Hi Everyone! I am a new host and am trying to get more booki...
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Hi Everyone! I am a new host and am trying to get more bookings without decreasing my price so low that I would be concerned ...
Latest reply
Hi folks,
As new hosts, my wife and I decided to calculate how much it actually costs us to provide our space for a single night, in the hope that it would help us with pricing, so we wondered if anyone else had calculated their cost per night lately?
We were taking a leaf out of Alex Polizzi's book, since we quite enjoy watching the Hotel Inspector. Having watched a recent episode, we learned that we had fallen for Alex's biggest gotcha - running an accomodation based business without calculating the bare minimum we need to charge in order to break even. We were operating on the assumption that if money comes in, we must be making a profit somewhere. Terrible planning, now that I think about it.
I thought it would be hard to whip up a calculation, given that we don't yet have 1 years worth of profit & loss to look back at, but after about 30 minutes we managed to come up with a very good picture of what our direct costs are likely to be (the costs that would no longer incur if we stopped renting our space) and what our indirect costs are likley to be (the costs we attribute to our Airbnb business for tax purposes, but we would incur anyway if we ended the business tomorrow).
Here's a close example of what we ended up with:
| Cost of 1 night in my Airbnb | |||
| Income per night | |||
| Base price (average) | $147.12 | ||
| Cleaning fee (average) | $13.81 | ||
| $160.93 | |||
| Direct costs | |||
| Airbnb 3% service fee | $4.83 | ||
| Cleaning costs (average) | $19.73 | ||
| Gardening (average) | $16.44 | ||
| Linens & laundry | $5.43 | ||
| Toiletries & consumables | $1.01 | ||
| Food supplies | $9.39 | ||
| Batteries & lightbulbs | $0.27 | ||
| Garbage | $0.26 | ||
| Superhosttools | $0.30 | ||
| Accounting | $1.37 | ||
| Printing | $0.07 | ||
| Gas & Electricity | $6.16 | ||
| Advertising & promotion | $0.10 | ||
| Maintenance & Depreciation | $6.47 | ||
| Office supplies | $0.11 | ||
| Income taxes | $5.58 | ||
| $77.52 | |||
| GROSS PROFIT PER NIGHT | $83.41 | 52% | |
| Indirect costs | |||
| Alarm monitoring | $0.69 | ||
| Council rates | $6.43 | ||
| House insurance | $2.93 | ||
| Mortgage interest | $54.89 | ||
| Telephone and internet | $1.64 | ||
| Bank charges | $0.12 | ||
| Parking permits | $0.17 | ||
| Vehicle mileage | $2.19 | ||
| $69.06 | |||
| TOTAL COST PER NIGHT | $146.58 | ||
| NET PROFIT PER NIGHT | $14.35 | 9% |
The key assumptions that we found changed the numbers (particularly indirect costs) were the occupancy rate and floor area for attributing overheads. Even so, it was helpful to see what both the gross profit and net profit were likely to be.
We're not experts so I'd be interested in what examples other people have!
~ Ben
Wow, there is not a big margin of 'wiggle' room there for you Ben!
I decided to use your calculations against my profit and loss statements and this is how hosting comes out for me.......
For me things are a bit different Ben because I live on the same property as the listing cottage and many of those items are expenses which would be incured regardless of whether I Airbnb listed or not. In fact the situation is even better than that because I am able to write off a lot of the general household expenditure against the Airbnb profit and loss.
My net result from last year was a disposable profit return of 68%! My gross income was $26,840 and my net profit was $18,452.00. This equates to $354 pr week and coupled with the $790 per week we get from other income investment sources, this gives us a nice comfortable living. We are even able to snag a bit of age pension on top of that would you believe!
Airbnb has been good for me but, as many will tell you....it's not for everyone!
Mate, if I was getting 9%, I would find something else to do with my time!
Cheers......Rob
No I am not Mariann, because I don't have to. I don't Airbnb because I have to, I do it because I want to. Although we are all running a business to a certain degree the cost of me cleaning my listing does not have to equate to what an external cleaning service would charge....I don't have to be competetive simply for myself!
Although I need to know I am making something, I don't have to put a commercial value on what I do. The $354 per week net which we average year round by hosting, coupled with our other income helps me in my retirement to have a really comfortable lifestyle.
My 'cleaning fee' is not really a cleaning fee! That money goes straight into a damage fund that I can draw on when needed to replace items that may be lost in some way or require special attention to restore. That fund currently sits just over $2,100, and if something gets broken, stolen or damaged in some way, I don't hassle Airbnb, I don't try to lock the guest in some dungeon in irons chasing payment! .There is a cost to hosting and we just have to accept that and allow for it.....I just fix what needs to be fixed and get on making my $354 per week to do what ever I want to!
The thrill for me has been the fact that I have been able to be able to do this. Without any help at all I have singlehanded turned this place around from being a 'knock-down' proposition to being somewhere a lot of people want to stay.
We have gone from this.............to this
And the icing on the cake, we get to meet a lot of beautiful people.
Mariann, I wouldn't really care if it didn't make us anything, it's been a lot of fun, a sense of achievement and, a nice part of my life!
Cheers......Rob
What @Ben551 wanted to know and myself, we set a nightly listing amount and want to know what comes out of our pockets to achieve that goal.
As a third party what you are saying is correct and if I had to pay someone to come and do my cleaning, that would be a cost I would have to take into account.
As far as my profit and loss statement to the government is concerned I claim $30 per listing turn-around as a cleaning cost, because I am entitled to! I am entitled to claim my efforts spent in order to earn an income. But the laws of business say, what one earns and what one pays tax on are two entirely different things!
Cleaning cost me nothing out of my pocket apart from a few cents worth of cleaning consumables...detergents, toilet cleaners, polishes, cleaning cloths.......it is my effort rather than my cost. Those other costs you mentioned, phone, internet, car are all physical costs!
My 'Cleaning fee' is a potential damage fund and the only time I access that is to return something in the listing to the condition it was in before the last guest.
Gardening is something else that I cannot put a figure to as far as hosting is concerned because I would have to do it anyway and the fact that I host is irrelevant to gardening!
Garbage disposal is another thing. I already claim a percentage of my council rates under indirect costs which includes garbage disposal, so I cannot 'double dip' and claim it as an item again!
All other items on that list are costs which come out of my pocket so Mariann, what Ben has done here is provide me with is a 'quick reference' framework to work out exactly how much I spend as a pecentage of how much I receive for each hosting night!
Re the property photos, you would love where I am at the moment. I spent yesterday cleaning out the potting shed. I was so full of junk that had built up over time I could not put the lawnmower away. Now after yesterday you could almost eat a meal out of there......almost!
I am a lot slower than I used to be but, everything gets done in the end!
I have just started another mozaic for daughter Sarah and her partner. I have my moxaics scattered all around the place and when Ade drives me mad enough mozaicing is good therapy....
The one for daughter will be a Rhode Island Red Hen on a white background, something they can hang in their chook house!
Cheers......Rob
