The direct answer
Break-even ADR is the average daily rate required for available nights to cover the modeled fixed and variable costs at a chosen occupancy level. A simplified formula divides the monthly cost burden by expected occupied nights, then adjusts for variable costs or platform fees that rise with revenue or stays.
Start with occupied-night assumptions
Expected occupied nights equal available nights multiplied by occupancy. Because occupancy is uncertain, calculate break-even ADR under several occupancy scenarios rather than relying on one forecast.
To apply the approach to an editable scenario, use the Airbnb / Short-Term Rental Calculator. For the neighboring question, explore Vacation Rental ROI Calculator.
Separate fixed and variable costs
Mortgage or rent, taxes, insurance and many utilities are largely fixed over the month, while cleaning, platform charges, payment fees and consumables can depend on stays or revenue. Model those variable items explicitly.
Use the result as a threshold, not a target price
A break-even ADR does not include a desired return unless you add it. Market demand, seasonality and minimum-stay rules determine whether the required rate is realistically achievable.
Worked example
If monthly fixed costs are $4,000 and the property expects 20 occupied nights, fixed-cost break-even begins at $200 per occupied night before adding variable stay costs, revenue-based fees and any target profit.
Open Airbnb / Short-Term Rental Calculator and test your assumptions →
Common mistakes and limitations
Do not divide monthly costs by all calendar nights unless you are assuming 100% occupancy. Break-even ADR should reflect expected occupied nights and variable cost behavior.
Uses user-entered assumptions and does not access Airbnb/AirDNA or guarantee local STR legality, demand or pricing.
Frequently asked questions
Does break-even ADR include profit?
Not unless you deliberately add a target return or profit requirement to the cost base.
Why does break-even ADR rise when occupancy falls?
Because the same fixed costs must be recovered across fewer occupied nights.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
- Fannie Mae — Selling Guide B3-3.8-03, Short-Term Rental (09/02/2026)Current short-term-rental income context and vacancy/maintenance treatment.
Read our editorial policy for the scope of these educational methods.