What Floor Pricing Actually Means

Your floor price is the minimum nightly rate you'll accept for a booking. Below this number, you'd rather leave the night empty than host a guest.

This isn't about pride or positioning. It's about math. Every booking has costs. If the rate doesn't cover those costs plus a reasonable margin, you're literally paying to host guests.

And yet, most operators get floor pricing wrong. They look at what competitors charge during slow periods. They guess. They set round numbers that feel right. They leave money on the table—or worse, lose money on bookings they thought were profitable.

Why Floor Price Matters More Than Max Price

Here's a counterintuitive truth: your floor price affects revenue more than your maximum price.

Peak season nights sell themselves. Whether you price at $400 or $450, you'll probably book. The demand is there.

But slow season? Shoulder periods? Weekday gaps? These are the nights where floor price determines whether you make money or lose it.

Consider a property with:

Those 150 slow nights might represent $30,000-$45,000 depending on how you price them. And your floor price determines the bottom end of that range.

Set floor too high: nights go empty. Set floor too low: you fill nights but lose money. The math matters.

Calculate Your True Cost Per Night

Floor price must cover your costs. Here's how to calculate them:

Cleaning Costs (Per Turnover)

How much do you pay for cleaning after each guest?

Let's say: $100 per clean

But cleaning cost per NIGHT depends on average stay length:

This is why short bookings are expensive. A 1-night booking at $100 might net you nothing after cleaning.

Utilities

Electricity, water, gas, internet, streaming services. Estimate your monthly utility costs and divide by 30.

Example: $300/month ÷ 30 = $10/night

Platform Fees

Airbnb takes ~3% from hosts. VRBO varies. HostAway has its own fee structure.

For a $150 night, that's $4.50 to Airbnb.

Supplies and Restocking

Toiletries, coffee, paper products, linens replacement amortized. Typically $5-10/night.

Maintenance Reserve

Things break. Budget 1-2% of gross revenue for repairs. On a $150 night, that's $1.50-3.00.

The Total

Add it up for a typical property:

This is your breakeven floor. Book below $75 and you're losing money.

Add Your Margin Requirement

But you're not running a charity. You need profit.

What's your minimum acceptable margin? 20%? 30%?

If you want 25% margin on a $75 cost base:

$75 ÷ 0.75 = $100 minimum rate

That's your true floor: $100/night.

Weekday vs Weekend Floors

One floor price doesn't fit all days. Weekend demand is higher. Weekend guests have different price tolerance.

Our approach:

If weekday floor is $100:

Why? Because weekend nights have higher opportunity cost. Accepting $100 on a Friday when you might get $150 is leaving money on the table.

When to Break Floor

Rules have exceptions. Here's when going below floor makes sense:

Last-Minute Bookings (0-3 Days Out)

If it's Wednesday and Saturday is still empty, a below-floor booking might make sense. The alternative is $0.

But don't go below 75% of your floor. If floor is $100, don't accept less than $75.

And never do this more than 3 days out—you're training guests to wait for discounts.

Filling Orphan Gaps

A 1-night gap between bookings has special economics. Cleaning is already happening. The incremental cost is nearly zero.

For orphan gaps, we'll discount up to 50% of floor because the marginal cost is so low. (See our article on orphan gap strategy.)

Building Reviews

If you're a new listing with few reviews, below-floor pricing might make sense to build credibility quickly. But set a time limit—one month of discounted pricing, then return to true floor.

The 75% Rule for Floor Breaks

When you do break floor, never go below 75% of your calculated minimum.

Why 75%? Because at 75% of floor, you're still covering your variable costs even if you're not making your full margin. Below that, you're truly losing money.

Example:

At $75, you break even. At $60, you're losing $15 to host that guest.

Common Floor Pricing Mistakes

Mistake 1: Setting Floor Based on Competitors

"My competitors go down to $80, so I will too."

But your competitors might have different cost structures. Lower cleaning costs. No mortgage. Different utility setups. Their floor isn't your floor.

Mistake 2: One Floor for All Days

Weekends are worth more. A single floor leaves weekend revenue on the table.

Mistake 3: Forgetting Cleaning Costs

A $150 2-night booking sounds great until you subtract $100 in cleaning. You netted $25/night.

Always factor cleaning cost per night based on your average stay length.

Mistake 4: Static Floors Year-Round

Your costs might vary seasonally. Utility costs higher in summer (AC) or winter (heat). Adjust floors accordingly.

Mistake 5: Emotional Floor Setting

"I could never accept less than $200 for my property!"

Pride isn't a pricing strategy. If your costs support a $150 floor, accepting $150 on slow days is better than empty nights.

Property-Specific Floor Examples

Here's how we set floors across our portfolio:

La Jolla Beach House (Premium)

Wait—why is actual floor so much higher than calculated?

Because La Jolla commands premium pricing. The calculated floor is a minimum; the market-based floor is based on competitive positioning. We set floor at the lowest we'd accept given our brand and comp set.

Barrio Logan Room (Budget)

The actual floor is higher than calculated because even budget rooms have minimum acceptable positioning.

Setting Up Your Floors

Here's the process:

  1. Calculate your per-night costs - Be thorough. Include everything.
  2. Add your margin requirement - What's the minimum profit that makes hosting worthwhile?
  3. Check against market - Your floor can't exceed what the market will bear.
  4. Set weekday floor - The calculated minimum.
  5. Set weekend floor - 15-25% above weekday.
  6. Program into your pricing tool - Automate enforcement.
  7. Review quarterly - Costs change. Floors should too.

Get Your Floors Analyzed

Not sure if your floors are set correctly? Our free pricing audit includes floor price analysis:

Request Free Floor Price Analysis