The Price Of Lowballing Your Home Staging Service
It might seem like a tempting proposition: Take on more work by offering your services at a lower price point. This strategy can backfire if you do not have an efficient business process and a good financial strategy in place. More work can be good for your cash flow but will not necessarily lead to profit as your operational costs go up to meet the high volume. The true price of home staging starts with knowing your cost of doing business in comparison to how much you charge to ensure you make a profit.
There are very few businesses that can thrive on this model, unfortunately, home staging as a capital-intensive business with high overheads is not one of them (unless you do not stock inventory) Think bigger warehouses, more inventory, and hiring additional help with the attending payroll taxes and fees. Throw in an overstretched, burned-out team and you have compromised quality as you rush to fulfill mounting demands without investing in upgrading your inventory, having room to breathe so you can take the time to hire and train the right people, plus continuing education for you and your team to stay in the know of industry standards and new trends along with all the other things that add value to you and your clients.
You may even need to cut corners on government regulations by hiring independent contractors to save on payroll fees, and taxes, not providing the required and deserved worker's compensation for your team. These are some of the behind-the-scenes deadly sins that can make your services "affordable" in the short term but will eventually bring your business to its proverbial knees. Compromised quality means the home seller may be leaving money on the table with sub-par services, the opposite of what home staging is supposed to do: home staging increases the perceived value of a home so it can sell quickly for more money.
A Real-World Scenario
I recently had a conversation with one of my Agent Partners. They told me how they have been working with a competitor in the area and how that company would do the same job for about half the price we charge. They wanted to know if there was any way we could match or get close to that competing bid.
"Let me get this straight, found someone that can do it for less, there must be a reason why you’re not going with them". The answer was that the company had not been picking up their phone or responding to emails. Then I asked them the name of the company and immediately realized it was the same company whose landlord recently contacted me to offer a warehouse full of their inventory for free after they went AWOL being unable to make rent for months. I am not one to profit from someone else's misfortune, so I put heads together with a good friend and another Stager in the area to offer the "free" inventory to a non-profit organization we partner with. It was heartbreaking to see someone's hard-earned business become a free-for-all grabfest. It was a humbling experience that shook me to my core because, "but for the grace of God, there go I".
Back to my conversation with my client, I told them that the reason they were not picking up the phone was that they were now out of business. This is a trend we are seeing in our area and I'm sure nationwide as I get news of staging companies going out of business on a fairly regular basis, one such just yesterday. I know this is not unique to the home staging industry as other small businesses are also suffering with the current state of the economy. None of us is immune to the state of affairs in the real estate market, but we can get ahead with careful planning and strategy.
Staying Resilient in a Competitive Market
It can be challenging to navigate the waters when your competitors are constantly underbidding to get the job. While it might seem like they have the upper hand, getting all the business now, they are running an unsustainable nonprofit business model with inherently compromised quality.
Prioritize Sustainable Growth Over Short-Lived Gains
Price is just one factor in a client's decision-making process. As real estate and home staging professionals, it's crucial to emphasize the value we bring to the table. After all, the longevity and reputation of our businesses depend on the quality of our work and the relationships we build as business partners and service providers.
Let your work speak for you and don't be shy about speaking for your work, Don't just send out bids without engaging with your clients and ensuring they understand the value you bring. Learn what is important to them and meet them at the point of their needs. Educate them to compare apples to apples and use statistics to show the returns they get when they work with you, the proof is always in the pudding.
I am encouraged by several industry veterans who have weathered decades of economic storms and recessions. Their success stories often share a common thread: a focus on delivering value over just being the cheapest option.
Connect And Grow With Me!
Profit is the very lifeblood of any business. Learn the simplified way to know your numbers and set your price in a way that will continue to serve you profit so you can grow your business and pay yourself for your hard work.
Start where you are, Use what you have, Grow And Thrive!