How to set an Airbnb nightly rate
Copying the flat down the road prices your listing against their mortgage. Work backwards from what you need the year to produce instead.
The short answer
Set the rate by working backwards: take your annual fixed costs plus the profit you need, divide by the nights you realistically expect to book, and adjust for the platform fee, consumables and the cleaning margin. Comparable listings tell you whether the answer is achievable, not what the answer is.
The formula
required contribution = annual fixed costs + target profit
expected nights = 365 x expected occupancy
turnovers = expected nights / average stay length
cleaning margin per turnover = fee charged x (1 - platform fee) - cleaning cost
solve: nights x (rate x (1 - fee) - consumables) + turnovers x cleaning margin = required contribution
The cleaning margin belongs in the equation rather than beside it. Leaving it out on a listing that turns over often can move the required rate by several dollars a night in either direction.
Worked example
Fixed costs of $1,486 a month, a target profit of $12,000 a year, 62% expected occupancy, average stay 3.5 nights, cleaning charged at $95 against a $65 cost, 6% platform fee, $8 of consumables a night:
required contribution = 17,832 + 12,000 = 29,832
expected nights = 365 x 0.62 = 226.3
turnovers = 226.3 / 3.5 = 64.7
cleaning margin = 95 x 0.94 - 65 = 24.30 → 64.7 x 24.30 = 1,572
226.3 x (0.94r - 8) = 29,832 - 1,572 = 28,260
0.94r - 8 = 124.88 → r = 141.36
About $141 a night. If comparable listings are at $110, the plan does not work at 62% occupancy and something else has to move: the occupancy, the fixed costs, or the profit you were counting on.
Why copying neighbours goes wrong
Their rate is set against their costs, and you cannot see those. A host who bought in 2014 and one who bought last year need very different numbers from the same flat, and the one with the cheap mortgage sets the market price you are being compared against.
You also cannot see their occupancy. A listing at $110 that runs at 40% is not beating a listing at $141 that runs at 62%, but the price is public and the occupancy is not.
Where a single rate stops being useful
This gives you the average you need to hit across the year, not the price to show on every date. Real pricing moves with season, day of week and how far out the booking is, and the average is what those variations have to produce between them.
A practical version: set the base at the number the arithmetic gives you, discount the genuinely dead weeks rather than the whole year, and raise weekends and known local events. If the calendar fills instantly at your base rate, the base was too low.
The occupancy assumption does most of the work
Everything here depends on a number you are guessing. Move expected occupancy from 62% to 50% and the required rate goes to about $180, which may not be achievable at all.
That is worth knowing before you buy or furnish anything, because it is the point at which a short let stops being a better use of a property than a long tenancy. Run it at a pessimistic occupancy first and see whether the plan survives.
What this leaves out
- Excludes tax and any local short-let licensing or tourist levy, which vary enormously and can be a material share of the rate.
- Assumes you keep the cleaning fee. Where guests are charged separately by a manager, that term drops out and the required rate rises.
- Fixed costs mean everything you pay when the calendar is empty, including the months when it is.
This arithmetic is free to run in your browser — no signup, nothing held back.
Open the free calculatorCommon questions
- Should I use dynamic pricing tools?
- They are good at reacting to demand and they know nothing about your costs. Set your own floor from the arithmetic here and let a tool move prices above it, rather than letting it discount into territory where a booking makes you poorer.
- How do I estimate occupancy before I have any history?
- Look at how far out comparable listings are booked and how many of their dates are blocked, over several weeks rather than once. It is rough, and it is far better than assuming the number you need.
- Is a lower rate with higher occupancy better?
- Only if the extra nights carry positive contribution after cleaning and consumables, and only if the higher occupancy comes from longer stays rather than more turnovers. Busier and poorer is a common outcome and it is not visible in the revenue line.
Spreadsheets that do this
The formulas above, already built and checked — so you fill in your numbers rather than the arithmetic.
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Last reviewed 22 August 2026