INSTANTLY INCREASE YOUR AIRBNB INCOME
I’m about to teach you the one thing that when I made this change, I increased my revenues very quickly. It'ssuper simple any of you can do it. Weather you have one property or many, I am going to increase the amount of money that you make on your Airbnb. Today I want to increase your revenue. I want to make you moremoney. I’m making a ton of money myself. I make a few million dollars a year on the Airbnb platform. I have a hundred properties and I’ve learned all the little things the hard way. This insight was like a paradigm shift.This trick essentially is going to allow you to free yourself from one of the most annoying parts of your Airbnbbusiness. It will allow you to focus on making more money. This trick is controversial but I will explain myself.
This really great tip to increase your revenue on Airbnb is to stop paying your rent in your mind. Here’s what I mean I want you to stop paying your rent when you're setting your prices. I want you to take rent out of the equation.
Let me first give you the with rent philosophy since everybody does this :
• Rent - $1,500 a month or $50 a day
• $40 to clean that's
• Netflix my internet my electricity let's say that's $8 a day
• That’s $98
• Airbnb charges a 3%
• I need to collect $101 dollars to break-even
That's my minim I’m going to set my nightly rate at $101.
I would like to double my money, so i need to charge $202 per day
$202 per day is going to be my rate but I’ll go as low as $120 per day because my breakeven $101
That’s probably what a lot of you are doing and that is an effective and normal strategy.
Here's what I want you to do: I want you to stop paying rent. Kick that out. So let’s redo the calculations.
Act like :
• $40 to clean that's
• Netflix my internet my electricity let's say that's $8 a day
• That’s $48
• Airbnb charges a 3%
• I need to collect $50 dollars to break-even
That's my minim I’m going to set my nightly rate at $50.
I would still like to make two hundred percent including my rent so that number can still stick so my top number is $202 per night, but I will go as low as $70 per night if I have to because my break-even point is $50.
Now where can this go wrong if at all, and why is this a better idea? Why is ignoring your rent a thing? Onething I want you to understand is that your rent is something you aren't in control of. That number is notincremental. There's a couple of other numbers here that aren't incremental either so you could actually forgetthose two, but I really am not trying to oversell you on this so let's just start with rent only. Your utilities aren'treally incremental the only part that was really incremental or your cost of supplies in your cost of cleaning. When you have a new guest that is a new cost you have what I would call a holding cost for your home.
Holding Costs
What are your holding costs? While your rent is your holding cost, your insurance is your holding cost, your electricity will fluctuate all only so slightly so 80% of your electric bill is a holding cost. Any other fixed costs like if you have a manager that's on salary that becomes a holding cost because the more business you get won't affect how much your manager gets paid so anything that does not change per guest becomes a fixedcost. You will call that a holding cost. That means that to hold your properties even if you have zero guests that number always stays the same. What I want you to do is to write that number down: your rents plus your utilities plus your internet plus your insurances plus any salary salaried employees like if you pay yourself a salary for example, write that all down.Those holding costs will go that's a column A.
Variable Costs
Column B is your variable costs. Your variable cost include how much in supplies does a guest go through per day in your home. We have like a $35 per month supplies cost on average for our homes so we estimate about a dollar a day maybe $1.50 a day. Our true cleaning cost $22-$20 per door because we pay our people by the hour and we have a lot of studios and they're all in the same building. We've got this really lean cost for cleaners. That is not going to be your cost and that's okay this is still going to work for you. Write that numberdown what is your what is your variable cost. 50 bucks and then you've got your dollar 50 per day and variable cost for like supplies and stuff and that's column B.
You have your ideal revenues that you would like to make something that you can make on weekends and ifyou've been a host any period of time you know what you can collect ideally. I do not want you to ever sacrifice that number. Your goal here is to take your biggest reservations and to get those reservations first. I want you to imagine filling a glass you've got ping-pong balls you've got marbles and you have sand. Let'ssay you have four ounces of sand that you can put in an 8 ounce glass and you have two ping-pong balls and you have six marbles. If you put the sand in first and then you put the ping-pong balls in the ping-pong balls will come out the top. There's not enough room for the ping-pong balls because if you got your little bookingsfirst they fill up your calendar in an odd way and there's no room for the big ones. If you wanted to fill thisglass up you'd first put the ping-pong balls in the glass then you'd pour the marbles in and then you'd pour the sand in and the sand would work its way around. The sand or the small bookings are not your priority yourpriority is the ping-pong balls the big ones. In this case, your big bookings that you always get are your ping-pong balls. The bookings that you get like two weeks out that are in between your high paid reservations those your model marbles. Then you’re going to start filling up the rest of your glass with sand in this example and this is what you're not getting is the sand in. In our case the reason why is because you are only pricing four marbles at worst if you now understand one thing you will either get $0 for a day or you will book it andyou'll get some dollars for the reservation. If you can come to terms with this little shift in philosophy this is what's going to make you all of your revenue.
If you understand that your rents will always be your rest and if you get 10 more reservations in a month thecolumn a doesn't change. But column B you add 10 more instances of column B free because you got 10 new reservations that's your incremental cost increase so if you have 20 days booked on your calendar and you get $3,000 for you 20 days column a hasn't changed column B has let's say it's 5 reservations well then you have like two hundred and sixty dollars two hundred seventy dollars because that buck fifty a day in costs so column a plus two hundred seventy dollars of column B for those twenty days five reservations.
Contribution Margin
Let's say you get five more reservations for the last ten days well you have another $270 in cost that gets added right so now your costs are holding costs plus the $270 plus $270. Now for those last ten days as long as you collect more money than $275 dollars that overflows from Airbnb’s costs and starts getting contributedtowards column A. This is the heart of contribution margin. When you understand this trick understand the approach of taking a contribution margin mindset to getting your final bookings for the month this is where you'll make the most money. Airlines do the same thing Airlines will price a certain way and if they're doing really good they'll keep their prices high. If the plane isn't filling up and they're having a hard time selling seats they will lower their prices and they'll go to third party platforms like Orbitz and kayak and they'll sell off all of these extra seats at a low price to get full. They’d rather get $30 for a seat than zero dollars for the seat because the plane is going to take off either way. You are selling time. It's the weirdest thing. I know you thinkyou're selling your Airbnb property, but you're selling time. Today if you don't sell today at this one address you will never get that day back to sell it ever again. Forget about your rent it doesn't matter you're going to pay it anyway you're getting enough reservations to cover your rent. If you can just make a little bit of money above your operating in the incremental cost it's going to go a long way. Use this become more profitablemake more money even though it's it's the same amount of work for less profit per day. I get it, but it's still at the end of the month more profit in your pocket and you can do something with it. You'll be happy you had it.
