Advice

Smart Ways to Keep Airbnb Operating Costs in Check

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Running a vacation rental property is all about balancing costs and gains. As much as we want to provide a sensational experience for our guests, we also need to ensure that we keep our Airbnb operating costs in check. After all, vacation rentals are still business properties and they need to make money to continue to operate. 

As times are tough in the global market at the moment, travelers are looking for bargains. But how can hosts offer bargains when they can’t meet their monthly costs? The simple answer is that they can’t. So, before you can lower your prices to increase your bookings, you first need to lower your Airbnb operating costs. 

Before you start to understand how you can lower your monthly costs, you first need to ascertain what they are. For this, we’d recommend doing two calculations. First, start with your fixed costs. These costs include your mortgage/bond payments, rental (if you’re subletting), insurance, tax, and utilities (if they’re fixed). Next, calculate your additional costs. These costs include cleaning fees, WiFi connection costs, essential items for your property like food basics and toilet paper, and services like property managers and co-host payments. 

Cleaning Fee - DPGO (Pexels)

Once you’ve ascertained your total monthly cost, you can start to look at ways to cut those Airbnb operating costs. Ideally, without surrendering the quality of your listing. For example, if you have an expensive cleaning service, but you’re consistently getting five-star reviews with guests commenting on how clean your listing was, then changing your cleaning service doesn’t make sense. 

Also, remember that start-up costs are a different conversation altogether. According to Hospitable, “But if you want to rent out your house or apartment, you’ll need to consider upfront costs of redecorating and furnishing your home to make it perfect for your potential guests. You should create a cozy atmosphere and make your space look unique because you’ll compete with lots of other Airbnb hosts. That means you’ll have to spend about $1,500 for each bedroom and an additional $2,000 to $3,000 for the rest of the house and common areas.”

How Can I Cut My Airbnb Operating Costs Without Losing Business? 

The name of the game in literally every industry is balancing costs with customer satisfaction. A bakery might change to a cheaper flour, but only if the bread they bake with it is as soft and delicious as the bread made with the more expensive flour. This is the idea you’ll need to apply to your cost-cutting endeavors in your short-term rental business. 

Switch to Cheaper Branded Basic Essentials 

This idea is especially helpful if you’re decanting these products into stylish jars or hiding them in cupboards. Switching from official Keurig or Nespresso pods to a generic brand can save you a surprising amount of money. Especially if you’re giving your guests a large number to enjoy when they check-in. You can pick up 80 Keurig-similar pods on Amazon for $23 while a pack of 72 official K Pods will cost you $41.00. The same goes for coffee creamer if you provide it. Decant it into a stylish glass bottle and they’ll never know you bought a much cheaper brand. Your guests will simply be happy you provided anything at all!

Limit Your Luxury

If you’re charging luxury prices, then your hands are tied on this one. If not, and you’re pricing your listing competitively, then be mindful about the level of luxury that you’re sticking to. Super-expensive crockery and cutlery are never a good idea for a vacation rental property. They get damaged, broken, or even stolen in some cases. Unlike mattresses and pillows, your guests are not going to complain if your glassware isn’t the highest quality.  

Airbnb Operating Costs 1

Economize Where You Can 

If your electricity bill is high, look at switching to lower-wattage bulbs, removing high electricity usage items like dryers, or instruct your cleaning team to turn everything off at the socket when they’ve finished cleaning. Electrical items that are switched off but plugged in can still use electricity, which means you could be spending money while there are no guests in the house! 

Think Long Term

Installing solar panels is a great way to save yourself some money, but only in the future. Your balance sheet will take a bit of a hit as you’ll need to first buy the panels and have them installed, but once you’re off the national grid completely and solely operating through your solar panels, your monthly electricity bill will be $0! The same goes for pool heating. If you have a pool, and you advertise that it’s heated, move to a solar-heating system and save yourself that money every month. 

Dynamic Pricing Tool for Airbnb Hosts

Use Dynamic Pricing Software

It might sound like a contradiction but have you ever heard the term “you’ve got to spend money to make money”? Well, it’s true. By using a dynamic pricing software like DPGO, you can set your minimum price, leave your ‘maximum price’ field blank and let us get as much for your listing as we can in the given market environment. DPGO has a range of pricing options, one starting at just $1 per booked night (so a maximum of $31 per month if you have a full calendar) or just $18 per listing per month. 

Avatar for Charlotte Rogers

I love writing and I am seriously passionate about real estate and technology. I've been writing about both topics for nearly 10 years and there isn't a development in the world of tech without me reading about it!

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