How to charge for home staging
We’ve all been there when we first started out. You’re ready to pursue your passion of home staging, but there’s one aspect of your new business that’s unclear and haunts you, “What do I charge for my home staging services?” This is an important question, because you need to take in to account your inventory, expenses, and most importantly, your time. Well, in this blog post, we’re going to tackle this question. We’ll cover home staging cost breakdown and recommend how to setup your home staging pricing structure.
Also look for future posts on this and other topics related to the business of home staging. Okay let’s get started...
Separate costs by type
The first step is to breakdown the type of costs you’ll encounter. A typical home staging professional may have the following cost types:
There may be other types of costs, but generally will fall in one of the buckets above. Let’s take a closer look at each home staging expense:
This is by far the easiest cost to calculate. It’s your time. What you want to do here is determine how long it will take you to stage an average size vacant home from start to finish. For example, it may take you a full day (8 hours) to stage a home. And for your design services you charge an hourly rate of $75. So your service fee for a typical project will be $600 (8hrs x $75).
Okay we got the easy one out of the way. Now let's tackle inventory costs. There’s generally two ways to do this. And it depends on if you own your furniture and design accessories or if you’re renting the furniture. Both are acceptable methods, it just depends on your business model.
Renting your furniture - This is easier to calculate. Typically a home stager will pass along the cost of renting furniture to the customer and only charge for design services.
Own your own furniture - The key here is to determine your ROI (Return on Investment) on your furniture. Let’s take a closer look:
First determine the total cost of your inventory. Say all the furniture and accessories to stage a typical home will cost $5,000 out of pocket.
Once you have the furniture cost down, estimate the life expectancy of your set. For example, you may say that the entire set will last you 2 years.
Next, determine your margin. For example, knowing that you’ve gone through the trouble of acquiring the furniture and cost of holding it in inventory, you may come up with a rate of 40 percent as your margin.
Finally, we bring all these steps together to determine your annual inventory rental rate. Here’s our formula:
(Cost x Life x (1 + Margin))/Life = Annual Rental Rate
So here is what we have to this point ...
Cost of furniture: $5,000 Life expectancy: 2 years Margin: 40%
Which results in: ($5,000 x 2 (1+.40))/2 = $7,000
So this means, that for your $5,000 furniture set, you should be generating $7,000 per year. Your monthly fee for this set will be ($7,000/12) about $583.
There are other operational costs to take into account such as vendor fees, third-party moving companies, and referral fees. These will vary based on your business, but keep track of these to help manage your costs.
In summary, pricing your home staging projects can get complicated. Separating out your main cost drivers is key to helping you be more efficient and acquire new customers.
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November 30, 2018
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