Guidelines to continue the business?
Guidelines to continue the business?
Hi there everyone!
We often see topics on pricing here in the CC and there are several different ways that hosts decide their nightly rate. One of these ways is based on breaking down the overhead costs and deciding the nightly rate dependant on those costs.
However, this is sometimes easier said than done, for example if you list a private room, it can sometimes be difficult to allocate what costs are used by you or your guest. A real headscratcher!
So then, hosts, how do you break down your costs to work out what price to charge?
Share your strategies!
Many thanks
Stephanie
Hi Stephanie, thanks for starting this thread. I don't know that even you appreciate how important this thread can be to a host.
I made a comment to Stephen in another post the other day about the importance of setting a proper accounting package in place before arriving at a listing amount.
Too many of us hosts are simply guided by those other listings around them and their reaction is...."Well if those guys can make a profit, so can I"! Nothing could be further from the truth.
You can always adapt your accounting suite to suit your individual circumstances but you must have a framework somewhere to start from.
I have used something similar to this since 2015 but I picked this up from Ben I think it was.....another host here on the CC who put it into a more useable form than the Excel sheet I was using some time back and I started adapting it to my individual situation.
I am enclosing the blank screenshot Stephanie, and I recommend every host download this screenshot by right clicking the image and saving it as a picture file! If you do that you will then be able to open this file in 'Paint' or another picture processing program and put your own figures into it......
with this template you can make an accurate assessment as whether you are going to make money or lose money, and you can set your listing amount appropriately.
I have used this a number of times on hosts in my area and a few of them were supprised to learn they were actually making a loss. Longer stays were nearer the break even point but one night stays were costing them money.
After doing all the sums, this is how I arrived at my listing amount and actually make a reasonable profit out of hosting.........
Now of course this is not totally accurate because the cleaning fee is only applicable as a $10 unit to one night stays. Thereafter its value is deminished by the length of the stay'. However, that does not have a large impact on these figures.
Sorry to be such a bore Stephanie but this is an important topic that you have raised and I felt the need to contribute to it!
Cheers.....Rob
I would not consider a seperate stand alone property to be worth consideration on a short term rental basis Sandra. I can't afford a property that is so stand out beautiful that it will command any price I might have in my head. I am always going to be in the competetive end of the hosting spectrum where pricing is an issue.
I do have a 10 berth houseboat on the Murray based at Kia Marina, just north of Mannum but I have that on the market at the moment. Floating real estate loses value each year unlike bricks and mortar and each year my investment there is worth a bit less than it was last year
For my home situation many of my listing costs would have to be paid whether I was listing or not so, they cannot be charged as a cost of hosting....gardening, garbage disposal, power and water! The most significant one is our power which I have gone into on another thread of Lizzie's. With our cost of electricity the guests consumption could easily top $10 per day.
Sandra, an STR in the back yard is a good proposition for hosting. I could not see myself doing it through a remote listing somewhere. I am too old for that!
Cheers.....Rob
