Airbnb's change of costing structure

[Peter_Joan0]

Since AIRBNB changed the service fee paid for by hosts (according to AIRBNB this made it easier and more straightforward for guests to see the price for the accommodation), if we wished to receive the same amount for the stay as before, we had to increase the listing price.  In order not to deter would-be guests, we have lowered our basic price (we use Smart Pricing) and consequently receive slightly less than before.  Also, since February this year, four guests have made separate bookings but cancelled within two days.  Is this happening to other hosts?  We are wondering if our pricing is still too high, is it the cost of petrol, uncertainty of the geo-political situation at the moment, basis rise in cost of living.  We actually thought that staycations would be the 'thing' and boost our bookings, but guests seem flakier.  Any thoughts on this would be very helpful. 

[Elaine701]

@Peter_Joan0 

Well, despite all the misunderstood uproar about it, it's actually the same system used across the industry. And no, you don't "lower" your prices, you raise them to maintain the same price you had previously, and nobody knows the difference.

Yet in general, competing on price alone generally will render the results you refer to, so it's always better to price a bit above your competition. 

Previously, commission charged to guests varied by region from about 14% - 16%, and 3% was charged to the host.

So, calculate what the price was before (e.g., your 100 per night + 15% charged to guest = 115 per night). So, raise your price to 115 per night so it's equal to before. 

Now you're charged 15.5%  commission. So, your payout is 97.175 per night.

Previously, you got 100 - 3% commission, or 97 per night, so you actually make a few cents more this way.

And that's how every other platform works too, so if you're on multiple platforms, it's much easier to calculate a consistent price across them 

I hope that helps. 

[Peter_Joan0]

Thanks, @Elaine701.  Understand what you are saying, but your line: "So, calculate what the price was before (e.g., your 100 per night + 15% charged to guest = 115 per night). So, raise your price to 115 per night so it's equal to before." we understand, and did so when the new price structure was mooted.  However, surely guests will see a price of £115, whereas it was £100 before (they never twigged on to the service charge) so will shy away if they think the accommodation is not worth £115 per night.  Or are we totally brain fogged now.

[Elaine701]

@Peter_Joan0 

Hmm.. this may be the difference  in regional law. We are in the EU, where the law has always required that the whole price, including all fees and taxes is shown as the "headline" price, so our 100 has always been shown as 115. 

I am aware that it's commonly expected in retail in the US for example, that the price shown on the tag is always something less than what the buyer actually pays.

It gets worse though.. the difference between the headline price and what's demanded at booking time can be dramatic when the host adds on a large cleaning fee or other additional fees that aren't shown in the headline price.

I understand that along with this price model change, Airbnb has also now adopted the "full price headline" policy worldwide, to eliminate the appearance of "bait and switch" (and prevent hosts from setting a low per night rate with a huge cleaning fee which blows it all up at booking time). 

The fact remains that your guests always paid 115 whether or not it was presented to them in the headline or not.

I have plenty of gripes about other Airbnb policies, but IMO, this is one they got right. 

[Mike-And-Jane0]

@Elaine701 @Peter_Joan0 my only slight correction is that the service fee paid by the guest was 15%+tax. so in the UK that would be 18%. This then needs to be added to the original price.

BUT as the 18% service charge is now coming off an 18% higher amount it will give you very slightly less money than before.

I think Airbnb matched the two methods of charging assuming zero tax. With tax at 20% (most of Europe) and the guest paying the same the host loses but only by less than 1%

[Peter_Joan0]

Thanks for this. However still uncomfortable with the new pricing structure but guess we have to suck it up.