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Can you relate to Debbie the Designer? Are you charging enough?

By
Industry Observer with Ashley Whittenberger Fine Art

I recently received an e-mail from a colleague of mine here in Austin, Texas who was looking for some business advice. We both started our companies at the same time and we used to meet at the playground while our toddlers would play and we would brainstorm, talk about marketing ideas and share our wins and failures. Now, our "toddlers" are snaggle toothed 8 year olds. My how time flies. Anyway, I digress... 

After I received her e-mail and sent my response, she said I should turn the response into a blog entry or article. So, here you have it. (Some names have been changed to protect the innocent.) :-)

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Monday, February 22, 2010

Dear Ashley,

I know when I met with you several months back, you mentioned I should probably raise my rates. I raised them just 10% and now, I'm wondering if I raised them enough. In your honest opinion do you think they need to be higher?  Since I just raised my rates a few months ago, should I stay at this awhile and then set a date to raise them?  I want to be in line with my market, but not over charge. 

I really appreciate your input on this.  I know you work with a lot of designers & stagers and you have good feel for what I should be doing.

Thanks for you help,

"Debbie Designer"

~~~~~~~~~~~~~~~~~

Monday, February 22, 2010

Dear "Debbie Designer",

I wish you could have been at the Real Estate Staging Association Conference where I delivered a course on Pricing Strategies

A common mistake that many designers make is they set their rates too low and forget to consider that they don't get to charge anyone an hourly rate when they are doing all of those other things involved with running a successful and stable design business (i.e. bookkeeping, training, marketing, driving to and fro, basic business operations.) If you're not charging enough, you'll find that by the time you factor in your fixed expenses, variable expenses, COGS/COS & taxes, your net isn't that much. It's worth REALLY taking the time to see how much you are actually making, vs. how much time you are working. Calculate the # of hours you spent last year on your business. Include the obvious (i.e. meeting with clients, book keeping, etc.) but also factor in commute times, arranging for child care and even the time and money it takes to get dressed up to look like a savvy & stylish designer. Now, look at your bottom line and divide that by the # of hours you worked last year. How much did you truly make an hour last year?   

When you see this net hourly rate, it will usually be a rude awakening which will motivate you into raising your rates. Think about the time you spend away from your family and the time you take away from yourself - is it worth it? I'm all for charity work, I just don't think "Mrs. Jones" in her $500,000 home who wants custom draperies but doesn't want to pay our price qualifies for a charity case. Nor does Mr. Jones, who agrees that staging a home increases the perceived value, but doesn't want hire an expert and pay the expert's rate to properly execute a staging. If I'm going to donate my time, it will be for a homeless shelter, Haiti, child advocacy, Humane Society, etc. People who truly need it, NOT MR. OR MRS. JONES!  You only have one life and one family. Why whittle it away by charging less than you're worth? Profit is not a bad word or an embarrassing thing and you shouldn't feel guilty about making a profit to earn what you're worth.

With that said, I definitely think you would be justified in a rate hike. If you don't feel comfortable doing it right away, there are lots of ways to raise your rates, without a flat out rate hike: 

•¡  Revise the discount structure.

•¡  Change the minimum order size.

•¡  Charge for delivery and special services.

•¡  Invoice for repairs.

•¡  Charge for engineering, installation.

•¡  Charge for overtime on rushed orders.

•¡  Collect interest on overdue accounts.

•¡  Produce less of the lower margin "widgets".

•¡  Write penalty clauses into contracts.

My mission for 2010 is to combat the plague of under-earning in our industry. When I spoke before 250 stagers at the Real Estate Staging Association Conference in January, and asked the room how many felt their net profit at the end of 2009 reflected what they are worth, and how many felt like, "Yeah, that's fair. That's what I should've made." You know how many stood up? 5. I knew it wouldn't be a lot, but was stunned at how few. 

It's an epidemic. It's got to stop. If we don't value ourselves and our work, no one else will. We're giving away our most precious commodities -- our time, our talents, ourselves. For what? For the Jones' so they can keep up with the other Jones while we struggle and sacrifice ourselves and our time? And so we can work ourselves into the ground for leftovers? I don't think so!

I won't go into the details, but during my presentation, I walked everyone through a simple exercise involving "Sally the Stager" who charges $50 an hour. At the end of the exercise, we see how Sally actually makes less than $6 an hour if she's charging $50 an hour to her clients. Needless to say, most people left the room vowing to increase their rates as soon as they returned from the conference.

Let me know if you need anything else! You're taking all the right steps and you'll soon reap the rewards! Keep at it & stay focused. You're definitely moving in the right direction.

- Ashley

www.theinterioritycomplex.com

P.S. Sorry to be so long winded. Can't you tell I'm passionate about this?

P.S.S. If you want to take the Pricing Strategies course online, you can now apply it towards your RESA Pro Designation. Here's the link w/ more info. on RESA-PRO Designation and the classes. (The Pricing Strategies course is under "Business Principles".)

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Tuesday, February 23, 2010

Ashley,

Thanks so much for all of the valuable information and input.  Wow...you are passionate about this!  Yes...I am going to raise my rates.  I think it might be a good idea to roll that increase out with our rebranding so that it all lines up at one time.    

I have already felt much better about hourly consultation after raising my rates the first time, and so I know everything you are saying is so true.  

I so appreciate all of the great advice and support you have been to me over the years.  Please let me know anytime you need a favor back. 

"Debbie Designer"

 

 

Posted by

 

CEO, Ashley Whittenberger Companies, Inc.

www.ashleywhittenberger.com

FACEBOOK | TWITTERLINKED IN  | STAGING & DESIGN PRO'S

_________________________________________________________________________________________

Ashley Whittenberger, Award Winning Entrepreneur & Design Biz Mentor

Ashley Whittenberger is a chronic entrepreneur, business consultant and sought-after speaker.   Her determination and focus motivates and inspires others to step into action and create the businesses and lives of their dreams. As President and CEO of several companies Ashley knows exactly how to harness her creativity, vision, business savvy and leadership skills to inspire others to play a bigger game and focus on what’s really important in business, and in life. 

Ashley has been featured as an expert in the Austin Business Journal, Realtor Magazine, Realtor.com, Your Address Magazine, the Get More Business Show on Blog Talk Radio, a variety of expert panels and on TV including Fox 7’s Good Day Austin and the Austin Real Estate Experts. She was named one of 2011's Innovators of the Year by the Real Estate Staging Association and was honored to be nominated for the Women of Influence/Profiles in Power in 2010. She was also honored as the Real Estate Staging Association’s State Chapter President of the Year in 2010. Her newest program, the Design Biz Incubator, provides business and success advice, resources and support to members around the world.

If you liked this blog entry, you'll love Ashley's innovative courses and programs featuring fresh new strategies to help you start, market, and grow your design-related business. Learn more at www.ashleywhittenber.com.

 

Comments (22)

Wanda Richards
Shows Great Home Staging and Web Solutions - Roanoke, VA
Shows Great Home Staging

Great information.  I have been thinking about this a lot lately because I really think it is time to change my pricing structure.  I am working way too hard for too little money at the end of the day after everyone has been paid.

Mar 08, 2010 08:34 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Ashley- So timely.  After completing a Vacant Staging last week, I decided to seriously look at what I'm charging for my inventory and at my staging fee.  Thanks for your post.

Mar 08, 2010 01:02 PM
Lori Kim Polk
Premiere Home Staging : Home Staging Services - Roseville, CA
Home Stager - Roseville, Sacramento

Ashley.... very true words of wisdom. Inch by inch, mile by mile... the value that we bring to the industry surely exemplifies the value that we need to put on our services.  You offer some great alternatives to adding value to our services in ways that we may not have thought about. You don't need to raise your prices in order to gain. ;))

Mar 08, 2010 04:06 PM
Monica Murphy
Preferred Staging, LLC - Potomac Falls, VA
ASP, IAHSP, RESA

Great post!  I'm finding that I'm running up against a lot of "budget stagers" who charge $50 or less per hour.  Although they may be getting business now, I can't imagine that they can keep working at that rate. 

Mar 08, 2010 11:27 PM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Julia, Ginger, Wanda, Kathy, Lori -- glad you joined the conversation (and took the time to read that super long post!)  :-)

Monica - yes, the budget stagers can deteriorate the market and disrupt the market place. I've seen it happen year after year... they eventually figure it out or go out of business.

Mar 09, 2010 12:44 AM
Connie Tebyani
Platinum Home Staging, Inc. : RESA-Pro - Calabasas, CA
Platinum Home Staging, Los Angeles and Ventura County

Excallent post, Ashley!!!!!  So many times as business owners, you don't think about factoring in all the "little" stuff and then calculating the hourly rate from there.  I also like your suggestions of "other" ways to increase the income without technically raising the prices.

Mar 09, 2010 01:09 AM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Glad you enjoyed it Connie, and you're right, it's amazing how all the little things can add up.

 

 

Mar 09, 2010 01:19 AM
Tessa Skeens
Hampton ReDesign, Home Staging and Redesign - Grand Junction, CO
Staging For Realtors, Builders & Investors

Ashley you made me think about charging the Jones more.

I often think that everyone is looking to save money and I need to re-train myself! I should not assume that my sellers either can't afford or don't want to pay a certain amount to have their homes staged. I don't try and compete in price with anyone else and I do set my rates so that I am comfortable with them but it could be I need to consider raising them.

My goal is to help sellers sell their properties and make it affordable for them to do so, but thanks for the reminder that I need to figure myself into that equation!

Mar 09, 2010 10:51 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
Retired New Hampshire Home Stager

Excellent post!  We are so lucky that Debbie Designer suggested you transform your reply into a post.  You certainly have hit a nerve amongst the staging population here and I think it's safe to say there are a lot of rates being raised in the very near future!

Mar 09, 2010 11:57 AM
Kate Hart
Hart & Associates Staging and Design - Radnor, PA

Totally agree! I just got off the phone with a client that told me her Realtor told her my hourly rate was $75.00. It is $125.00. I explained to her that the realtor was misinformed. She said her Realtor told her to let me know that it was the preferred rate that I give her. I have only worked with this Realtor once and do not discount my rates for anyone. I explained to her that coming to her home for an hour involves my travel time to her home (40 minutes, my over head (childcare, gas, etc) and then my time to invoice her. She told me she would "think about it". Honestly it would not be worth my while to get up, shower, put on makeup and go over there for less than my hourly rate. I could stay home with my kids instead and wear my jammies!

Mar 10, 2010 12:29 AM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Tessa, I think you hit the nail on the head... we do have to re-train ourselves. It's almost like building a muscle. One thing I do know, is that our staging services truly help people and that they pay for themselves. It's not like we're selling snake oil out of the back of a wagon! When you look at what a good staging actually does for a property, even at $125 an hour, it's great value and the services will pay for themselves, and then some!

Sharon, glad this resonates with you as well!

Kate, good for you for sticking to your guns (a.k.a. your business plan!) At $75 an hour, after taxes, travel time, prep time and child care, you'd make more schlepping coffee at Starbucks AND you'd get health benefits. :-)

We charge a trip charge for anything over a 30 minute commute. Time is money in this business. We've been doing this for several years and only a few times have we had a client question it. If they do, once we explain the why, they are usually fine with it. If they are not ok with it, then we have to determine if they really are our ideal client.

We believe in exchanging money for the goods and services we provide, not "air"! 

 

 

 

Mar 10, 2010 12:44 AM
Michelle Minch
Moving Mountains Design Home Staging, Pasadena, CA - Los Angeles, CA
Home Staging Los Angeles and Orange County, CA

Ashley: I loved your talk at the RESA Conference and I love your post here. I'm always stunned by how little some home stagers and designers in my area charge, even ones that have been in business for a while. They may get a few more jobs than me, but they're not making more money than I am. They're spending a lot more time working harder (not smarter) doing more jobs, but at the end of the year, I've made more money because I charge what I am worth.

I won't get every job that I bid, because some potential clients are only interested in price, not value. I'm not the cheapest stager, but I provide the best value.

The most important thing most of us could be better at is convincing clients that we are worth what we charge - showing them the true value of our expertise and skills.

Mar 10, 2010 01:10 AM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Michelle, you bring up another great point... you've got to be willing to walk away from some jobs/clients in order to work smarter, and not harder, and you may not get every job you bid if you raise your prices.

It's sort of like dating -- if you're too desperate, you'll only end up attracting a less than ideal "date" (a.k.a. client)!

Mar 10, 2010 02:07 AM
Gary Barnett
Home Matters - Indianapolis, IN
Home Matters Property Stylist Group, Indianapolis

Ashley, Linda and I also really enjoyed hearing you speak at the RESA conference.  I have always thought that a client that understands the value of what we do will rarely have an issue with how you price your services.  On the other hand those that do not understand the value will find any price to high.  So our stance is to price your services appropriately and concentrate on educating on the value.

Mar 10, 2010 08:53 AM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Thank you, Gary, and your advice is spot-on. The best way to close the gap between the price the consumer is willing to pay and the price at which you can offer it is through education. Thanks for sharing your insight and wisdom! We've had a lot of successful and experienced stagers and business owners posting up here. I hope this helps those who might be struggling, those new to our industry, or even those experienced stagers who might not quite yet be earning what they are truly worth!

Mar 10, 2010 09:18 AM
Pangaea Interior Design Kitchen & Bath Design, Remodeling
Portland Oregon - Portland, OR

I gave myself a raise this year and am glad I did! However, there is the law of supply and demand in a free market place. If our market is flooded with many stagers and the jobs are few and far between, it's a natural occurrence that the rates will fall. Business 101. But it is also in business 101, that you need to know your cost of doing business, and if you don't cover it with enough left over for profit, you'll be out of business. This is why I think it is important to recruit new stagers into our professional associations so that they don't deteriorate the market through lack of business knowledge.

Mar 10, 2010 02:28 PM
Sheila Kennedy
J29 Project - Rochester, NY

This really hits a nerve.  I look at the amount of clients I had last year and the amount of money I should have been bringing in and .... well you can imagine.  It wasn't where I wanted or needed it to be.  I have revised my fee schedule for the new year and so far it hasn't slowed me down one bit.  Actually business picked up right after.  Thanks you for your passion and for sharing it with us Ashley!

Mar 10, 2010 03:11 PM
Lori Kim Polk
Premiere Home Staging : Home Staging Services - Roseville, CA
Home Stager - Roseville, Sacramento

We just raised our basic staging 10% from last year with no problem. Pangaea stated it well, "you need to know your cost of doing business, and if you don't cover it with enough left over for profit, you'll be out of business"....right on woman!!!!  I loved your presentation at RESA and I look forward to more great advice. Thank you Ashley;)

Mar 12, 2010 04:56 PM
Robin North
Dramatic Spaces Home Staging and Design - Cambridge, ON

I am so glad stagers are talking about pricing.  We go in to help homeowners increase their asking price sometimes thousands of dollars and they sell so much faster so we do deserve to get paid for our expertise.  Thanks for starting the conversation Ashley!!

Mar 26, 2010 04:40 PM
Ashley Whittenberger
Ashley Whittenberger Fine Art - Austin, TX

Looks like we're going to have an interesting conversation about pricing tomorrow on The Get More Business Show on Blog Talk Radio! The topic is Pricing: How To Establish The Value of Your Business' Products and Services.

I hope some of you can tune in at 11:30AM EST/10:30am CST/8:30amPST.

Here's the link with more info. on our fan page.

Thanks for inviting me to be a part of this conversation and show, Sheila!

 

Mar 30, 2010 09:19 AM