Pricing Your Home Staging Jobs
Cindy: On today’s show, I would like to talk a little bit more about the financial side of your business. I know that’s a bit of a touchy subject. A lot of stagers don’t want to talk about it, but I think we can still convey at least the general information for stagers, especially the new ones that are a little bit confused about how to price or how to handle finances and business. So how do you normally approach pricing your projects?
Pam: We approach it two different ways. The best way to do it, and I do this once a year, is I figure out what all of my overhead costs are. So I have warehouse rent, I have business insurance, I have truck insurance, I have labor costs. My labor is separate. I’m not going to include labor in overhead right now, but those types of overhead prices that you have to pay no matter what. I add them all together, so I have a total cost of my overhead for a year. And then I divide them by 365 so that I have what my overhead cost is per day, and I keep that in mind when I price my projects.
There’s two different ways to price. One way is by square foot, which is really the easiest way. So if you have a 2000-square-foot home, you might want to charge, you know, $1.20/foot or whatever you decide. The difficulty with that pricing method, I think, is that if you’re doing a partial stage, which most of us do, you don’t always stage all the bedrooms, for example. So would that dollar figure per square foot be for the entire square footage of the home? Even if you’re only staging half of it? How do you want to do that? But it still gives you a ballpark figure if you start with a price per square foot.
The other way is to get more scientific about it and to take your overhead costs that you’ve figured out and then take your estimated labor costs for that job and then determine what the profit margin is that you want to achieve. Then you have to also look at what the market is — what’s the going rate in your area? You don’t want to be extremely low or high. Then you want to make sure that you’re within the ballpark of what other people are charging. There’s a lot that goes into pricing.
Cindy: Is your pricing different if you’re staging vacant versus occupied homes?
Pam: We don’t stage occupied homes anymore, only vacant homes. I think the best way I can answer that question is that I’ve had clients come up to me and say, “Well, what if I leave my dining set and what if I leave my bedroom set and I’ll leave this? How much money will that save me?”And my answer is “none” because it actually costs me more and it’s harder for me to stage when they leave their pieces there because now instead of working around a design where I know I’ve got stuff that goes together, I might have to actually go shopping in order to use their furniture. So it actually costs me more. I always tell them, “It won’t save you anything if you’d like to leave it all for me to work with it. However, it’s really best for me to start with a clean slate.”
Cindy: How about starter homes versus luxury homes?
Pam: I add on a surcharge when I’m doing luxury homes. Our sweet spot or our market is more mid-range homes. We do some luxury homes. I’m in the Seattle market, so our mid-range home now is like $800,000, but we go up to like $2 million, maybe $3 million max. We don’t do the multi-million dollar homes. It’s just not what we do. But when we get up into the $2 to $3 million range, I do add more per square foot because I know that I’m going to have to use higher-end inventory. I may have to buy new stuff because, you know, your furniture gets used and it gets worn.
Cindy: How do you determine your profit margin for each job?
Pam: I do it per quarter, not per job. And, at the beginning of the year — I think this is an important thing for anyone and everyone to do, no matter how long you’ve been in business and no matter what business you’re in — at the beginning of the year, sit down and look back over at least your last two years at what your net profit was. I’ve been told, and I am not an expert on this, but what I’ve heard is that your net profits should be somewhere between 15-25% of your gross income. So I look at what mine was and determine what I want my goal to be for the coming year.
Cindy: Do you usually have a minimum price for doing a job? Why or why not?
Pam: Yes, we have a minimum. Like I said at the beginning, I figured out what my overhead costs are, so we have a baseline number that we have to make no matter what size of the houses. So if it’s a 500-square-foot condo versus a 1200-square-foot house, it costs me a certain amount to have my truck leave the warehouse with two guys and a stager doing the design. There’s just a certain cost. So I have a $1,700 minimum. That’s my market. I don’t do anything for less. That includes the first month’s furniture rental, but it doesn’t include sales tax.
Cindy: How long is your typical contract? What happens if someone goes over their contract and how do you calculate rental fees for those situations?
Pam: Our typical contract is for 30 days. And in the contract it says that your rental will be due at the end of those 30 days. We charge in advance, and we get a credit card number. So if they do keep the furniture in place for over 30 days, we charge their credit card for the next month’s rent.
Because we do have a lot of clients that we’ve worked with for many years, as soon as we know that their house is pending, we favorite the house on Redfin so that we get an email as soon as the market status changes on the home, and we send them an email that says, “Congratulations, we see your home has pending. Please let us know what your closing date is and we’ll schedule it in on the calendar. Keep in mind that your next rental will be due on _______ date. It’s going to be ______ amount. We can schedule your de-stage prior to that to help you avoid any additional charges.” We also include in that the caveat that you don’t want to pull the furniture until all the contingencies are removed. So you want your inspection to be signed off and the appraisal to be complete.
Cindy: What is your one top tip for stagers when pricing their services?
Pam: Know your costs and make sure that when you’re pricing your projects, you’re covering your costs and you also build in at least 10% profit. I would say more like 20% profit over your costs and don’t back down. We have what I call “let’s make a deal” clients, for some of them it’s a game and they enjoy it. So I overprice a bit so that they can come back to me and say, “Well, can you give me this much off?” And I can say, “Okay, just for you. I will do that.” But then I’m getting down to what I would have charged them anyway, so it doesn’t hurt me. Don’t do something for so low that you’re not making money on it just to get the job. Because what’s going to happen then is that client may come back to you, but they’re always going to expect that bargain basement price and you’ll lose.
Wow! So much great, transparent information on pricing our home staging services! What did you learn from Pam? Comment down below!
About Pam
Pam has staged millions of dollars in real estate and is passionate about helping her clients sell better and faster. Pam is also Academy Home Stager Certified and is one of the top home stagers and home staging educators in the nation! Pam says, “Staging to me is not just a career but a lifestyle. Staging a home to sell allows me to help both the buyers and sellers have an elegant ending and beautiful beginning.”
