We’ve all been there when we first started our business. You’re ready to pursue your passion for home staging and design, but there’s one aspect of your new business that’s unclear: “How do I charge for my home staging services?” This is an important question we answer in this article and in this YouTube video.
You need to take in to account your inventory, operating expenses, and most importantly, your time. In this blog article, we’re going to tackle this question. We’ll cover home staging costs and recommend how to setup your home staging pricing structure. Okay let’s get started…
Home Staging 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:
- Services
- Inventory
- Operations
There may be other types of costs, but generally everything you encounter will fall in one of the buckets above. Let’s take a closer look at each home staging expense:
Home Staging Services
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).
Staging Furniture Inventory
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 staging furniture and design accessories or if you’re renting the furniture. Both are acceptable methods, it just depends on your business model.
Renting your Staging 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. Suppose you lease $500 per month in staging furniture from a local design rental store. You should charge the customer $500 plus a modest fee to coordinate the rental contract.
Own your Staging Furniture
The key here is to determine your ROI (Return on Investment) on your staging 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 furniture set. For example, you may say that the entire set will last you two years.
Next, determine your margin. For example, knowing that you’ve gone through the trouble of acquiring the staging furniture and cost of holding it in inventory, you may come up with a rate of 40 percent as your margin.
Home Staging Cost Calculation
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 in furniture rental revenue. Your monthly fee for this set will be ($7,000/12) about $583. Over the two year life expectancy of that furniture, you should receive $14,000 in furniture rental revenue.
Operational Expenses
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. You want to make sure that you incorporate these into your professional service fees.
Summary
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.
Want help with home staging costs for your next project? Get Levitate installed on your website and we will be happy to help you refine your pricing strategy. Sign up here.