(This posted was updated June 2016!)
Here’s a common new home stager & reader question:
Congratulations on completing your first job! It is a very exciting time in your business. Unfortunately, there’re no specific $ amount on how much you should charge for your work. There’s sort of an industry standard, but the ballpark varies depending where you’re located in the world. Here are a few suggestions I’d make:
1. DON’T EVER WORK FOR PEANUTS OR FREE ANYMORE
You can’t command the price you want if you are giving it away all for free or you’re charging peanuts. The issue with working for very little money compensation is that you wont be able to sustain yourself and your business for the long term. You’ll get bitter about how little money you’re making. You’ll get stressed that you’re not making enough income to support yourself. Also, you won’t be able to grow the business.f you are going to charge a rate you want, it will be a significant price increase the next time you do the project for the same client. The other problem is that you had purchased a few inventory for the first project, plus you worked for free, it is not a sustainable business model.
Let’s say you charge $10 (for easy math, not what you should be charging) now, and eventually you want to charge $150 per hour. How will you make the jump from charging $10 to $150 per hour? Clients are sensitive to major price changes, and this is a big jump! On average, people make about 4-5% bump when they get a raise. Anything more than that, frankly the clients will balk (I learned that the hard way!)
If you don’t charge a rate that’s on par with the market average now, you won’t be able to charge a rate you want in the future. Because once your business starts to grow, it will be a significant price increase the next time you do the project for the same client. Plus, working for free is not a sustainable business model.
People will always call you to see if you will stage for free for any business opportunity, exposure, charity, blah, blah, blah. DON’T, even when HGTV came calling, or ask for a discount. Clients always want the pay the least amount of money possible, it is your job to defend your pricing.
I do do projects with a pay cut if I think it’s interesting or I can boost my portfolio. If there is a unique project, like when I was approached to design & install holiday decoration for the San Francisco Union Square Ice Rink, I’d take a pay cut. But I NEVER work for free.
2. BUYING INVENTORY IS INCREDIBLY SCARY, BUT IT IS NECESSARY.
I was very scared too when I first started and not sure if I should buy inventory. My mom (who was a dentist and had her own practice) was very decisive about it. She advised me that inventory is my tool to generate business and I have to do it if this is the type of business I want.
I’m going to pass the same advice onto you.
3. WHEN YOU INVEST IN INVENTORY, INVEST WISELY.
Ok, so here is the thing: what kind of stager do you want to be? I used to want to stage these giant, grand projects all the time in this town Hillsborough, where homes start at $1.5M and above. In fact, I had it on my vision board. But when I started getting booked for those Hillsborough projects, I realized that I actually don’t enjoy doing larger projects.
My warehouse is set up for storing smaller furniture for starter home market, where I can have a faster turn around, buy smaller and less expensive pieces and turn over more projects. So I got clear with how I want my business to be. I now only do projects within a certain square footage. My business boomed consequently after I chose my niche. I’m no longer wasting my time on appointments where they are not a good fit for me, have little chances to get and major time & money suck.
When I decided on my niche, it also allowed me to be very focused on what type of inventory I buy, which subsequently lowered the cost of business.
4. DON’T EVER GET INTO SIGNIFICANT DEBT WITHOUT A BUILDING A SOUND BUSINESS FIRST
Debt is healthy for any business, like your credit card bills is a type of debt. However, I will never advise you to get into debt.
I still remember this very clearly. A stager who was going out of business called me and wanted to see if I was interested in buying her inventory. She had racked up $40,000 in credit card bills and had done zero jobs as a home stager for 1 year. I didn’t buy any inventory until I got the deposit payment for my first job, then I went shopping.
5. DECIDE WHAT KIND OF STAGER YOU WANT TO BE
Usually as a new stager, you are still trying to figure it all out and deciding what’s working for you. But you should still have a baseline on what is the minimum you want to make per project and what your professional policies are. Then depending on the general feedback, tweak them as you go.
As a new stager, you will be charging on the lower end of the spectrum. Once you started building up your client base, then you can adjust the pricing accordingly. Regardless what you will charge for your hourly rate, bill for everything and everyone that is involved in your business. For example, if your friend helped you out on the job for free, you still want to bill for assistants’ time in your fee.
Why? Let’s say you didn’t bill for your friend’s time to the client. When you are hiring actual assistants who are billing you for the day and expect payment, you will have to add that in your pricing. This can become a significant increase for your clients, which may cause you to lose them for bumping up your pricing too quickly. (Side note: Clients won’t care that it’s a tough economy and you’ve got to pay rent. They just care about the $ they need to pay you. So make price increase as painless and transparent as possible to your clients, and raise prices in increments. SMALL increments.)
You should also try to figure out what kind of business model you want. There are stagers who have a warehouse and inventory, like mine. There are stagers who have bigger business operations, who own trucks, have a whole crew and $million worth of inventory. There are also stagers who only do redesign projects or consultations. So decide what kind of stager you want to be. This will help you determine how much to invest in the business.
When you carry inventory, you will need storage and movers. There is no escaping of this. If you don’t want to deal with that, look into rental or only doing consultations or redesign work where you won’t need to carry inventory (at least big pieces anyway).
Sooooo, back to the question… how much should you charge?
While there’s no hard and fast rule to pricing (unfortunately, I know, I hate that too), here are a few things I use to figure out my pricing:
a) What are my hard costs? (Materials, movers, etc.)
b) What would I like to make on each job? (% of profits? $X per project?)
c) What are the people in the market roughly charging? Can I stand behind my pricing? Does my pricing make sense? Am I undercutting the market? Will I be able to support myself on this income?
Hope this helps, and good luck!!
WHAT DID YOU THINK OF MY ADVICE? DO YOU HAVE ANY MORE TO ADD? SHARE THEM IN THE COMMENT SECTION BELOW, I’D LOVE TO HEAR FROM YOU.
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