How to Price Strategically with Airbnb Fees and Discounts

In this episode of Vacation Rental Machine, Jon Bell and Julian Sage talk about Airbnb fees, security deposits, discounts, and how to strategically price your Airbnb units considering all these fees. 

Listen to the podcast

Listen to the episode on Apple PodcastsSpotifyOvercastStitcherCastbox, or on your favorite podcast platform.

Full Interview Transcript

Julian Sage:                         00:00                     In this episode, we are talking about fees and discounts and how you should be strategically pricing your Airbnb units. So stay tuned. Vacation rental machine helps hosts just like you learn how to start grow and scale your short term rental business. The show’s all about creating systems that help you automate your business, give any more time and money freedom. If you’re ready to start living the vacation rental life, then subscribe to this podcast today, come and join us on our Facebook group, the host nation where we’ll be talking about starting automating and scaling a short term rental business. Now onto the show.

Julian Sage:                         00:35                     Hey, welcome back host nation to another episode of vacation rental machine. I am with Jon Bell and we are talking about pricing strategies, so things such as discounts, cleaning fees, all of these other little fees that come within your Airbnb profile. So in the previous episodes, we were talking about creating your listing, the descriptions, the title. Last episode we were talking about your base price and your minimum price. Now we are talking about the fees and all these different numbers that come into play when it comes to being able to strategically price your unit. So Jon, I know a lot of people take a lot of consideration and thought into like security deposits, cleaning fees, weekly discounts, monthly discounts. As a professional. What are some of the different, or what’s your thought process when it comes to all these different fees and does it really make an impact on how people are going to be booking with you?

Jon Bell:                               01:24                     It does make an impact. You know, having, having the right number of fees and not being either overly expensive but at the same time not short cutting yourself is key. Right? When it comes to cleaning, I just ended up going with the market average because I know that my cleaner should be right in line with that number. So I’m not going to be like $40 on my cleaning if my cleaners are going to charge me $60 or so because that’s just taking money away from me, especially if the guy next door to me is charging $100. If the bar is set at a hundred charge a hundred, you can be a little bit lower. If you were a cleaners charge you just a little bit more. It’s okay to be above maybe five, maybe $10 or so. I don’t really see or hear my guests that come in that say, Hey, I don’t want to pay your fee unless they somehow some way want to clean the unit before they leave.

Jon Bell:                               02:16                     And I technically– I just don’t allow it because I don’t know how they’re going to be doing that. So your fees are definitely something that you need to be on top of. Fees that are important to be competitive on are your cleaning fees and your extra guest fees. Your extra guest fees could be used as a deterrent though of not allowing certain people or a certain number of people in your place. I know that there’s, or heard of there some strategies out there that say, Hey, if you could only sleep four people but yeah, do you have a blow up mattress and you could have a foldout but you want to charge $35 per extra guest. That does help deter all these people from booking and having just access to your place. But on the flip side, what you might end up having is somebody that doesn’t tell you the actual number in which they’re actually bringing all these guests.

Jon Bell:                               03:11                     You’d only be able to verify it once you look at whatever camera system you have, if you have a camera system at all. So a safe number for extra guest for me is right around $20. I try to stay below that or right at that number, even on most of my high end places.

Julian Sage:                         03:29                     So two things with the cleaning fee. People think that the cleaning fee maybe scares people away. So they try to lower their cleaning fee and then raise their price for their property. And then they also might do vice versa where they might make their place cheaper. And then raise their cleaning fee. Is that something that people have to take into consideration?

Jon Bell:                               03:48                     To me it doesn’t make a difference. Right? When they go to click on that book now button, they’re going to see everything. Whether you’ve tried to sneak in something by having a linen fee or a management fee at the same time, yes, you can add these all in. They don’t do anything but help separate how it looks on the back end when you get paid out or when you print out that CSV from the booking channel, the guest is just going to see it as a loan.

Jon Bell:                               04:18                     If they get down to the bottom of booking stuff and it’s $200 more than what they expected, they’re either going to book or they’re probably going to move on. So it doesn’t matter where you put the fees, they’re really going to look at that bottom line number. So you do want to be competitive.

Julian Sage:                         04:33                     And then with the minimum guests, how should you be pricing your minimum guest? So if I have one bedroom and let’s say there’s a bed that can sleep two people and I have an air mattress, am I going to put the extra guests fee for anybody that’s above two, how do you come up with your minimum amount of guests and then the people that get charged after that?

Jon Bell:                               04:53                     For me, it comes down to linens. So anytime that I have to bring in extra linens, like extra pullout sheets maybe make sure that the pillows are all there, the extra blankets. That’s when I do charge.

Jon Bell:                               05:06                     So in your scenario, yes, that third guest would have to pay an extra guest fee.

Julian Sage:                         05:11                     One of the other discounts that people also give are the monthly and weekly stay discounts. How should be people be pricing these discounts?

Jon Bell:                               05:18                     All right. I’m not really big on these discount structures to be honest. Most of mine are under 5%. The reason why is sometimes there’s ways you can trick the system, especially if you got a brand new listing. I’ve seen this happen to even one of our students. They did a brand new listing. They had a 10% monthly discount, 5% weekly discount, new listing, and they had a 20% off there. So this person was able to get 25% off of their stay just because they booked a week. Technically they were only going to be there three days. It’s just was cheaper for them to book the entire week.

Jon Bell:                               06:01                     You don’t want to get tricked like that. At the same time. I’d rather that my people that need to come stay for that long, they messaged me and then we come up with a special offer.

Julian Sage:                         06:09                     One of the other things that often comes up is people that are asking for a late checkout or early check in. Are we charging for those types of situations?

Jon Bell:                               06:17                     Absolutely. For me, it goes out in messaging whenever it’s available. It’s not always available, so you can’t really message me and ask me for it up front. Like if you’re super early, you have to book the day before or we can wait and see if it’s unbooked and then I can give you a fee. That’s where that minimum price comes in that we talked about in the last episode. We just want to know that number so then when those questions are asked, we can come up with the best answer that we have hat is not going to shortcut ourselves.

Julian Sage:                         06:50                     So when does an early check in or late checkout fee come into place and how much are you charging for those types of situations? To me it depends on what time. If they want to get in a few hours early sometimes it’s 80 bucks. They want to believe like super late. Sometimes it’s, it’s just my minimum price, whatever that might be for that unit. If it’s like past 5:00 PM pretty much you got to book the whole day. Like I’m charging you that minimum price.

Julian Sage:                         07:19                     The last fee are the security deposits. I know a lot of people have a lot of personal feelings about security closets that they don’t actually work or that it’s just a facade. How does security deposit work and is that something that we should be pricing really high or really low?

Jon Bell:                               07:35                     You know what, lesson learned.

Jon Bell:                               07:39                     I find that if you’ve had an issue with the guests and you’re going to submit a claim to the host guarantee, in most cases, if it’s below your security deposit, you won’t receive any pushback. Even if you have to replace something and maybe the cost is $30 cheaper, but you’ve asked for $30 more as long as it’s underneath that security deposit, I have received no issues when it comes to making a claim. What I would say about security deposits, because guests will assume that they have to pay that in addition to their booking. I wouldn’t make it exorbitant unless your booking price is exorbitant. If you’ve got a place that books $4,000 a night, it is assumed that’s your security deposit will be somewhere around that number if not a little higher, but if you’re booking under $200 or so, I would say your security deposit should probably be 200, 250, 150, somewhere around that number.

Julian Sage:                         08:46                     The last fee that Airbnb has that is kind of unique because we do have these smart pricing tools is their weekend pricing? What is this weekend pricing and should we be using this?

Jon Bell:                               08:55                     Uh no. We use a pricing tool which controls all of that for us. So we don’t need to use anything that Airbnb or any other platform will want to include or influx for us those weekend prices versus the weekday prices because they’re not going to be competitive enough for what we’re trying to do.

Julian Sage:                         09:17                     All right, Jon, that covers all of the fees and all the discounts, all these little nuance things in the backend of your Airbnb listing. So if you do have any other questions about your fees, leave it in the comment section down below. Let us know what are the things that you’re concerned with, what are the things that are keeping you from maybe thinking that you can get the maximum amount?

Julian Sage:                         09:36                     With all that being said, keep on hosting. Hope you hosts found value in this episode. If you did, please go on over to iTunes and leave us a review, that would greatly support the show. If you’d like to connect with Jon the community, and I, then go on over to our Facebook group, the host nation, talk to you hosts in the next episode, keep on hosting.

 

Links from the show

Ready to become a host?
https://ShortTermSage.com/airbnb

[Full Disclaimer: As an affiliate, I receive compensation if you purchase through these links.]

Connect with The Host Nation over on Facebook

ready to start your Vacation Rental Machine?