One question I asked myself when I set out to become an Airbnb host was hows does the Airbnb price breakdown work? It’s a question that both hosts and guests ask on a frequent basis. So I thought I will write this post and answer them all in the one article.

First, the Airbnb price breakdown consists of the base rate per night, which is what a host charges. Many hosts will charge an added fee for extra guests as well. Second is a one-time cleaning fee charged by the host to cover cleaning costs. Finally, there is a service fee charged by Airbnb (inclusive of tax).

But don’t worry, I’ll give you a full rundown of how the breakdown of those costs works below. From both the host and guest perspective. It’s easy, trust me!

What percentage does Airbnb take? Is the cleaning fee included? And do you have to pay up front? These are all common questions I hear asked all the time too, which I will answer.

Now lets get cracking and find out how that pesky Airbnb price breakdown actually works once and for all.

Airbnb Price Breakdown Explained

There are several factors which form the price you see when making a reservation. To help explain, let’s look at a real life example.

For example you’ll see that the base price is $189 per night. This property is actually $109, but charge an extra $20 per person each night, bringing the base cost up to $189.

Many guests ask why does the Airbnb price change per night? Well, this is the extra guest charge, and it often catches people off guard. Make sure you’re not one of those people!

You will find the extra guest charge by hovering over the question mark icon next to the price

Under that is the one time cleaning fee charged by the host to cover the cost of their cleaning space.

Airbnb also charge a fee for you to use their service. The total price shown is the total trip price, including added fees and taxes.

I should also note the importance of getting your price right. It is a strong ranking factor, which I discuss in my article how to improve your Airbnb ranking.

To summarise, below are some common FAQ’s that I often here asked.

Airbnb Price Breakdown FAQ’s

What percentage does Airbnb take?

One cost you cannot avoid is the Airbnb service fee. This is a charge for you to use their service, plus pay for things like the 24/7 customer support. So you may be wondering what percentage does Airbnb take from each booking?

The simple answer is – it varies. Guests will usually pay between 5% – 15%, while hosts will get hit with a 3% service fee.

For Guests

Airbnb says this fee is a commission needed to cover the costs of running the company and it’s operations.

Guests will pay a fee anywhere between 5% to 15%, depending on the total price of the booking.

The greater the subtotal, the lower the total percentage fee will be. On the other hand, the lower the subtotal, the higher the total percentage fee.

To sum up, processing of the fee will not happen until the booking is official. It’s also worth noting that if a guest cancels a reservation, there will be no refund on the fee.

For Hosts

Hosts pay a flat 3% percentage. Included in that cost is local taxes such as VAT, GST etc.

The idea behind the host fee is to cover the cots of processing payments.

You may be interested in learning if you can make good money from Airbnb. It’s a popular article here on BnbDuck related to this topic.

So, sorry guests, but you have to take most of the brunt of the costs! Them’s the breaks.

Breakdown

Is cleaning fee included in Airbnb price?

Yes, hosts have the option of charging a cleaning fee. The Airbnb price breakdown will include this cost at the time of booking. It is a once off fee that hosts charge at the time of booking which goes towards cleaning up their house.

As a host, you have the option of choosing if you want to charge a cleaning fee or not. But from my experience, it is a rare occurrence to see a listing that doesn’t charge.

Some hosts can be cheeky though. I have seen them raise their base price and not charge a cleaning fee. The reason for this is they believe it makes their Airbnb price breakdown look tastier.

I would recommend against this practice though. It’s best to be transparent with your pricing.

A side effect of having a higher base cost means your house will appear a lot more expensive in the search results. For instance. searches don’t include fees, so potential guests may scroll right past your listing

Usually a host will charge somewhere between 5% to 20%. You’ll find in the capital cities that costs will be much higher. This is because many hosts hire cleaners, and this is not a cheap cost.

For instance, the cleaners I hire charge roughly $25 USD per hour (and this is a reasonable price!), so it is an expense that can add up.

To sum up, guests are using your house or apartment and will leave behind dirty linen and mess. It’s only fair to charge them, as it’s an added cost for you.

Here are some things you should consider when setting your price:

• What are similar properties in your area charging?
• Size of your house or apartment
• Number of beds and bathrooms
• Do you supply any amenities? eg. food, shampoo, coffee, etc
• Is there an outdoor area?

How do I set price on Airbnb?

The great thing about Airbnb is that you can set your own price, and this figure can be any amount you wish. So long as you keep within the guidelines.

There are several ways to set price on Airbnb, but two I recommend. Firstly is to set a custom price for specific nights. Secondly is to set a price for specific weeks or months.

Finally is the very nifty Smart Pricing. This is something many hosts now use, including myself.

Smart Pricing is an automatic way to adjust your price based on demand in the area. You choose a price range and set rules, and the price will jump up and down based on houses in your area. Setting a Custom Price

Setting a Custom Price

Setting a custom price on Airbnb is very easy. Head over to your Hosting Dashboard and click on Listings in the top menu.

Then select your house and then click on Pricing. A ton of different pricing options will greet you on this page.

Dashboard >> Listing >> Pricing

There are some options here that I would like to point out. Such as nightly price, length of stay discounts, last minute discounts, standard fees and charges, and currency. These are all custom options you can set.

To set your own custom price, you’ll need to click on edit next to Nightly Price. Airbnb will even offer your a price tip based on similar properties in the area. But I find this price is often a little on the low side.

Therefore have a play around with Smart Pricing, it’s something I find useful myself. One problem you may run into is the price being set low from time to time.

This is particularly so in quiet times. While the good thing is you can turn it off whenever you wish. Guests will not see that you’re running Smart Pricing on the Airbnb price breakdown.

While it may sound like a good idea to set a high price, be careful. Setting it too high could be the reason why you’re not getting bookings on Airbnb.

Do you have to pay upfront for Airbnb?

Yes. You will see a charge for the full amount of the booking once a host accepts your reservation. Or if you make an instant booking, which is immediate. The charge comes from your preferred payment method, which you can set in your Airbnb profile.

Check out my article on when do you pay for Airbnb bookings. It covers this topic in great detail.

I remember hearing on the grapevine that they were flirting with the idea of allowing guests to pay 50% up front. With the option to pay off the rest down the track.

Many other short stay platforms, such as HomeAway, allow payment instalments. It is something Airbnb has been slow off the mark with for whatever reason.

Check out their official booking reservation guide here, as it gives you a good breakdown.

It’s worth noting that hosts do not receive a payment until 24-hours after a guest has checked in. The reason for this is in case a guest cancels a reservation and refund can process faster.

Conclusion

I hope that answers many of the questions you have relating to how does the Airbnb price breakdown work.

As a host, all you care about is how much you are going to earn for a booking after fees.

While as a guest, all you want to know is the full cost of a reservation, including any fees.

I have shown you that the price breakdown is very transparent and easy to read. Airbnb makes the process as easy as possible and are the best short stay platform on the market for this reason.

With this in mind, if you have any more questions, please send me a line in the comments section below.