There are a few other factors to consider that I did not see other people mention as I skimmed through the thread. People book on Airbnb not only to save money, but also to have a more unique experience. Does your rental have a great sense of style? Also, the fact that there are no other lodging options in your immediate area might work to your advantage if there is a reason people would preferred to stay in your geographic area…
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YES!!! I’ve been saying this for some time. There should be a + / - chart.
Some things to consider is - do you serve breakfast? how far are you from 'city center? do you have real beds vs air beds? kitchenette? on-site host for assistance? a place to sit outside? tourist information? private bath? And more - hot tub, pool, water view, ocean view, etc. .
Of course, you would still need some kind of base price - that’s hard to peg. If you don’t have competition, that is one thing. But what draws people to your area? Will they be 1-nighters, week-long stays?
But once we start with a base price, and compare what our neighbors are charging, such a chart could help us.
As a guest, breakfast, proximity to transportation, host on site, private bath, kitchenette, and outside space are all things I’d be willing to pay for. A view would be a bonus, but I may not pay for it.
I’d think that we as hosts, who are sometimes also guests, could come up with a list of what is worth charging a bit more for.
I look at my breakfast as a ‘hook’ - something that sets me apart from the competition, but I don’t add to the price. It’s just a way to get them to pay my price.
Though right now it’s dead dead dead dead dead. Oh, I think I already mentioned that in another post, lol!! I know it was like this at the end of August and for both September and October I was fully booked. So, trying to not freak out.
So, perhaps I’m not that crazy after all. To me this seems obvious. Base rate* + amenities = day rate.
Why should I bother to build in a kitchenette if I cannot get some $$ for it. The Super8 motel for $55 does not offer that. I should be able to get more if I do and it is stocked with goodies that I have to pay for.
Seems this was said before. There are people who will stay at a cheap motel (I can be included in that mix) and there are those that want more and will pay up for it… within reason. It is the latter that I’m after and so should you all be or you’re wasting your time.
*How to arrive at Base Rate:
- Room rental (including fees to heat, cool, supply water)
- Room tax (if any)
- Cleaning/preparation fees
- Expected Profit
Amenities: The icing on the cake, More $$ for us after it all gets paid off, that is.
We had a small advantage as I quit one of my part-time jobs and we had a ltr move out for airbnb. (don’t judge, she wasn’t pleasant to live with anyway!). So we had that as our base - my loss of income and loss of long-term rent income) of what we need to make to make airbnb worthwhile- also counting what we could make if we rented out both rooms to students long term. Also factoring that str has the advantage of us having days off, room when family comes, and getting to say ‘good-bye’ to those guests we don’t enjoy.
Of course, we keep putting money INTO the space to improve it…we wouldn’t be doing that if it were two students down there. But we are having fun doing it…
So we used that lost income amount as a base, a minimum. Then I decided how many days we want to be booked. We rent in our home, I have three kids, we need time off for special events and to take our own vacation.
I came up the number of days I want to host, and divided the required income by those number of days, and came up with an average ($105) that we would need to make per night to make str worth it for us.
Then we worked some numbers, using averages, to calculate what our hourly rate is - $20 an hour, which is what cleaning-people and babysitters make in our neighborhood. Not great, but there are the other advantages, PLUS we do it as a family.
So we are satisfied with that rate. I’m still a bit below other ‘whole-house’ rentals but since my ‘whole-house’ is an apartment/suite in my basement with a small kitchen/living area combined I take that into account. But I also serve a nice breakfast, etc. etc etc.
So there are different ways of thinking of your rate - competition, what the market will bear, etc. - also, what is the minimum you are willing to accept for the work you have to do?
Some pricing experts say that you should be booked 50% 30 days in advance and (I think) 30% 90 days in advance.
We then did some research of what the ‘seasons’ are here in DC -easy since we have lots of tourists. We then set a low, high, and shoulder seasons and adjusted the price accordingly. Then we added for specific dates we know are big tourist times.
So, you can try different calculations - set your price. If you begin to book up fast, whoa!! Put that price on up there, lil’ missy!! This happened to me - my price was to low and by last February a lot of my summer was booked… I didn’t know until kind hosts on this forum blew the whistle for me.
Keep an eye on your calendar and see how it goes at that price. If no one is biting, lower it a bit. Is it the season where you are? Here it is not.
You can wait and think about the kitchenette later, UNLESS you think it will benefit you in someway even if you don’t continue with STR. We added a whole bathroom after hosting for 5 months, but, that bathroom is only going to increase the value and use of the space. Same with the work we are doing now - even if we stopped airbnb tomorrow it is still a great improvement and adding value to the home. You could add a microwave and minifridge and see how it goes.
I did a little questionnaire for awhile, asking guests how important the breakfast was to them choosing us, and then, in enjoying us? Overwhelmingly my guests check ‘VERY’. I also asked how important a separate entrance would be and they said ‘not at all’. That doesn’t mean that I’m not losing bookings because they don’t have a separate entrance, but it gives me a little idea.
So you can play around with things and see how it goes!!!
You’re not locked into much start out slow and see what works for you!
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That’s funny about Motel 6. That’s what I use as my reference point except it’s $91. In your case I’d start with a price at least $10 or $15 less than those motels. Unless you are offering a stand alone place with private entrance you can’t expect people to pay more.
Thanks for you very detailed reply. You and I think alike, it seems. I have not run the numbers the way you have… accounting was never my strong suit… but I like your rate of $105 better than $50. I expect to be somewhere between those two or I will not attempt this venture.
I mentioned this before. There is a real B&B soon to open in a large, old home just up my street early next year. Similar in style to a B&B home in my previous home town and that place is getting $200 to $300 per room, per night. It’s a classy place, don’t get me wrong and they do serve breakfast. My point is, this place near me will likely try for those same high dollars. Fine, go to it. That will make my day rate seem even better.
My reason for (eventually) adding that kitchenette is I was told, here, not to allow folks to roam my kitchen. I have this space… a jog in the hallway about 5’ wide by 3’ deep… right across from the bedroom I plan to use. Picked up a piece of unused laminate counter top for $25 from the local Habitat for Humanity Restore (great resource BTW for anything needed for your place) and will mount that to the walls. Already have a 4 cu ft. fridge to go underneath. Will add a shelf for a smallish microwave and a coffee maker.
It just made sense to go this way and solve a problem before it began.
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Sounds great!! A plus for people who want to at least be able to warm up leftovers!
If the cheap hotel is $55, then upgrade to a Queen bed and set your rate at $60. You offer a much better experience than a rock hard bed in a fifth rate motel. And explain why it’s a superior experience in your description
If you have a kitchenette, put in a toaster or toaster oven, and microwave. You need to have 'workstation/computer space, WiFi and adequate inlets to charge things as well. Supply milk, a couple kinds of cereal, a couple bottle of water, and other simple brekkie items like commercial hand pies. Cost of groceries is a cost of doing business, not an add-on cost to the guest.
Cleaning Fee and Taxes are charged separately after all else is in. For that size space, call it $15 or $20 cleaning fee. Make sure you get registered with your city/county tax department as you have to do the remitting.
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If it were me I honestly don’t think it would be worth my while at that price, either. (I’m not sure how we went from $50 per night down to $42.50 - the guest pays the additional taxes so their rate is $57.50.) But the cheap motels were the only comparable mentioned previously. It’s a place to start so you can gauge who your target audience is and what the market will bear as it seems limited with only people who are there to visit family. Then you raise your rates accordingly.
If you’re rethinking doing this at all why not get a larger bed from Craigslist, double that price to $100 and see if you get any guests? If you have half the guests at double the rate you’re better off since you don’t want to share your house “for days on end”.
The info about the $200-$300 per night B&B down the street would have been valuable information for people trying to help you assess your rate. Are they getting many guests at that rate? If so, you know there may be more potential for a higher cost than we thought.
Yes, I agree that $43 a night may not be worth it, but it also depends on the motivation for renting it out in the first place. If @CanadianHost is retired, or otherwise has free time on their hands and would like to meet some people and just turn a spare room into a bit of cash, it might be.
@CanadianHost - if the local motel is charging that rate they are ADDING the tax to that nightly rate. So can you. Many of us do. My guests pay my nightly rate to airbnb and pay me the sales and occupancy tax in cash to me. Otherwise, you will be paying tax on your income of $50 (for example) but only being paid $42.50 in income, the balance being THEIR TAXES. Remember those taxes are not for you to pay, they are for the guest to pay. When you go to booking.com or other, they quote you a nightly rate and then add the tax.
So you can charge $50, then collect their tax when they arrive. Charge a cleaning fee so you can still take ‘one night stands’ and make a profit. Check with your homeowner’s insurance - there are many posts about that.
You misread the post.
The $200-300 rate is for a B&B in my old home town some 30 miles away. It looks, from the outside, like a new B&B yet to open up the street from me now. Similar old-style, three story 1800’s home.
I’m only speculating what they might be asking for rooms. I have no actual knowledge, but assume it will be much more than what you feel I can charge for mine.
Again, I like your thinking.
This answers another question I had. I see rates for room rental, room tax, cleaning fees broken out in many listings. More so if I view them on the web as opposed to using the Airbnb app. Not sure why that is (?)
I had asked, in another post, how if Airbnb collects the money how the room tax gets paid. But you’re saying here they do not collect the taxes or, I assume, the cleaning fees either, is that correct?
This means the guest pays the host “at the door” when they arrive. Just how does that take place? Seems a bit awkward. “I need $30 from you before I can let you in”
Do you issue an invoice to them, take credit cards? If they’re staying for several days do you collect it all upfront? Is the cleaning fee a one time charge or for each night?
As I sent my reply I realized I was assuming -
Where are you? Here in Maryland, they do not collect taxes, nor in Hawaii, I think not in VA. It depends, I think, on the state.
They do collect the cleaning fee and remit it to you bundled with the rent.
Here in my state, Connecticut, they reached an agreement this year between Airbnb and the Department of Revenue Services. Hosts have to pay the same 15% “room tax” as motels and hotels for stays of less than 30 days.
So, I’m still not sure what you say you are collecting at the door. Is the room tax collected by airbnb? Is the cleaning fee collected as well?
If “bundled with the rent” can I assume this is somehow separated when they file a 1099 on you? Otherwise you are paying income tax on that room tax.
I just found this on the Airbnb site:
State of Connecticut
Guests who book Airbnb listings that are located in the State of Connecticut will pay the following taxes as part of their reservation:
Connecticut State Room Occupancy Tax: 15% of the listing price including any cleaning fee for the first 30 nights of any reservation. For detailed information, visit the Connecticut Department of Revenue website.
That depends - in some places airbnb collects in, in some places, not.
OK, See above, I added some info from the Airbnb site on this.
So it appears they collect it all for Connecticut. The room rental, the room tax AND the cleaning fee (if any). Then pay it out to the host less their 3% commission from the room tax part (?)
So nothing is collected at the door, then.
The host fee comes off of the nightly rate.
They collect the tax on behalf of the guest (yay for you!) and submit the entire tax to the government.
Cleaning fee and nightly rate comes to you, less host fees.
You will pay federal income tax on the entire amount they pay you.
Do check with your homeowner’s insurance policy pretty quickly.
Don’t forget to save for your federal & state income tax - you will pay that on your next receipts.
Thank you for the clarification.
Not having to handle and submit that room tax will be a blessing. I do that now for quarterly sales tax for my business.
That was precisely my point when I asked @Cresentwrench[quote=“CanadianHost, post:30, topic:9531”]
I’m not sure how we went from $50 per night down to $42.50 - the guest pays the additional taxes so their rate is $57.50.
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So are we! And while you know where your home town was and where you live now, none of us do (was it in a better location… who knows?). We haven’t seen your space so you’ll have to gauge if your furnishings justify charging more. Maybe your space is SO beautiful people will consider it a destination place and you can charge more than the $200 a night BnB from your “home town”.
In the end, you can ask whatever you want for your room - it is totally YOUR call. People here have offered you advice based on so many factors, the main one being “what are others nearby charging?” which is a good BASIS to start with since it really doesn’t sound like there is a lot of demand in your area. Less demand = lower price.
All of these suggestions are simply attempts to help guide you. Charge what you want and see how it goes - if $50 a night isn’t worth the time (and you aren’t inclined to share your space anyway) then charge more. I think you have a figure in your head of what you wanted to charge “somewhere between $105 and $50” so go for it! Try it out and see how many bookings you get.
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