One of the most common questions from new Airbnb hosts is what is the Airbnb service fee and how does it work? Unlike traditional long-term rentals, Airbnb charges hosts a service fee that is deducted from the rental rate to cover use of their booking platform and related services.
Understanding Airbnb’s service fee structure and when different fees apply is key for hosts to accurately project their potential earnings. This comprehensive guide will examine the Airbnb service fee, how it’s calculated, tips to minimize the impact on your profits, and other questions hosts have around Airbnb’s various fees.
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Airbnb’s Service Fee Explained
Airbnb charges hosts a service fee percentage on every booking to cover the costs of:
- Access to Airbnb’s booking platform
- Listing visibility to millions of travelers
- Payments processing and security
- 24/7 customer support
- Photography services
- Damage protection programs
This service fee helps fund Airbnb’s operations and services that facilitate the rental transaction between guests and hosts. Airbnb’s service fee typically ranges from 14-16% depending on cancellation policies and other factors.
It’s deducted from the total rental rate before the remainder is paid out to the host. So for a $100 booking, Airbnb may charge a 15% or $15 service fee, paying the host $85. This fee applies to all bookings on Airbnb including hotels.
Understanding Airbnb’s service fee model helps hosts set pricing and manage expectations around profits.
How Airbnb Calculates the Service Fee
Airbnb uses the following formula to determine the service fee percentage charged to hosts:
Base fee – All listings are charged a baseline service fee, typically 14%.
+ Additional fees – Extra fees may apply for using certain cancellation policies or booking options.
= Total service fee – The base fee + additional fees = the total service percentage.
X Rental rate – This percentage is multiplied by the total rental rate agreed for a booking.
= Service fee – This is the total service fee in dollars that Airbnb deducts per booking.
While the base fee is consistent at 14%, additional fees for cancellation policies, booking settings, and lengths can increase the total percentage deducted.
When Does Airbnb Charge Service Fees?
The Airbnb service fee is charged at the time any booking is made by a guest. This includes:
- New bookings
- Changed or extended bookings
- Full home rentals
- Private or shared room rentals
- Fee for additional guests
Service fees apply to any booking transaction initiated through Airbnb’s platform, regardless of listing type.
There are NO Airbnb service fees charged when:
- A booking is canceled by a guest
- A booking is declined or ignored
- An inquiry is made but not booked
Airbnb only deducts the service percentage fee once a confirmed booking and payment have been made.
Airbnb Service Fee Amounts
While the base service fee is generally 14%, here are the total service fee percentages charged based on policies:
- 14% – For listings with Moderate or Flexible cancellation policies
- 15% – For listings with a Super Strict 60 day or 30 day cancellation policy
- 16% – For listings with Super Strict 7 day cancellation policies
- 15% – For listings managed via certain third-party property management integrations
- 15% – For bookings using Airbnb’s Pay Less Upfront option
So while 14% is most common, stricter cancellation terms, third-party managers, and other factors can push service fees to 15% or 16% of the total booking cost.
Does Airbnb Charge a Service Fee to Guests?
In addition to the host service fee, Airbnb also charges guests a service fee that averages around 14.2%. This covers the same services like payments, customer support, and booking platform access.
Guests pay this service fee percentage based on the base rental rate, not including fees like cleaning or taxes. Airbnb service fees for both hosts and guests appear during the booking process before payment.
By charging both hosts and guests, Airbnb earns service fees on both ends of the transaction while keeping its booking platform free to use.
Tips to Minimize Airbnb Service Fees
While Airbnb’s service fee is unavoidable, here are some tips to reduce the impact on your profits:
- Set pricing intelligently – Include assumptions for the Airbnb fee when setting your rates to earn your target income.
- Offer weekly/monthly discounts – Longer rentals incur lower total service fees, so discounts can boost profits.
- Avoid strict cancellation policies – Using Moderate or Flexible policies keep fees at 14% vs. 15-16% for Super Strict.
- Maximize occupancy – More bookings amortize the fees, so focus on boosting occupancy through pricing, promotions and instant booking.
- Offer extra services – Earn added income via fees on extras like cleaning, pets, early check-in/late checkout.
While the Airbnb service fee eats into profits, smart pricing strategies and maximizing bookings help offset the deductions.
Airbnb Service Fee vs. Competitors
How does Airbnb’s service fee compare to competitors like Vrbo and Booking.com?
Airbnb – Charges hosts 14-16% service fee deducted from each booking payment. Guests pay a 14.2% service fee.
Vrbo – Takes 10% service fee from the owner payment and also charges renters a 5% service fee.
Booking.com – Charges hosts a 15% commission on every booking made through their platform.
Expedia – Takes an average commission of 18% for vacation rental bookings from both guests and owners.
Airbnb’s 14-16% host service fee is quite competitive compared to other major vacation rental platforms, which carry fees ranging from 10-18%.
Additional Airbnb Fees to Know
Beyond the standard service percentage fee, Airbnb also charges hosts a few other fees in certain scenarios:
- Photography fee – A one-time $100-150 fee if you use Airbnb’s professional photography services for your listing. This is optional.
- Income tax – In certain states/countries, hosts must pay occupancy taxes on top of Airbnb’s service fees. Check local requirements.
- Cleaning fees – If you outsource cleaning to Airbnb’s cleaning partners, they’ll deduct the cleaning cost per stay from your payouts.
Understanding these additional potential fees and costs will prevent unpleasant surprises and allow you to set pricing to cover them.
Airbnb Service Fee FAQs
Can I avoid paying Airbnb’s service fee?
No, all hosts must pay the standard service fee percentage on any bookings made through Airbnb’s platform. This covers their provided services.
Does the service fee apply to the cleaning fee too?
No, service fees are only calculated based on the base rental rate for each booking. Cleaning, tax, and other fees paid by guests are excluded.
Do longer rentals incur lower service fees?
Yes, typically. The service percentage remains fixed but applied against a lower overall rate over long stays, reducing the total fee amount.
Can I increase my rates to offset the service fee?
Absolutely. You should factor in the approximate Airbnb service fee percentage when pricing listings to earn your income goals.
Is the service fee refundable if a guest cancels?
No service fee is charged if a guest cancels a booking before check-in. Airbnb only deducts the fee once a confirmed booking occurs.
Can I deduct Airbnb service fees for tax purposes?
In most cases, yes. Service fees qualify as a business expense. Consult a tax professional to be sure.
So in summary, Airbnb’s service fee covers use of their booking platform and related services. While hosts have to pay the 14-16% fee, smart pricing strategies help offset it. Understanding exactly how Airbnb’s service fee works allows hosts to accurately project profits.