There’s money in Airbnb—but that is if you rent the property at the right price. The problem is, many seem clueless on how to do it. Others are so pricey they cannot attract their customers. Others are dirt cheap that they don’t recover their investments.
Fortunately, this “Airbnb pricing explained” article will tell you you can use third-party platforms. It makes the job so much easier.
Nevertheless, if you want to offer your home, room, cabin, or other properties to the market through this platform, it pays to know how the system works.
How Much Does Airbnb Charge Hosts?
Contrary to popular belief, Airbnb doesn’t charge customers per se. Instead, it’s you as the host that does it. The platform only collects on your behalf, and it doesn’t get all the fees you asked. However, it is a business and, thus, earns income from fees you make in every booking.
There are three primary types of fees under this:
- Shared host
- Guest
- Host-only
Between shared-host and host-only fees, the difference lies in the property being rented out. If the room is part of a hospitality business, such as a hotel, then you pay the host-only fee.
The host-only fee can be between 14% and 20%, with an additional 2% if the rental agreement has a super-strict cancellation policy. This is after the company faced intense competition from websites such as Agoda and Booking.com that also now offer individual homes. The flat fee is supposed to provide professionally managed properties of greater flexibility with their pricing.
The system charges a much lower rate of 3% for those who run individual homes. However, the percentage might be higher for those offering Airbnb Plus because owners can command a premium price.
The guest service fee can cost 14.2%, and it covers cleaning and additional-guest charges. It doesn’t yet include taxes, such as value-added taxes. If you wish to add more, like pet fees or tour costs, you can show in your listing. But the platform cannot collect that for you.
Airbnb has a different rate for properties operating in Mainland China. It charges 10% whether you’re a host for individual homes or in the hospitality business.
The Power of Machine Learning
For Airbnb to make a lot of money, they need to rent as many rooms as they can. But to do that, they need to get one thing right: match the right properties to what the customers are looking for. Otherwise, they will experience a high bounce rate. People browse through the site and even check properties, but they don’t book.
That’s why they optimize machine learning. In hindsight, machine learning is using big data to glean information on customer behavior. They can then use the outcomes to improve many aspects of their business model, such as pricing.
For instance, their machine-learning tool considers the following factors to know what appears when you search for a property in a particular location:
- The neighborhood of the listing
- Quality
- Property review
- Demand
- Day of the week
Machine learning and their algorithms are some of the biggest reasons two similar properties in the same location can still not appear together on the search results and why one can command a better price.
In the end, for pricing, you can rely on your knowledge on how Airbnb works or use a third-party platform. However, for better results, why don’t you combine both?
