What a PG actually earns: cost per bed, occupancy, break-even

Search for whether a PG is profitable and you will find a dozen articles containing a number. Monthly earnings of so much. Occupancy of such-and-such percent. Payback in this many years.

We went looking for the sources behind those numbers. Almost none of them have one. The occupancy figure that circulates most widely is attributed to unnamed "industry sources". The monthly-earnings range that appears at the top of several results has no working shown. They are quoted, requoted, and eventually cited to each other.

So this article has no benchmarks in it. What it has instead is the arithmetic — which is more useful anyway, because the only numbers that can tell you whether your PG makes money are yours.

Why somebody else's numbers cannot help you

Two PGs on the same road can have completely different economics. One owns the building; one pays lease rent that is the largest line in its cost base. One serves two meals with a cook on salary; one serves none. One is near a campus and empties every summer; one is near an office park and does not.

A single national "PG earns X" figure has to average across all of that. What survives the averaging is not a fact about any actual PG. Run the arithmetic below with your own figures once, and you will know more about your business than every listicle on the subject put together.

Step one: cost per bed per month

The whole business becomes legible once you can state one number: what one bed costs you to run for one month.

Add up everything you spend in a normal month:

• Building — lease rent, or the EMI if you own and borrowed. Usually the largest line.
• Staff — cook, cleaner, caretaker, security. Salaries plus whatever you actually pay beyond them.
• Food — the monthly grocery and gas bill, if you serve meals.
• Utilities — electricity, water, gas, internet. Note which of these scale with occupancy and which do not.
• Consumables — cleaning supplies, toiletries, replacements.
• Maintenance — plumbing, electrical, painting, repairs. Take an annual figure and divide by twelve rather than using a quiet month.
• Platform and admin costs — software, listing fees, accounting, phone.

Then:

cost per bed = total monthly cost / total beds

Note that the denominator is total beds, not occupied beds. A cost per occupied bed flatters you exactly when you need honesty most: it falls as the house empties, because you are dividing the same costs among fewer people and calling it efficiency.

Compare cost per bed to your rent per bed and you have the gross margin on a full house. That is the ceiling. Everything from here down is about how far below the ceiling you actually operate.

Step two: occupancy is the whole business

Most of your cost base does not care whether a bed is occupied. The building rent is the same. The caretaker's salary is the same. The internet is the same. What changes with an empty bed is one resident's food and a little electricity.

Which means an empty bed does not cost you a small amount. It costs you almost the entire rent:

cost of one empty bed for one month
    = rent per bed − (the variable cost that bed would have incurred)

Fill in your own rent and your own food-plus-utilities figure per resident, and look at the answer. For most houses it is uncomfortably close to the full rent. Two beds empty for two months is a number worth writing on a wall.

The corollary is a pricing insight owners routinely miss. Raising rent by a few hundred rupees and losing one resident to it is often a worse month than not raising it. Test any rent increase against the occupancy it might cost, using your own two numbers, before you announce it.

Step three: break-even occupancy

This is the number to know. Split your costs into fixed — the ones you pay with the house empty — and variable per resident. Then:

break-even occupancy = fixed monthly cost
                     / ((rent per bed − variable cost per resident) × total beds)

The result is the fraction of your beds that must be filled before you earn anything. Below it you are funding the house. Above it, nearly every additional rupee of rent drops through.

Two things to do with that number once you have it:

• Compare it to your worst month, not your average month. Every PG has a season. If break-even sits above what the bad month delivers, the good months are not profit, they are recovery.
• Watch what changes it. A rent revision from your landlord raises fixed cost and pushes break-even up. Adding beds to an existing house pushes it down, which is why converting a room to higher sharing is so tempting — and why it has to be weighed against the space and safety conditions your city imposes, covered in the approvals a PG actually needs.

The costs that get left out

Four things that are missing from almost every PG's mental arithmetic, and all four are real money:

The gap between residents. A bed does not go from one resident to the next on the same morning. A few days of cleaning and searching, every turnover, all year, is a permanent haircut on occupancy — and it never appears as a cost, only as a slightly lower number than expected.

Deposit refunds. A deposit is not income. Money held is money owed, and a month with several move-outs can be cash-flow negative while looking profitable on paper. Know what you are holding and what is due back.

Seasonal churn. A campus-adjacent house empties on a calendar you do not control. That is not a bad month to be explained away; it is a structural feature to be budgeted for across twelve.

Rent that never arrives. Notice periods served without payment, residents who leave owing. Every house has some. If you have never measured it, you are carrying it in your margin without knowing the size.

What to measure every month

Five numbers. If you know these, you know your business:

1. Occupancy — occupied beds over total beds, on the same day each month.
2. Collected rent versus billed rent — the gap is your real bad-debt rate, and it is invisible if you only track collections.
3. Total cost, by category — so you can see which line moved when the margin did.
4. Cost per bed and revenue per bed — the same denominator, every month, so the trend means something.
5. Deposits held — because that is money on your balance sheet that is not yours.

HamaraPG produces most of that as a matter of course, though not all of it on the same plan. Occupancy from the bed grid, billed against collected from the rent ledger, and deposits held tracked separately from income are on the free tier. Expenses by category arrive with Standard. The monthly profit-and-loss that sits behind them — per-bed revenue against per-bed cost, and for operators leasing buildings a lease cost tracked against the property it belongs to, which makes a per-building margin a number rather than an estimate — is a Pro feature.

And since software is one of the line items in the cost-per-bed calculation above, our pricing is per bed per month, published, with a free tier for a small house — so you can put a real figure into that line rather than asking for a quote.

Related reading: GST on PG rent, which is the other thing that changes what a bed nets you, and the rental agreement PG owners skip.