Airbnb Lesson 8: Setting Your Airbnb Price, Part 1
What are the factors that would affect my Airbnb price?
Pricing is tricky since there are plenty of factors to
consider. By listing all the factors related
to owning and operating an Airbnb unit, we can arrive to a base price. This base price is very important since it
will set the bar on how we recuperate our investments, make that investment pay
for itself and possibly have a little something left for profit.
It is also good practice to list down all expenses and revenue generated by your Airbnb. Not only would it help in pricing your Airbnb accurately, it would also help you know if your investment is profitable or not.
It is also good practice to list down all expenses and revenue generated by your Airbnb. Not only would it help in pricing your Airbnb accurately, it would also help you know if your investment is profitable or not.
Based on my experience it boils down to the following factors. Take note that a host must learn to adjust their base price depending on history and seasonality.
·
Monthly amortization – most Airbnb rooms in the
Philippines are condo units bought thru mortgage, and as such the goal is to
collect as much room fee as possible enough to cover the monthly due.
·
Association due – on top of your monthly due,
there’s the condo association due. This
should be added on your computation.
·
Insurance – yes, if your mortgage is thru bank
or you’ve decided to get a separate insurance coverage for the furnishing on
your Airbnb, this must be included in your base price. As most insurance are paid annually, get the
monthly price by dividing this to 12.
·
Real Property Tax – don’t forget the tax
·
Parking lot fee – if you have a dedicated
parking lot, you can either add this to the base price or set a separate fee on
your Airbnb list for parking.
·
Utilities – this includes electricity, water,
internet, cable, Netflix subscription if you’re offering Netflix or other
streaming service. Electricity and water
might be a bit tricky to price. A 1
bedroom unit with a 1HP aircon, water heater and induction cooker can consume
between 300kWh to 400kWh a month, or P3,500 to P5,000. While water consumption is in the 30 to 40
cu.m range, or P300 to P500.
·
Laundry – whether you do your own laundry or
have it down professionally, it should be part of your nightly price. If you’re doing your laundry, base the price
on how much you would pay had you sent it to the laundry shop.
·
Toiletries – this would include shampoo, soap,
dish washing liquid, toilet paper, etc.
·
Pantry – coffee, tea, bottled water, cookies or
fruits. For those who allow cooking and
stock their pantries, a weekly pantry fee for the cooking oil, salt, sugar,
pepper etc, should be included.
Another factor to consider is the difference between the room cleaning fees you’ll be charging versus the actually cleaning fee you’ll pay to your care taker. The price varies between 0 since you’re doing your own cleaning and P500 when hiring a professional to do the job.
Collect the entire price or at least set a budget for the items you can’t accurately predict. On my next post, we’ll do the math and compute the minimum base price for your Airbnb and the maximum for weekends and holidays.
Got questions on how to set-up your own Airbnb unit? Shoot me a comment and I'll answer it or direct you to the appropriate post.
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