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Question :
I started a living art business 9 months ago, where I custom make art like vertical gardens for private clients, however, I also hire them out to businesses.  I will also be introducing backdrop walls for weddings and events in July.  Due to personal circumstances, my business may change over time to predominantly hiring products rather than making them.  So that I can get this side of my business running well with the right pricing formula from here on in, does anybody on this site have experience with working out a formula for daily, weekly, or monthly hire charges?  I am comfortable with pricing one-off purchases.  Any help would be appreciated.  Many thanks.

Question submitted 06/05/20 @ 07:41am
Industry: Sales
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  • Morena Kirsty – there are two ways to do pricing, the first is talk to your target market, your sweet spot customer and work out what they would be prepared to pay for hiring. If you can find 10 friendlies to talk to then see what they say. The 2nd way is to look at what others ie competitors are charging ie be a mystery shopper and just get market information from them. In the end, trial and error is really important – don’t freeze on the thinking, do and just be prepared to change your pricing over time. Hope that helps. A

    Hi Kirsty
    Further to Andy’s advice, once you’ve figured out what the market is prepared to pay you’ll want to check that what you’re hiring out will give you a reasonable return over it’s useful life i.e. number of hires. You’ll need to factor in how many hires you can get out of it before it needs replacement/overhaul. I guess you already know how much you make from a one-off sale and that $ is acceptable to you? – divide that $ by the number of hires you expect over useful life and use that as your starting point. Then add on a recovery for the time it takes to quote, deliver, install, uninstall, return, maintenance costs between successive hires, etc. If there is any space between all of that and what the customer is prepared to pay then you have a bit of a buffer when things don’t go according to the model e.g. someone waters your plants with Veuve. For your longer term hires your clients may be prepared to pay a premium for a refresh/replacement every 3 months – a lot of companies make more money out of on-going maintenance contracts than the upfront sale of a product. But Andy is right – don’t get trapped in a spreadsheet. Get out there and see what works and change quickly if needed.
    Cheers, Damian

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