Airbnb has two different commission structures for hosts.
The original method, 'mark-up' pricing, charges a 3% processing fee on the NET rates set by homeowners. Airbnb then adds a 'service fee' to reservations that is paid by the guest. This enables Airbnb to take a 12-19% commission on reservation values. In this method, Airbnb controls a property's 'Rack Rates'.
'Simplified Pricing' is a system where homeowners set their 'Rack Rates' (public rates), controlling exactly what guests will pay. Airbnb will then take a flat 15% commission from reservation values.
Airbnb started with a single fee structure for all Hosts. The commission is comprised of two parts; a service fee charged to the Host (3%) and to the guest (variable 12-19%).
Becauses of the prevelance of many professional Hosts on the Airbnb platform*, and increased scrutiny from many local governments about the transparency of 'reservation values', Airbnb introduced 'Simplifed Pricing' for software-connected Hosts globally.
Simplified Pricing (15% Host fee) is the only fee structure available to software-connected Hosts on Airbnb globally. There are a few excluded markets from this rule. The excluded markets are USA, Canada, Mexico, Uruguay, The Bahamas, Argentina and Taiwan.
Simplifed Pricing allows property managers to have a simpler pricing strategy (hence the name). as you set what guests will pay. Airbnb will also highlight the fact that there is no guest service fee added to your property's rates, making your Airbnb listings more attractive to guests.
In an Airbnb study, Airbnb Hosts that switched to Simplified Pricing and updated their Rack Rates accordingly have seen an overall increase in reservation volume (~17%).
*Airbnb needs to ensure the rates on their platform are the same as other channels like Booking.com or Vrbo. If you put a rate of $100/night into your channel manager, it will distribute to all channels as $100/night, and be charged to guests at $100/night. IF Airbnb has to mark-up on that price to establish a commission for their guest rate, they become uncompetitive in the marketplace, and look 15% higher than other channels. What is true for Airbnb is also true for the property manager. To maintain rate integrity across platforms, you want to use Simplified Pricing.
If/when a RentalWise user wishes to differentiate pricing on different channels, we offer channel mark-ups as needed or channel specific fees. This is how you start with a uniform rate and have a channel rate strategy.
Steps to prepare for Simplifed Pricing
Adjust your rates: Since a larger commission will be deducted from payouts, you need to adjust your prices to ensure your earnings don’t change. You can offset the new structure by adding 15% to your rates. Remember - guests will pay the same thing with this change, and you should get paid the same!
Add a VAT number: If applicable, make sure you add your VAT information to ensure Airbnb does not withhold VAT on host fees.
FAQs
Q. Will host service fees be charged on cleaning fees or other standard fees?
A. The Airbnb fee is calculated from the booking subtotal (nightly rates plus cleaning fee and additional guest fee, if applicable, but excluding Airbnb fees and taxes).
Q. Are Host service fees refunded on cancelled bookings?
A. Refund policies for hosts on service fees remain the same. If guests cancel a booking, service fees will not be charged. If you cancel the booking as a Host, penalties may apply.
Q. I use a channel manager for only some of my listings. Can the rest stay on split-fee pricing?
A. No. Simplified Pricing will apply to all listings for accounts connected to a software or channel manager.
Q. Does simplified pricing fee charged on tourist taxes?
A. No, fees are calculated from the booking subtotal excluding Airbnb fees and taxes.