New host single fee.

[Petrona2]

Hi all, is any host happy with the new single fee. I am struggling to comprehend it. If you set too high high you may not be booked, set too low and loose a big chunk in 15.5 deduction. So I am thinking of going back to split fee. Let me know what your thoughts are.

[Helen3]

From a guest point of view it makes no difference @Petrona2 

[Petrona2]

I realised that.

[Roy1390]

I just tried using the app tool that Airbnb provides to automatically adjust the daily base price. However, as per Airbnb, this new single-fee charge will be applied to other host-charged items as well,  such as extra guest fees, cleaning fees, pet fees, etc. The app does NOT appear to adjust these other charges. If you, as the host do not adjust them manually yourself, your overall payout WILL be lower, it appears. It is very confusing.

Roy

[Richard3335]

Hi Roy, yes I just saw the notification from AirBnb and noted this comment "Airbnb service fees are a percentage of a host’s nightly price and any fees a host adds, like a cleaning, pet or extra guest fee.".

As you suggest, for a Host to receive a payout of the same amount prior to this change, the Host needs to set a grossed-up price that includes all fees, taxes and charges.

I think AirBnb might have missed something  in their tool / calculations. You don't simply add 15.5% to your previous payout to  arrive at the same payout net of the new 15.5% fee. For example:

1. If my payout was previously $100 (net of Host fees) then if I add 15.5% my new price is $ 115.50
2. If AirBnb take 15.5% off that amount I am left with $97.60
3. The correct approach is to take $100, divide it by (100 - 15.5) and then multiple by 100. E.g. 100 / (100 - 15.5) * 100  becomes 100 / 84.5 * 100, which gives $118.343. To check the result: $118.343 gross fee less 15.5% = $100.00 net fee

So, instead of increasing your old payout by 15.5% you need to increase the amount by 18.343 %.

And Yes, the new base amount needs to include all fees. So if I was charging $100 per night for 5 nights and had a $75 cleaning fee the maths is:

1. overall stay cost is $500
2. overall grossed-up costs are $500 + $75 = $575
3. what I need to charge a Guest per day is now $575 / 5  = $115 per night
4. grossing up becomes: $115 / 84.5 * 100 = $136.09. So I need to charge $136.09 as the new daily rate
5. checking this by working this backwards: $136.09 less 15.5% = 114.996 = $115.00 when round to 2 decimal places
6. Or put another way, my fee for the total stay is $680.45 which less 15.5% become $574.98

So this not as easy and obvious as AirBnb implies. I can see other "unintended consequences" with this change too. Consider what happens when you offer (say) a 10% discount on the daily fee you are charging. This discount of 10% would then be applied to all the components that make-up the daily fee, such as cleaning and taxes. I only ever discount the costs I charge and not the fixed costs of other providers, of which I have not control over. So basically need to pay more from my net payout to cleaners and other services / taxes.

If I have got any of this wrong please feel free to correct me (anyone) as am still getting my head around it.

Cheers

Richard

[Frances3408]

@Richard3335 . No, from what I can see you are on the money.

Never been a more important time for hosts to sharpen the saw (with thanks to Steve Covey's 7th habit, a text I read in business school many years ago).

[Richard3335]

Actually, as the new 15.5% service fee includes service fees paybale by the Host to AirBnb, this raises the question whether an allowance for GST on the host service fee is included or not (GST is 10% here in Australia).

I assume that the 15.5% service fee includes all fees payable charged by AirBnb to the Host, and so this must also include GST aplicable to the service fee. Hence the grossed-up price I set as the new adjust price must include:

1. My base nightly rental cost
2. An allowance for cleaning costs
3. An allowance for linen costs
4. Allowances for all other direct costs
5. Allowance for the 15.5% service fee
6. Allowance for the GST on the service fee (10% of 15.5% = an extra 1.55%)

Gee, if I truly want to provide pricing parity between the old and new pricing methods, this is getting very messy very quickly.

I will also need to cease offering discounts due to the complexities I outlined above. AirBnb's loss, not mine as other AirBnb hosts will realise that discounts will be come a dog's breakfast and potentially do as I am proposing.

[Shelley159]

Hi @Richard3335 

I agree with your calculations, but you don't have to worry that there's any discount that you can set on Airbnb that will reduce your extra fees (such as cleaning). The discounts only affect the nightly rate.

[Richard3335]

Hi @Shelley159 

It would be good if that were the case, to continue to set cleaning costs (as a whole-of-booking cost) independently of the nightly rate. AirBnb should make this crystal clear via a documented worked, detailed example that addresses all questions being raised here.

But norte that AirBnb have stated that the service fee of 15.5% will now be applied to all other fees like cleaning, pet fees, extra guest fee etc. So I ssume a Host will now need to add 18.34% to the cleaning fee in order to receive what their cleaner charges them?

In effect this increases the overall booking cost for Guests, making AirBnb Hosts look more expensive for same rental offered via another platform. AirBnb being less competitive is not great for it's Hosts.

Thoughts?

Thanks Richard

[Shelley159]

Hi @Richard3335 

I took screenshots from the host and guest views before I used the tool to update my prices, and checked again afterwards.

The cleaning fee was automatically (and correctly) updated using the tool. I didn't have to do it manually.

In guest view, my prices are virtually the same as before. The night of 22 July, for example, is now 0.8% cheaper - it's a night with a custom promotion. The night of 10 December, which doesn't have a custom promotion, is now 0.3% more expensive. These prices include the cleaning fee for a one-night stay in guest view.

[Richard3335]

Hi Shelley, I guess you wont actually know what fees AirBnb takes until a booking is made...have you taken any actual bookings with the new pricing rules in effect ?

Thanks Richard

[Michele283]

Thank you so much for pointing out airbnb's big math mistake. Seems unbelievable they missed this!

So, now my question is, in order to make this price adjustment across my whole calendar, I can't use airbnb's one click offer to make a one-time adjustment  updating my prices to account for the single service fee, I have to go through and use this math for every different nightly rate? More unbelievable!

[Shelley159]

I don't follow @Michele283 - what did Airbnb miss?

[Timothy794]

I understand your concern about the new single fee, especially with the 15.5% deduction. I've been using the single fee for a while now and it has simplified things for me. Just like using an ** to track expenses, it's about finding a system that works for you. Perhaps we can discuss ways to adjust pricing to minimize losses.

**[Link removed in line with the Community Center Guidelines]

[Richard3335]

Like most things, its all about providing poeple with sufficient information about changes being made and how new approaches will work. Unfortunately, there are so many pending questions about how this new service fee will work; and its not the Hosts who should be providing the answers to these questions, its the platform who controls the processes, the permitted rules, the timing of the changes...and basically everything else.

[Gentry10]

I actually wish AirBNB would go ahead and include taxes into the on sight pricing strategy they are going with.  Would help me out a lot if you could see the cheaper taxes in my area versus other STRs around me in slightly different zip codes/local tax zones.