I’ve always been annoyed by the nickel and diming business practices of the travel industry. As consumers, we no longer expect up front and honest pricing. We cringe when paying baggage fees, tourist taxes, mandatory gratuities, resort fees, and a slew of other hidden extras that ruin a vacation budget.

In contrast, booking travel through Airbnb is like a breath of fresh air. Airbnb fees are clearly displayed during the booking process. The total price is displayed along with an easy-to-understand breakdown of fees. The user can hover over any of the question marks to view an explanation of the individual line items.

As a host, you still need to determine how best to set your Airbnb fees. After two years of testing dozens of fee configurations, I’ve identified the most effective Airbnb fee strategy. In this article, I outline my approach. I also answer the question, “What percentage does Airbnb take?”

At first, I was adamantly opposed to charging additional cleaning fees. As I moved along in the process I realized that cleaning fees are used as a tool to encourage longer stays. A $100 Airbnb cleaning fee spread over a week is no big deal. When you add it to one night, it’s cost prohibitive.

The cleaning fee is clearly visible to your guest. But be reasonable with what you charge. You don’t want to put off potential guests by pricing yourself out of the market. I suggest you review similar listings in your area to establish the average cleaning fee. Then set your fee accordingly.

View your city intelligence report to see the perfect price for cleaning in your city.

I’ve never charged a security deposit. Security deposits can deter potential guests. If you’re concerned about valuables in your home, you can acquire an itemized insurance policy. You can find out more about insurance in our article on Airbnb taxes and insurance.

If anything goes horribly wrong, Airbnb has its own million dollar host guarantee. This covers your property and general furnishings after, and only after, your own insurance policy is exhausted. With over 100 bookings to date, I’ve never been left chasing tenants for money or had anything of value broken or stolen.

The one exception to not taking a security deposit is if you have a high end property. In this situation you may want to charge a security deposit to deter the wrong type of guest. Deposits can help you attract more careful (and higher paying) guests. If you decide to take a deposit, check competitor listings to establish the going rate in your area.

Airbnb holds the deposit on your behalf. If there’s an issue, you have 48 hours after check-out to make a claim through Airbnb’s resolution center. You’ll need to provide documentation to support your claim. I recommend keeping original receipts and taking lots of pictures. This gives you some documentation in case you need to file a claim.

Using the additional guest fee is not recommended. Guests can easily side step this fee by being elusive. Stick to a maximum number of guests and charge the same fee no matter how many people stay at your place. You don’t want to find yourself patrolling the premises like a secret service agent to count heads. Trust your guests; they are looking to gain credibility on Airbnb as much as you are.

Airbnb allows you to set a weekly or monthly discount. This is a good idea if you want to encourage longer stays. Longer bookings generally lead to a higher occupancy rate (because of fewer gaps between bookings). This in turn boosts your Airbnb earnings.

Airbnb works as follows. You optionally specify a weekly discount that applies to any reservation for 7-27 nights. You can also define a monthly discount which applies to any reservation for 28 nights or longer.

Suggested Weekly and Monthly Discount: 0% – 10%

There is one final fee you need to be aware of. It’s the percentage that Airbnb takes for themselves.

Airbnb charges hosts a 3% host service fee per booking. This amount is taken out of your total earnings and is not visible to your guests. Airbnb also adds a 6-12% service fee that’s paid by your guests. The guest service fee declines from 12% to 6% as the reservation amount increases. This way, your guests save money on larger bookings.

While you have no control over Airbnb’s percentage, you want to understand how it works in case a guest queries the total amount for their booking.

If you’d like more help determining the optimum fees for your listing, check out the Airbnb Market Report for your area. Find out exactly what your competitors are doing and how this impacts your listing.

An outlined approach to the most effective Airbnb fee strategy as a host.

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