Heads In Beds Show - Direct Bookings Aren't Free... Here's How To Understand Your Marketing Costs

Episode Date: January 28, 2026

In this episode Conrad and Paul talk all about how much it actually costs to get direct bookings and scale your bookings with paid ads. Enjoy!⭐️ Links & Show NotesPaul Manzey Conrad O'ConnellConrad's Book: Mastering Vacation Rental MarketingConrad's Course: Mastering Vacation Rental Marketing 101🔗 Connect With BuildUp BookingsWebsiteBook A Call With Us🚀 About BuildUp BookingsBuildUp Bookings is a team of creative, problem solvers made to drive you more traffic, direct bookings and results for your accommodations brand. Reach out to us for help on search, social and email marketing for your vacation rental brand.

Welcome to the Heads of Med Show presented by Buildup Bookings. We teach you how to get more vacational properties, earn more revenue per property, master marketing, and increase your occupancy. Take your vacation rental marketing game to the next level by listening in. I'm your co-host Conrad. And I'm your co-host, Paul. All right, Paul. We're here recording January 15th, middle of, or two weeks into a 52-week year.

What's going on? What's happening in your world? Well, you know, it's, I think we've started the year out with a, a bang. It's good. I would say we're busy. This is that time of year where it feels like everybody kind of wanted to take a break if they could over that little winter break two week period of 20th to the first week. And now everybody's saying, hey, don't forget about me. So yeah, this is that fun time of year to just try to remind people. It's, we're still doing this. This is still, it's still time to market. We, you know, we did.

didn't stop marketing during the holidays. We're not going to stop marketing after the holidays. And we're getting into booking season in a lot of markets. So this is, this is the fun time year. How are you doing, sir? Yeah, pretty good. Same type of problem a little bit, I would say on my side as well, yeah, it's like, well, I saw it was like last Monday was Circleback Day. And it's just been Circle Back months for me so far, other than maybe the first day or two. It's just been like all the things that you promised or that you said you'd do in the new year. It's like that people start kind of remembering or reminding you of all those things. And then you got to go exit upon them. So busy, busy as can be trying to, you know,

of juggle and keep all the balls in the air, but we try not to skip these recordings because the people want to hear what we have to say. So a bit of steel manning may be going on today. So steel manning, if you're not familiar with that, kind of trying to think of, I don't say the oppositions, because we were doing some politics job before we hit record, which you will not do now that we're recording. But, you know, I think it's good, I think it's a good best practice to like understand someone who might disagree with you, what their position is and why. I try to put, put yourselves in their shoes and really hold their argument up strongly. And I think that's kind of a little bit of the premise of today, which is that this idea of, you know, we'll often say or will often refer to

the fact that like, of course, you should want to get more direct bookings. Your margins are going to be better. You're going to see, why would you pay Airbnb 15 percent? And I've seen some sentiment, you know, I would say over the past week and the clients have asked us too as we did some final 2025 wrapped, you know, type of reporting for clients where they're like, you know, we were profitable this year, but not as profitable as I wanted to. Or maybe in some cases, they knew we'd be down from the year prior, but in some cases, the drop was more than anticipated. And they started to think about it of like, okay, we're doing all this direct marketing. It's working. We're getting bookings. Like, you know, some of these things are indisputable, but is it as effective as I wanted

to be or is it as profitable as I want it to be? And kind of just has idea that like direct bookings are not free. Getting results from direct marketing is a costly endeavor, sometimes both in time and money and both and energy, maybe all those three things combined. And yeah, like a little bit of just, again, steel mining today of like getting an honest accounting of what you're spending versus what you're earning and then helping people understand, you know, what those numbers look like. And then maybe along the way, adding in some additional context or ideas of like, maybe it's not as profitable, but here's why you should be doing this, kind of as a matter, of course.

But yeah, what are kind of your thoughts on as we think about costs, expenses, revenue, margin, all the fun stuff, you know, in business that actually makes the world go around. What are your kind of thoughts as we get going here? Yeah, I mean, I think that when we look at an OTA of any kind, it's, everything's painful. It looks, we see it. We see the pain that we pay every time. We take one of those bookings. I think we've talked, we obviously have hammered on the value of direct booking.

and I think they're certainly owning your business and not having, we'll say leasing, renting, whatever it is, someone else's business with the OTA. But for those people who do have a system that they're happy with and content with, and it works for them, they get 70%, 80% from Airbnb and then they fill in the gaps wherever. I think that's usually when you have those conversations with people, they can. They can justify that decision-making process, and, you know, I think that's okay. I also am a victim of forgetting every once in a while that, oh, yeah, we do have these technology costs. We do have vendor costs.

We do have a lot of other items outside of just, you know, you're not just putting X number of dollars a month into Google or Facebook, and that's your only cost associated with a booking. as sometimes I think we do. We get too simplistic in that nature of dollar goes in, X dollars go out, that's the only money that's happening. No, there's a whole lot more there. So I do. I think, you know, I love this concept of kind of thinking about those hidden costs along

the way of that direct booking because, yeah, we're not taking that commission, but there is some other items that we have to contend with. as we look at the driving more of those direct book. So I love this as a discussion. And I think it's something that hopefully gives people some good foundational thoughts of really peeling back that onion and understanding what is the true cost of my direct booking. What is the true cost of my OTA booking?

And am I happy with the mix therein, I guess, from what those numbers tell me? Yeah. Well, I think a good example, too, just like, again, think of both sides of this is I've had clients before who are you know very financially savvy and have large companies say I'm going to budget in X dollars per month or per quarter or per year or whatever for refunds on the OTAs you know where it's like basically at some point you're going to get an unreasonable guest that guess is going to find small issues in the property maybe some legitimate some not legitimate or some somewhat manufactured and they're basically going to

angle to get a refund from Airbnb instead of sitting here and fighting a tooth and nail and trying like heck you know they'll use their playbook or their best practices for trying not direct to refund when no refund should be. do, you know, oh, a bat was screeching, you know, in the night and therefore I want a full refund for this night's day. It's like, okay, well, you're in a cabin in the middle of woods. Like bats exist and we can't do anything about that. You know, and of course, every property manager has a thousand stories like that. I'm thinking of one person I work with in particular who's just like, yeah, every quarter we're just going to get like seven to ten of those people,

you know, and I'm just budgeting in that we're going to give seven to ten away. And my only hope is that it doesn't go on the seven night premium stay at our largest property. You know, like the math doesn't really support that. But at the end of the day, I'm not going to sit here and drive myself and my team's time crazy over it. We're going to put up our best defense with the OTA. And then when we have to give, you know, one or two those per month, we give them, we move on. We ban that gas, remember booking again. And then we just kind of, you know, keep going marching for the next thing, right? So I think like that's kind of an adult way to handle this, which is understanding like this, I'm going to the Airbnb ecosystem. These are the rules

that they do play by. Not what I want them to play by. These are the rules they do play by. And I think the same thing exists in the direct marketing side. I'm going to go run ads on Google. And this is the rules that Google plays by. I wish we could, you know, do a percentage of ad spend model, you know, with like, hey, you spend $1,000 and I guarantee that you're going to get $7,000 or $10,000 back in bookings. I wish that was the case because it would make my life much easier, and it would make my sales process easier too, you know, but that is not how it works. So if you understand how these things work and you are objective about them and you say, okay, if I'm going in here, this is how it's going to go, then I think you can come up with,

you know, more better, a more better, a better solution, right, with respect to how these things actually go. So it's like, I think what it comes down to is like, yes, the OTA commission is very visible. It's painful. You see a payout and it's like, you know, 15 percent, whatever 70% gets ripped off the top and you're like, oh, man, like, that's not great. So you want to go direct. And of course, you've heard people like me and Paul and, you know, five dozen other industry experts say like, yes, direct bookings are great. There's better margins there. There is, but they're just expensive but a different way. Like obviously you're trading commission costs for marketing costs, as Paul said a second ago, advertising costs. So it's not really just like marketing cost.

Like for Airbnb to do their marketing and deliver a booking to you and put, you know, heads and beds, as it were, in your property, they have to incur a significant amount of cost. If you're trying to do the same thing with your business, you have to incur some of these costs do. So I think today is just like the honest angle. Like let's talk about some of these things, the costs and expenses of these things of these things. Now, it doesn't mean that we can improve some of these, you know, expenses and things make things more efficient because that can, if we lower our expenses and we're still getting the same product out to people, the profitability goes up, whereas Airbnb is going to be 15.5% at least this year, presumably for the rest of the year,

no matter what, right? So that's one thing. Like, you have more control, I would argue, to kind of come back to our direction of like where I think there is some upside here. You can switch a vendor and then get a better deal on payment processing. I had a client who was saving like one, one and a half percent on payment processing after he made a change last year. That's a lot of money when he does, you know, he does roughly $7 or $8 million a year on gross bookings on his website. That's a lot of money.

It adds up to be a significant savings at the end of the year enough to fund more ads or more marketing. So these things do add up. So I'm going to let's run through them quickly, like the seven that we've kind of identified and then we'll kind of go back and maybe a dive a little bit more into each of them. So number one, I think, is your technology stack. So this can be anything for website hosting, maintenance, booking engine software, obviously your PMS itself.

If you have like separate channel management fees, whether it be percent of booking or some kind of fee you're paying, it's kind of like, what does it take to actually get my software put together out there and working, you know, well. Again, every PMS kind of has a different pricing model, but that's one thing. The actual, Paul mentioned this well earlier, the ad cost themselves, what you're paying Google or meta or whatever platform directly. See our last episode if you want to think about other channels, but we'll kind of keep it simple for those two today. Again, what am I paying for actually running the ad so that people come to my

website? Number three, you can be SEO and content. So that's kind of like, again, maybe you have an in-house person. Maybe you're outsourcing to our freelancer. Maybe you're using an agency. Whatever, though, all those things cost cost money. So kind of figuring out what's the cost that I'm putting out there to create content to hire that person, to hire that freelancer, to hire that agency. What am I paying them on a monthly basis? And then how does that cost kind of flow into things? Email marketing CRM. There's probably two costs here. There's a software cost. Plus, there's also, of course, the people running at cost. Again, those could be two different things. Could be an in-house team member, could be an agency freelancer, that sort of thing. I would say just like brand and like logo design

or like logo brand elements in general. So that could be, I mean, heck, it could be signs on the outside of the houses. It could just be doing a new logo and printing cups and t-shirts and things like that and getting those out there. It could be, you know, managing a lot of the brand, you know, outbound messaging stuff, whether that be social platforms managing those. Again, people, you know, required typically. Photography equipment has required all these kind of things. And then, like, yeah, your team itself, I would say, like your actual labor and your expertise of your team itself, whether you have an in-house marketing person, whether you have a freelancer, whether you have an agency, you're paying some amount of money for that person to

work in your business, right? They're not doing it for free. The goodness, they're hard. They're doing it because they want to, you know, work, you know, in that business, get you more bookings and go from there. And the last one, this was kind of an interesting one we came up with in our outline is opportunity costs. So like, by doing this, you're not doing other things. Are you distracted by your direct booking marketing? If it's not working well, are you maybe harming your business growth in other ways by focusing on some of you don't be focusing on. So those are on the seven, which one do you want to start on, Paul? Which one do you like the most?

I mean, I think we just dive right into the tech stack because it is. I think that's something that these direct booking websites in our space are beautiful. They're lovely. I mean, they're fantastic. But the top performing ones, they cost some money. And it's not just the website. It's what else goes into it. It's hosting and maintenance.

It's support. Booking engines are usually different than this website, which just makes it delightful to think about. Then we have to figure out which channels we want to get on because we can't just have that direct channel. So now we've got to get on our OTAs and we have to get on, we've got to be on booking. We've got to be on Verbo. We've got to be on X, Y, Z.

We got to be on Airbnb, I guess. We are not Airbnb hashtag, all that stuff. But you still got to have a place to manage it. So we've got that. And then, you know, if you're, I would say, a good size business, you probably should have a property management system. You're going to make your job. I don't know if we got a time out there.

Some people would say it makes their job easier. Some people would just say the opposite. So I think that's one of those things where operationally you should have it in place and how you feel about it is a whole other thing. But there are a cost associated there. And then again, we're going to, if you are the merchant of record, which we all want to be, you got to pay the piper to get that payment through. So payment processing.

So let's see here, 2.9% is what we have, plus 30 cents per transaction. That starts to add up over time there. What we talked about as an example here, 10 property operation, you could be looking at $3,000 to $5,000 a year before a single booking coming through. So that's a lot of cost. And that's maintenance cost. That's not something that you're getting something new per se. That is just the system you have, the engine you are using to run your business. That's the cost you have.

So, all right, I can understand when that is one of the costs you have. You want to figure out ways to either maximize it or take some of those costs away. But yeah, I can understand where that would be frustrating for some people to think about all of those things that are contributing. But if you're not considering $3,000 to $5,000 a year as part of that equation on your return on investment for these direct bookings, you are. You're missing some very key parts of you can't do these things without these. you can't run that business effectively without some of these or all of these items. What do you think about that? Well, yeah, I think that's the somewhat messy part of this conversation to some degree is like,

okay, let's say you decide, you know, after hearing this or after thinking about it more, you say, okay, you know what, I'm going to go really hands off. I'm going to cut my budget to the bone on, you know, all of my direct marketing and advertising expenses. You could pause your Google ads. You could, you know, fire your agency, freelancer, let a lot of marketing person go on your team. And, okay, the wheels will keep turning. I understand that, right?

You're still going to get big guiding bookings from other places. But this is an messy one where it's like, well, you probably can't cancel your PMS subscription. Like whatever you keep all your property data cross-sinking. Like there's too much in there, right? Like these companies, a vacational company is not run without a PMS of any size and scale. At two or three or four, it's probably fine, right? You could just use ICAL links and stuff like that. Okay, I get.

Stay on platform, sure. Yeah. The moment you're getting to 10 or somewhere in that neighborhood, there is zero chance you're not able to use as a PMS and keep everything straight. Or you're just very, very single, literally single platform dependent, right? But if you want to do any syncing between different platforms, I feel like you have to have the PMS, there's just no other way around it, right, once you get to some level of size and scale.

So that's the messy part, I would admit, you know, in each of these different platforms have their own fees. Some are charging you a fixed percentage, you know, like a flat fee per month. Some are charging you based on the number of units you have. That seems to be very popular. You know, we're going to charge you $20 per month per unit or something like that to use our PMS software.

Okay, great. You can figure that out. Yeah. So you just have to figure out what you think is a fair, you know, assessment of your technology stack and how much of that relays to, you know, relates to your marketing expenses, something like a website hosting. Again, on the surface, it's like, okay, you can take down the website, obviously, like call your rep host and say,

I don't want to host this website anymore. What are some searches for your business? You're really not kind of a website at all? Like, that seems very, very foolish from a marketing strategy standpoint. I can't possibly recommend that. Even for someone that says, I want to do some bare bone budget, like we have to have a website, right? We agree on that. So it does get a little bit messy there. But I think ultimately at the end of the day, it's like, these are things you need to understand your technology costs. Let's be honest, every single one of our clients told us their technology costs I've gone on significantly in the last two or three years. Either existing vendors have raised their pricing by a good amount, a good margin, you know,

cutting in your margin, helping their margin, or they've added new tools. So they've said, oh, I was just using this tool. Now I'm using these three tools. And now I'm paying a lot more for it. So it is absolutely worth here, you know, as we start in 2026, going and reviewing all those costs. And I mean, I'm not saying goes change your PMS if you don't want to change your PMS, but a phone call, a conversation, a, how do I get more efficient? I saw one PMS.

I'm blinking, which one was sent an email out the other. day and it was we're changing your pricing, but if you pay for the year right now, I'll give you the pricing all the way through next year. So I'm like, okay, like, that's not, you know, I'd rather lock in the lower pricing and then I can, I have a year to figure out if I want to stay on this particular platform move on move on from it. So everything's, almost everything is negotiable, right? So you can think about that.

I would say one other thing we've talked about this a little bit more in the art of hospitality feed, how much of your software now overlaps to where your PMS now does something that you were using a third party system for? Yeah. And again, not hating on third party systems, but if you say, okay, I was using cleaning software at ABC to manage my cleans, now, whatever, guesty, hostway, hostfully, you know, track, whatever, whatever, streamlet. It doesn't matter.

I don't care. But it added that function in and I can use that. Well, like, you can get rid of this third-party software, put it back in your PMS. You might have just saved, you know, a few thousand dollars a year and those things out of up. So that's kind of my last thought on it before we. Yeah. I mean, that was always something that like I was, your tech stack with the PMS there.

Your PMS is only as good as all the other applications that are plugging into it. And I think at a certain point, those PMS has said, they want to build. They want to build. You know, build versus buy, everybody gets into that conversation. But they finally realized that piecing together partnerships with these third parties as opposed to building it themselves in some cases, it does. It's going to reduce some of that cost and it's going to make you stickier in the long run anyway. But I do think that this is a good time to reevaluate that.

And just see your tech stack, if it's been the same for two, three, four years, maybe it can. Maybe you can slim it down. Maybe functionality has improved. And I get, if you really like Breezeway, you really like all these add-ons, cool. But understand what other pieces of your tech stack also do the same thing. And again, think about that cost there. If that's what's motivating you. If not, you know, do what you want to do?

Just spend that money, write those checks every month and get by with that. Yeah, that's a. The software vendors love it, right? The more software people use, the more the software vendors. exist in our space. And look, we need these software vendors, so we're not saying anything bad about them. No, no, no, no. Last thought I'll leave people with here, again, just because I always like to share things that I see from other people, I pitched a few times people and they really have not liked it. But the person I know that did it was a little nervous and it was the best

thing he did. He started charging homeowners of a technology fee. $99 per month, you know, per listing. It was a technology fee and it helped cover some of this cost. It didn't even cover all this cost, but it helped defray at least. And these homeowners are like, hey, man, you want a dashboard, you want this software, you want this, you want this. Believe me, me, me charging you $99 per month is way more effective than you going and signing up for all these individualized services. And I'm not even charging you the full expense of it. We're still sharing that expense to some degree. But that $99 a month you're earmarking for each property covers a lot of that tech fee and stuff that you can offer your homeowners as a service. Again, some people seem to

hate that. Some people seem to think, well, it's my commission. I keep my commission's high because I'm going to offer every single service under the sun underneath that. Fair. But when a property has months with no booking or it's slow or it's not your biggest revenue property, you've got to figure out ways to drive more additional revenue from that. And ultimately, the homeowner is coming to you to help solve the problem. Technology helps you solve that problem. So you can determine whether that's fair or not in your own business, but something that I think makes a lot of sense for sure.

I think we can hit the next one pretty quickly, right? Basically, you're paying advertising costs. This is the most visible. This is kind of the most obvious one. You're paying advertising costs, let's say, running Google ads or meta ads, sum those up and look at what you can track, you know, from an attribution standpoint on those different platforms.

There's limitations on that, as we've covered in many, many, many episodes before. But at the end of the day, if you spent, let's say, $10,000 a month on Google Ads, and you're getting, let's say, $100,000 a month in gross bookings, you can attribute to those Google Ads clicks. You could say you have a 10 to 1 row ass on that particular ad spend. Doing more of it will probably yield, you know, somewhat similar results until you hit some kind of ceiling.

I don't know, probably can do an hour on this, but anything else that we should say about, like, understand your paid advertising costs, understand what campaigns are most effective, and then try to do more of those and less of the things that are not effective, basically. I mean, you should be seeing a return on your ads, and that's the key is that, I mean,

the more ad spend return you can get, I don't think it necessarily means paying more or investing more. That's, again, everybody's a little different there. And it's all about hitting your goals and doing stuff like that. But this is, that's a clear cost if you're not seeing that return. I think that's, that's one that's, it's pretty easy to want to turn off or to think that, you know, that that's something that I can stop the bleed if you feel like you're hemorrhaging money. But I think it's also one of the most impactful when you do start to, you know, try to. to uncover those hidden costs, certainly it's, it doesn't, it's not so hidden after a while

there. So yeah, it's, we, we can say maybe this is, we have six hidden costs and one semi-hidden cost. Because I do think paid averages, it's just so clear. Yeah. When you, when you're the business owner or you're the CFO or whatever the case may be, and you open up your credit card statement and you multiple $1,000 charges. Yeah. It's like, oh, okay, yeah, that's Google on. It's fun. Now again, you want to take away number three or four. So SEO, content creation, kind of all those different creative and content angles of new stuff you're making for your business. That's obviously a cough, right. If we've said anything over the last 12 months, 2 and 24 months, all those things, create content.

But creating content is not free. Whether that's paying someone to do blogs, whether that's paying someone externally to do blogs, photography, create travel guides, all these things are very beneficial to your business, but they have costs. If you're using an agency to do it, they have their own costs. Certainly, photography is something that I still think people don't do as much of, you know, doing the professional photography, really investing in that side of things because it is costly. But when you think about that, our return on spend as opposed to return on an investment,

or it's not Roas there, but return on that investment, hard to justify. But again, when you start seeing more people engaging with your images, more people engaging with your video if you're doing that as well, you can start to put some of those pieces together that this is valuable, but it is. A really good photography costs a lot of money, really good video costs a lot of money. Really well-written content costs a little bit of money there as well. So the one thing that, you know, it popped in my head and I'm hoping it comes back here in just a second, but one of those unforeseen costs is really going about the, all the content is great and when we put it on and we reappropriated to different areas of the website,

do all these things. But if you're creating some of that content, what we've jumped to now a lot is you also have that cost of, do you have Gemini? Do you have chat GPT? Do you have claw? Do you have some of these other systems? And they probably goes in the tech stack too. But I would say this falls more squarely under the SEO content side of things because if you are trying to cut some costs with a consultant or with an agency. More than likely, you're going to pay for some type of premium service or something like that on the AI side of things. And yeah, where is that cost-benefit analysis? And are you getting higher quality content?

And are you actually costing yourself money on the content side of things? It's a little deeper discussion there. But I do. I think that to have a – because a really good experience on a website that Google, that the L.I. that Bing, that whoever is going to send the traffic to you, they need a good experience. It's not just a home page and booking pages and destination pages. That's it. You got to have a blog.

You have to be demonstrating that trustworthiness, that authority, that expertise, all those items that are hallmarks of SEO that need to be in place on the website. So it's not just about a six-page website that's going to just give people that home page in five units. it really is about building an experience for people. And knowing that the first time people come to that website, they're not always going to book. And they might end up on those OTAs anyway.

So it's maybe a wash for us in the long run. But another key cost center that can get really expensive, I think. I mean, truly looking at the photography and video side and the content creation, it can get really expensive. What do you think? Yeah, and obviously the website itself, you know, right? Like that's where you actually display all that content. And I saw a quote from one of the major vendors in our space for over $30,000 to do website build.

And this was not a massively complicated website. You know, it's, that's just what they're charging to do website nowadays. And there's people to pay it. There's, they have a customer. And they do a good job, by the way. I think this vendor does a good job overall. But they're charging $30,000 because they feel like there's enough of a demand to offer. Believe me, when people see that price and they've never seen a price like that before for a website, they recoil.

But I'm like, there's the only ways that that happens and that they're in business, they have payroll, they have employees, they have customers. And they have no funding, by the way. is that people are paying that price. So you must think about it from like, why would someone want to spend $30,000 on a website? And it's someone who's a large property manager who gets significant revenue from their website. And they think if they improve my design,

if I improve my layout, if I improve my conversions, I will see that in my bottom line. So maybe that feels foreign to someone that has two listings. Is it like, that's crazy. How could that possibly be the case? But once you get to that stage, it makes a lot of sense. I will say this, you know, maybe one thought there before we move on,

just in the interest of time. I think some expenses like that are, they're like one-time expenses, and then you're essentially sharing them over the cost of all your inventory. So as you get bigger, a $30,000 website to a company with 500 units doesn't feel like a massive expense. A $30,000 website with a company for 15 units feels like an impossible hill to climb. So that's one element of it.

Whereas other things are more like you're getting photos and video shot per property. Every time we get a new property, you're getting photos and video shot. That's more of it's kind of like, I'm thinking back to college. I took this business operations class at Coastal, Coast Carolina. And we had variable cost and fixed costs, right? Like understanding what those are in your business, you know, learning way back when, business 101, accounting one-on-one type stuff. It's like, yep, that still applies today.

as you think about building your business. So that's why I think like getting bigger and growing your inventory is so valuable because it's like you can get better tools, you can get better websites, you can get better marketing, consultants work on your organization. And they're providing more value per unit.

And by the way, your conversion rate typically goes up as you get more units too as like a sidebar. So it's like your ads convert better. Your marketing works better. Your cost per unit actually goes down and you build these efficiencies that you just need a little bit of scale to unlock. And that kind of applies to a lot of stuff

we're talking about here, but definitely applies to content creation, site and some of the things we hit on there. So, all right, we'll flip the page slightly here. Email marketing CRM, again, really straightforward here. I think this is just one to keep in mind. You have a cost to actually send the emails in terms of who's designing it. What does that person him or her doing to get the email out there? And then, of course, you've got the cost of like the email system itself. Again, a lot of our clients use MailChimp. There's a lot of systems out there. We've clients on constant contact. We've clients on Mailerlight. We have clients on Brevo,

whatever the case may be, obviously makes sense to do your due diligence, figure out what what system would work best for you. I mean, I know one thing that will raise someone's marketing costs a lot, Paul, and that's using HubSpot. It's good system. Well, you're going to put a lot of money for it. That's another thing, too, is like, again, probably worth auditing your expenses and costs here and say, could I make things more efficient from a software perspective? But not really a lot of magic here, right? It's like, just know that that software costs can get quite high as your list gets bigger and figure out ways maybe every year, every other year to optimize it. Yeah. I mean, that's ultimately one of the KPIs for email marketing is list growth,

list size list growth, that type of thing. So, I mean, the systems know, the CRMs, know they know that you're trying to send more emails. So that's what they're going to. As your user account goes up or is your email sent number goes up, oh, those costs are going to precipitously go up alongside them. So I mean, that is one of those costs of doing business items, but it's still frustrating. It's just the reality of, I wish there were a different way.

But we don't get that option a lot. Let's, I mean, it is. The next one is brand building. I think this is one that you should. I mean, this is really something that maybe not when you're starting the business. Maybe it's something that, you know, a year later, two years later is when people start to do it. They should be doing it early on because it is. That's how you're kind of, that's how you're defining your business long term is that if you don't have a brand to build, you're building a business.

Okay, that's fine. How are people going to recognize your business? The business is just, you know, a vacation rental company, not the vacation rental company. So I do. I think that that's something that. Certainly, I mean, I've seen the expenses on some people when they, you know, do a brand as a rebrand. You know, that is a project. That is a, there's cost associated that if you're developing assets for people, a logo, print materials, a whole design book, you know, a truly a brand style guide that people are going to use, that is a valuable asset.

And it should. It's something that you're going to pay a premium for it. And it should be something. More of a one-time cost, though, too, right? Definitely, definitely, definitely, just that fixed one time, hopefully. But I do. I think that that's something that, because it's not just going to be your website, it's going to be if you do print materials.

If you're going to do a local sponsorship or partnership, if you're going to, you know, looking online, you know, reputation management, that's something that there's, you know, 50, 60, 70, 80 different platforms. Your business is probably listed on actively or inactively. That's the reality of that, like, your business is out there. These directories like to build them out for you and let you find them. And hopefully you can correct some of that information if it's not there. But that's it.

So ensuring that you do have that visibility and that anywhere that your business could be is in line with your brand standards, that's critical. And there are tools out there you can pay to do some of those audits and check some of those websites and check some of those directories and make sure that your listings are on the up and up. and that if someone is trying to get to you from there, that you can correct things. And then let's not forget about the other side, the coin of social media, because that's certainly something that when you're building that brand, social media can be a great way to do it,

whether you're doing it internally or whether you're having someone, you know, some, an agency or some other outsourced resource do that as well. So I do think that brand building is something, yes, it should not be put off, is put off more frequently than it should be, but it is going to make them have an impact on your business, and there's going to definitely be some cost associated if you do it the right way. If you just, I mean, it is, I've also seen people go to 99 designs, get one logo,

and that's it. Yeah, yeah. There's a step further. There's a few steps further to go there. So what are your thoughts on the brand building side of things? Yeah, it's so interesting because I think it shows maybe like someone's personal bias or maybe if they've run a business before of how much effort they put into like the initial aesthetics in the initial look and feel. I think sometimes, you know, you and I've talked offline

quite a few times recently about what marketing looks like to a non-marketing person versus what it looks like to a marketing person. And I feel the same way about all these design elements where someone wants like a pixel perfect, you know, launch or the site to be perfect when it goes live or spend a lot of money on a launch. And it's thinking that that's going to do the trick to get everything live and that's going and it's like, you know, I just think you need progress. You just need some kind of momentum first, right? Like maybe the logo isn't perfect. Maybe the design isn't perfect. maybe some of these things when you get initially going or even, I mean, I've seen companies that are doing several million dollars a year in revenue that like, yeah, I've no idea where that

logo came from. Like, I think it was just some random designer that, you know, put it together for us, like you said, on Fiverr 99 designs or something. But they're doing five million year in revenue, right? They have awesome relationships, awesome properties. They have their processes dialed in. So it's like, I don't know. Like, don't feel bad if you're not perfect yet. Maybe that's one thing too. Like, yeah, it's obviously an expense and a cost. And I think that it's also like, what is your own personal desire for your brand for your company? Like, you are designing, you're the CEO of your own little world here when you're designing your company, if design and branding and look and feel is really important to you, then, and you want to invest in that and you

understand that that's, maybe it's not going to show what this immediate ROI or I can't track, you know, someone choosing our brand or our company because of the way we look and feel. But I feel like that's the kind of brand I want to run or that's the kind of company I want to build. And like, I think that's awesome too, to be honest with you. Like, I think you, at the end of the day, it's like all these, a lot of these expenses, you could, you could certainly sit there, put two people on two sides of a table and have a spirited debate for two hours about every single marketing expense inside of a business, right? Oh, this is not worth it. This is worth it. Here's why. Here's the value. Here's the upside. Someone could take the other position and just go around in circles. And at the

end of the day, it's like decisions produce information. Make a decision, do the logo design, get the thing out there. Then go to the next thing, right? That would kind of be my thought process. And I guess like every small business requires like this cash and this oxygen to get going, whether it be things like, you know, an example that came to on recently, a friend of and starting a business. And he was like, where'd you file your LLC? Like, how'd you get your LLC set up? And I sent him a link to it. He's like, oh, man, it's like $600. And I'm like, believe me, buddy, it's going to get way worse from here as far as the expenses. But he's like, just to get some paperwork filed as a few hundred dollars, you know, $600 to get things, you know,

started. And I'm like, yep, you're going to find a lot of that kind of stuff in your business. So I think it's kind of that type of thing when I think about some of these items is like getting stuff up and rolling is kind of like table stakes. You're just coming to the poker game and you're just putting a few chips down, just to even play the game. Then from there, you can decide how you want to actually play it, how you want to bet, and how you want to make those decisions. And ultimately, you have to track those expenses and understand what you're hoping to accomplish. I think if you're one of these people who's like, I run a stupidly efficient business off of just the back of Airbnb and putting very minimal effort and direct bookings and my margins are amazing and all that, I think that's awesome. I think you have very little control of your business.

But I think that's what your ideal outcome is, it looks like that, then I think you should go all in on that. If you want to build like an actual company, a brand that could be like sellable or has more stability to it or isn't, you know, victim to the. whims of Airbnb algorithm for month to month, then like, I think a lot of these marketing expenses make it a lot of sense. And you should strongly consider, you know, how to make them, you know, effective and efficient, of course, not just throw money, good money after bad, but figure out how to get it to work. Our number six, labor and expertise, we kind of already touched on this to some degree, but it's like, yes, if you have a marketing person on your team, that full salary that you're paying is absolutely part of your marketing expenses,

you should judge that against your results over the year. So if you have marketing manager in your team, they're making $70,000 a year, let's say, by the way, you're probably paying more than that because of these, these lovely things called payroll taxes. maybe they have benefits, all that kind of stuff. If you pay them 70, you're probably costing closer to $100,000 a year, but you need to factor that into your overall customer acquisition, et cetera, et cetera. Now, you know, we can't shoot our own horn too aggressively, but if you hire a freelancer or an outsourced individual like Paul,

you hire an agency like myself, you can obviously, typically speaking, save a lot of money because you're hiring someone who has much higher level of expertise, but you're paying a much, much lower fee because you probably, depending the size of your company, don't need someone in your office 40 hours a week doing marketing. You need someone doing it probably 5, 10, 10, 15 hours a week maybe, and that's what agencies and freelancers are set up to do very well. But yeah, at the end of day, regardless of what you're choosing to do, whether you're hiring someone in-house full-time,

whether you have a remote team member, whether you're going overseas, whether you're hiring your freelancer, whether you're hiring an agency. There's a cost there. You've got to account for it, and you've got to figure out how to kind of, again, share that cost from there. Yeah, I mean, I think the one note on this one is, just by the nature of some of the markets where vacation rentals are located. I mean, with some of these major vacation rental markets,

it's difficult to find labor in some cases. I mean, it is. That's the biggest good luck you've got. So you do have to associate maybe more cost in something. You have to overpay. But that does have to be tied into that, you know, ROI if you're kind of evaluating through that lens. So I do. I mean, I remember that was something where when we were talking to a lot of the smaller resorts, some on vacation rental companies in northern Minnesota where it is, their mom and pop shops, it's 10 to 15 units, 15 to 20 units, stuff like that, the likelihood that they were going to find someone with any marketing expertise in a 150 mile radius was very low.

So it was. How many lumberjacks did they find, Paul? They did they find a lot of lumberjacks? They did some, you want maintenance, you want lumberjacks, you want anything like that. They got it in space. But it is. It's one of those things where, and I think especially on the marketing side of things, you don't want to just throw a dart at the board and hope for the best.

I think you do. You want to make sure that you are able to find the experts. Now, again, that's where you have to decide. Am I going to pay the premium or am I going to just kind of find a person, try to train them up? And I think not everybody's done it. I've certainly seen it both ways. I've seen them be effective both ways.

I mean, you can have someone who you bring in and try to help them learn the business, try to help them learn marketing and grow them into a successful marketer. Or you can do it the other way. hire someone that's an expert and kind of find that right path. It's this lovely part, this is your choose-your-own-a-venture episode. We're trying to show you where these costs could be coming, but as far as the amount of decisions that are made based on all these costs, I mean, all these bullet points have probably two or three decisions

that could be made on top of all of these and costs within, and how they contribute to everything rolling up and down. I posted a little while ago, the Top Gun clip where he's like, it comes down to the pilot in the box, right? Like, and it's from the second one, not the first one. He's talking about the feasibility of this mission. And it's, you know, it's, of course, Tom Cruise. It's almost like a mission impossible style, you know, plot line.

And then he comes down and he does this, does this raw, raw speech to the pilots. And he goes, it comes down to the pilot in the box. And that's kind of what I think running your company is like you are the pilot in the box. And you got to figure out how to navigate uncertain terrain, uncertain territory. The good news is you have a little bit of a GPS. You have a little bit of a system you can look at and try to evaluate how things are going to go. But yeah, ultimately at the end of the day, you are the pilot in the box. that is your job to figure out how to navigate your business into the right spot.

And believe me, you're going to make a lot of mistakes when it comes to marketing and advertising and hiring people and hiring the wrong people and making goofups and buying a logo that was 10 grand that you really didn't need to buy or whatever the case may be, right? Like, you were going to make these goofups. That is how it goes. But I think if you understand the cost of these things, then over time you get more and more efficient at like spotting where the rough spots are, where the rough patches are and being like, ah, I'm not going to fall in that one again.

I made that mistake before. I'm not going to hire that vendor. I'm not going to pay for that service because I've had it not work well before. and then evaluate each situation differently as you come along there. So final thought here before we put a bow on this one, your last one is your opportunity costs. I think that's reasonable to say, it's fair to say that if you are working on doing a lot of direct marketing

for, let's say, getting more guests, maybe that comes at the expense of getting more owners. Maybe because you're putting too much money in guest marketing, can't you own a marketing? You and I've talked about that before. Maybe some companies need to just focus on getting more revenue in the door. They just got to like, you know, whatever is required to get more revenue in the door, lower prices, get more bookings on Airbnb,

you know, get some initial revenue in the door so they can kind of survive and breathe and get that oxygen. I believe in a small business cash is oxygen to get to the next day. So it's like if you're doing some of this stuff too early or the wrong order, you're wasting, you know, dollars that you can't be wasting right now, then yeah, that's a bad thing. Opportunity cost is a real thing. If you're spending time, effort, energy, money on something that's not working and you could be doing something else that would be working and growing your business, that's probably, I think it's perfectly reasonable to say, I'm not big enough yet to really make my direct marketing awesome. I'm going to do some basics and just kind of get things

and get things in good shape. And then when I'm big enough, I'm going to hire someone like a Paul, someone like the built up team, you know, and I'm going to get some awesome advice in here, but I'm just not ready for that yet. I think that's a very adult decision or a very adult way to think about it as your business gets going for sure. Yeah, I mean, I think you had a great post on LinkedIn, kind of similar to this about, you know, you're not even at the point where you can get passive income when you don't have the active income.

I think that's a perfect kind of segue there. It's just, I mean, it is. You have to be able to understand how effective the money that you are investing is being is being used. And it's okay to try new things. it's also okay to just stand path. I think that's the weird part about ultimately this discussion is, yeah, we want you to evaluate, we want you to understand and know some of this stuff.

But just because you've evaluated it, just because you've done the numbers, just because you've seen how much of an actual, you know, you've figured out your effective commission rate on direct versus what you're paying on the OTA side of things, you may still might not change anything. But at least you have the data behind it to say, okay, this is what I'm seeing. if I adjust this, if I manipulate this, if I try something else here, if I cut this, if I add this, if I do one of these things, how is this going to impact this overall number? So I do. I hope that we've given people at least a checklist of where they should be evaluating so that they can

understand what is your actual cost of your direct bookings? What is your actual cost on your OTA bookings? And where do you want that split to be down the road? Yeah, 100%. Well, I think that brings us to a good spot to put a bow on this one, Paul, you know, know your numbers, do your math on your numbers, understand the marketing costs money. And, you know, yeah, take those Airbnb bookings when you need them. Take those direct bookings once you turn to get bigger and you can scale more. And then you can build a great company, which is ultimately what I assume you want to do. One more thing that the great listener would need to do if they made it all the way to the end, 40 minutes in, is to go to their podcast app of choice and leave us a five-star review. iTunes downloads and

Spotify downloads are our biggest largest source of listeners. So if you're on one of those two platforms, go ahead, click us five stars, leave us their view. And we'll be back next week with an awesome new episode. Appreciate it. Have a fantastic thing.