by Jennie Norris, President & CEO, Stagedhomes.com, CEO, Sensational Home Staging – We Stage Colorado, Chairwoman, IAHSP
PRICING.
We need to talk about it in order to understand it for our industry, and yet so many stagers are afraid to talk openly about pricing and what their market supports. As such we have an industry under valuing their time, product and service. You don’t want to be the Low Ball Leader.
In general, staging pricing is tied to the price of homes in a region. If an area has higher priced properties, stagers can charge more, and if the pricing is more modest, they charge less. Our industry is hard to explain as it is not based on hourly or salary or even experience per se. If the region has grown and staging is established, there is a benchmark of pricing that is accepted by the clients, and stagers need to be taught what that is.
Some established stagers believe that a newbie should not/can not price their services at the same rate as an experienced stager. What this has done is as new stagers enter the market and are told they cannot charge as much as an experienced stager, the market is devalued and undercutting happens. I have always taught the opposite. New people entering are benefitting from a seasoned stager who established the market. The seasoned stagers should not want a new person to charge less and drive the market down. The public honestly does not always care about experience or even education when it comes to staging – it is pricing and results. We all strive to add value and use our credentials to get business.
FACTORS IMPACTING PRICING: Pricing is a factor of many things – and ultimately, turning a profit of 25% or more is the goal. We have costs and overhead to run our business, not just a project. A stager who has more overhead, has to charge more to cover their costs for their overall company, versus one who does not have a larger operation. The larger operation must do more volume to cover costs and find ways to be very efficient with their staging. However, all stagers need to analyze their operating costs and factor that information in when pricing their projects. It is never just about that one project – it is always about the overall bigger picture of what the revenue is covering.
EFFICIENCY IS A FACTOR: A new stager usually takes way too long to stage – and they do not always factor all those hours into their time, nor should they be paid for all their time because they are slow and learning. However, a stager who is charging less could still be more profitable than a seasoned pro – it all depends on the type of operation they run.
WERE YOU TAUGHT HOW TO PRICE FOR YOUR MARKET? I wish I had one “right” answer but the price vs cost vs value discussion is one we all have and it irks me when I see stagers who have not been taught how to price their services, think, “I got paid $2000 to stage! I made all that money.” Yes – but that is NOT all profit! They rarely take a look at the costs to secure the business let alone the costs to run the project. Did they actually make a profit?
I once had a student in our ASP Masters course and as we broke down business models and talked about pricing, she shared she was getting $4500 per staging project. We were all very impressed. She had a little warehouse that cost her $1700 per month. She owned all her own things. So I was thinking, “Wow – she is doing pretty well.” UNTIL I asked, “How many stagings do you do per month?” Drum roll please. . . . she told me, “I stage about 6 houses – PER YEAR!” Yes – per YEAR! I mean – WHAT? As I looked at THAT fact, it was clear, she was losing money and not making any profit. I shared, if she could add in just 6 more per year – she would at least make some money. She was sort of in shock when we analyzed the reality of her biz – but it was a good eye opener.
Personally, I would not survive on 6 stagings per year. We do that in one week in our staging biz that serves Denver. Now her pricing per staging was good – she did every room (not necessarily needed) and only had one client. In my opinion, she should never have invested in a warehouse at that amount when she did not have the business to support it. We didn’t even get to cover all the other expenses she had: marketing, events, education, insurance, maintenance of her things, etc. She ended up selling her items and moving to a different state to live with her daughter (that was already sort of in the works anyway) and wanted to focus on consultations were there is much lower overhead and good potential for profit.
IAHSP actually has a pricing course that has 7 different webinars, handouts, planning forms, etc. For those struggling with where to price their services, it is worth looking into it – one of the handouts is the hourly price range each major city in the US supports for staging. There are 4-5 ways to price a project and help with coming up with guidelines for your country/region and deciding which model works the best for a staging company is subjective.
Stagers who want to crank out proposals and use a more predictable framework will opt for % of list, $ per sq foot or $ per room. Using actual costs is the 4th method – figuring out what rooms need staging, pricing out what goes in each area – is one half of the equation. The labor is the other part. If the % of list, price per sq ftg or price per room do not cover the labor and create a profit or price the stager out of their market, the actual pricing model has to be used. We use a hybrid method of pricing – a combo between #3 and #4 to price our vacant staging projects.
KNOW YOUR BOTTOM LINE: I believe every stager needs to take a look at their actual costs – and then for expediency can use one of the other models for pricing as long as they know they are turning a profit. We can all framework our own set of pricing that works for us – and it is hard not to compare to others. We do not own their companies so we have no way of knowing if they are making money or not. We do know if something is greatly undervalued such as $500 for staging a 3 room condo for 90 days. Because entities like NAR put out pricing averages for Staging that are not based in reality, the buying public believes our pricing should be that low and it is up to US to educate them.
TEACHING THE VALUE OF STAGING – what the hourly rate should be to calculate the lump sum pricing for the client – SHOULD be shared with ALL stagers so they don’t have to guess. If stagers are using a consistent number, the decisions to use one or another won’t be about price and who is cheaper – but be about quality, availability, relatability, responsiveness, etc. Price will always be a factor as people do not want to overpay, but stagers should be within acceptable range of one another in a market where they understand their value when it is an apples-to-apples comparison.
TIME IS MONEY: I know we run a tight ship and can get staging done quickly and efficiently. This means I am more profitable than a stager who takes all day to stage a property when we can get it done in 1-2 hours. Time is the great equalizer. And if I can make MORE than another stager because we are faster, that is a good thing. If I can get it done in 2 hours and can charge as much as someone who takes 8 hours, and win, I just made 6 hours of profit that was not needed. It also provides me with a buffer to negotiate if a client comes back to me and asks for an adjustment. I want to win the business, not at any cost, however I am willing to negotiate within reason. Sometimes that might be doing a little less, taking out a room, or making a little less profit. I NEVER go in knowing I am going to lose money. I know what my walk away price is: The price where I am essentially paying the client for the privilege of Staging their property. I refuse to start off at a loss. There are times things go awry on a staging, and we do end up costing ourselves more than planned, however that cannot be the norm.
Stagers need to be focused on making as much as possible, not just enough to cover their expenses. There are clients where I know I can pad the proposal, and then times where I know I have to be tighter. If you are reading this and are not sure what your rates should be, ask a colleague. If they are not forthcoming, take a look at sister industries and other affiliates who are part of the overall process of buying and selling a property. A stager can take a look at the hourly rate for interior designers in their region, and then fall in below that number as designers are usually seen as expensive. They can also take a look at what other pros involved in the sales/buying process for a property charge: what does an appraiser charge, and what a real estate photographer charge, etc. In other words, look at the others involved in the sale of a property and make sure for the service we are providing in the real estate industry, we are on par.
PRICING PSYCHOLOGY: The psychological factor of pricing is also important. $1950 sounds and looks a lot less than $2010 and they are only $60 apart. If I am adding up our pricing and we bump up just over $2000 or $3000 – I will see if I can get it down to just under the next thousand level. I stay away from round numbers – never add up to something with “00” as psychologically it sounds too perfect, like you didn’t really add up anything for their property quote. Look at $1987 versus $2000. If you got a quote and saw one or the other, which one seems like a better price? Visually 1987 looks a lot less because it has a “19” in the front. Once you bump up over that next threshold, the client’s see it as a lot more.
THE ETHICS OF PRICING: Having open discussions about pricing and agreeing from an ethics standpoint that a stager will not knowingly come in and undercut a market is key. Having recourse for stagers who deliberately do this is key. There are stagers in every market – who stage “for fun,” who don’t actually care about making money – and they will charge less, drive a market down, and do not care they are leaving LOTS of money on the table. A Stager who is NOT money motivated will ruin it for the pros that are out there. The good news is eventually, running at a loss year over year, will become a problem for that stager as the IRS does not like seeing a loss for more than 3-5 years.
Additionally, the adage, “You get what you pay for,” rings true and their quality will suffer, they will be forced to take a look at their poor business strategy and whoever is bankrolling their operation and allowing them to just do whatever they want and lose money, will wise up – after all that person does not want to lose thousands year after year. If that cheap stager exists in your market, go after the higher-end listings as the cheapo cannot stage them to the standard of expectation of a client – and so they will not go after that biz. The investors or agents who don’t care about quality, will hire the cheapo, and when the clients start seeing the lack of results and find themselves having to supplement stagings with their own things or not getting the results they expected, they will start to seek out a true pro.
- Edify the industry.
- Encourage others to price according to their value and their market.
- Focus on how you can be most efficient to reduce overhead.
- And be strategic with who you target for business.
When real estate prices are climbing and everyone involved in the sale is making more (Realtors, Lenders, Title companies, photographers, appraisers, etc.) why shouldn’t Stagers? If we truly are tied to the value we bring to the process of listing and selling a property, we should be making MORE as the markets grow stronger. Not less.
If you are an interior designer, decorator, professional organizer or feng shui practitioner looking to add Staging to your business, watch this 1 hour complimentary webinar that shares what it takes to add Staging to your business. Having an “eye” is not enough. The business goals are totally different, process is different and factors such as front-loading furnishings is a necessity not found in these sister industries.