposit at a reasonable price unless there's expensive stuff in the place.
The most variable is the extra guest fee. For instance, if you do mind hosting couples, consider offsetting with that high fees for extra guests to deter them.
For the record, I think hosts that charge resort fees, management fees, community fees and linen fees (seriously?!) are terrible hosts.
Basically, to state the obvious: The less fees tacked on for a listing, the easier you will make for people to book.
Figure out the local competition
Of course, if there are better deals in the neighborhood and no one books the place, there is no point is listing it. Find a reasonable rate that doesn’t undercut you and see who bites.
Don't spend too much time trying to pin an exact number down.
If you’re finding there is not much interest, considering lowering the price a little bit until there are decent reviews established.
Likewise, the opposite holds true. If you find that you have too much interest, consider raising it. Managing an Airbnb can be a full-time job!
Use Airbnb's smart pricing tool
If you don't want to do any work, Airbnb has their own smart pricing tool.
It's probably the best gauge for seeing if the pricing that you set is on the right track, and guess what? You don't have to use Airbnb's recommended prices!
Smart Pricing tool in action.
For instance, you can see above that we have chosen to add $2 to Airbnb's "suggested prices," and we particularly don't think we will be the worse for it.
If you want, Airbnb does let hosts give a special discount to the first few guests.
On the other hand, the extended pricing doesn't seem to give too many options for setting custom rates, though hosts can play around with the percentages a little bit to yield the number that they are looking for.
Tweak these percentages until you like them.
(In our opinion, these discounts are way too much!)
Go with what make your heart—and wallet—sing!
