Property managers must carefully configure vacation rental expenses and commissions to maximize profitability, control costs, ensure accurate owner statements, and maintain competitive pricing in the market.
In this support article, we will cover a couple of scenarios, how to configure the commissions for those expenses, and how each affects booking expenses. We're using a cleaning fee for our examples, but the expense and commission settings shown in these examples could be applied to any type of surcharge, such as additional guest or pet fees.
We recommend reviewing the Property Management Overview and Expenses Overview support articles before proceeding.
- No Commission: Surcharge and Expenses Are Equal
- With Commission: Surcharge and Expenses Are Equal
- PM Charges More (or Less) Than Expense
No Commission: Surcharge and Expenses Are Equal
This common configuration is for surcharges or fees, such as cleaning fees, that have no commission set. This means that the PM is not collecting any commission on the surcharge.
- Cleaning surcharge or fee is $100 charged to the guest
- Cleaner charges $100
If the owner pays the cleaners directly, you'd select Owner gets the entire amount (less commission). This is also the default setting.
If the PM pays the cleaners directly, you'd select PM gets the entire amount. When selected, a number of other fields are exposed. Category, Description, Vendor, PM Account, and Date to Use are displayed.
The first three are self-explanatory, but the PM Account determines how the expense is paid and whether it is reimbursed on your PM Statement. The Date to Use selection will be the actual date the expense is recorded. While the default Date to Use is the Arrival Date, some PMs choose to use the Departure Date to reflect the actual cleaning date for a booking.
With Commission: Surcharge and Expenses Are Equal
Another common configuration is for surcharges or fees, such as cleaning fees, that have a percentage commission set. In this scenario, the PM charges a 20% commission that is set on the property.
- Cleaning surcharge or fee is $100 charged to the guest
- Cleaner charges $100
- PM charges 20% commission on the property
If the owner pays the cleaners directly, you'd select Owner gets the entire amount (less commission). In the example shown below, the PM is also collecting commissions on this cleaning fee surcharge. The PM receives $20 in commission for each cleaning fee and the owner receives $80 to put towards the $100 cleaning fee that the owner pays directly to the cleaner.
If the PM pays the cleaners directly, you'd select PM gets the entire amount. When selected, a number of other fields are exposed. Category, Description, Vendor, PM Account, and Date to Use are displayed.
The first three are self-explanatory, but the PM Account determines how the expense is paid and whether it is reimbursed on your PM Statement. The Date to Use selection will be the actual date the expense is recorded. While the default Date to Use is the Arrival Date, some PMs choose to use the Departure Date to reflect the actual cleaning date for a booking.
Notice that in the Commission > Rate section, we selected Use the same commission percentage that is set on the property. The default Commission > Calculation setting is Calculate on the owner amount (after expenses).
- If you keep the default Commission > Calculation setting is Calculate on the owner amount (after expenses), the commission calculation is $0 x 20%, which means that the PM gets $0 in commission per cleaning fee. This occurs because there is no owner amount associated with the cleaning fee, as the PM retains the entire amount.
- If you select Calculate on the entire amount in the Commission > Calculation section, the commission calculation is $100 x 20%, which means that the PM gets $20 in commission per cleaning fee. This will also result in a $20 commission expense charged to the owner even though the owner did not receive any revenue from this surcharge.
PM Charges More (or Less) Than Expense
Some PMs charge more (or in some cases less) for common surcharges or fees, such as cleaning fees, to the guest. In this scenario, the PM charges a 20% commission that is set on the property.
- Cleaning surcharge or fee is $150 charged to the guest
- Cleaner charges $100
- PM charges 20% commission on the property
If the owner pays the cleaners directly, you'd select Owner gets the entire amount (less commission). In the example shown below, the PM is also collecting commissions on this cleaning fee surcharge. The PM receives $30 in commission for each cleaning fee and the owner receives $120 to put towards the $100 cleaning fee that the owner pays directly to the cleaner.
If the PM pays the cleaners directly, you'd select PM gets the entire amount. When selected, a number of other fields are exposed. Category, Description, Vendor, PM Account, and Date to Use are displayed.
The first three are self-explanatory, but the PM Account determines how the expense is paid and whether it is reimbursed on your PM Statement. The Date to Use selection will be the actual date the expense is recorded. While the default Date to Use is the Arrival Date, some PMs choose to use the Departure Date to reflect the actual cleaning date for a booking.
Because the expense is set to PM gets the entire amount, in this scenario the PM would keep the $50 difference between what the guest pays and what the cleaner charges.
Notice that in the Commission > Rate section, we selected Use the same commission percentage that is set on the property. The default Commission > Calculation setting is Calculate on the owner amount (after expenses).
- If you keep the default Commission > Calculation setting is Calculate on the owner amount (after expenses), the commission calculation is $0 x 20%, which means that the PM gets $0 commissions per cleaning fee. Remember that because the PM gets the entire amount, they are receiving the $50 difference.
- If you select Calculate on the entire amount in the Commission > Calculation section, the commission calculation is $150 x 20%, which means that the PM gets $30 commissions per cleaning fee. Remember that because the PM gets the entire amount, they are receiving the $50 difference plus a $30 commission for a total of $80. This will also result in a $30 commission expense charged to the owner even though the owner did not receive any revenue from this surcharge.