Inventory and Pricing

Since a personal shopping business is service oriented, you won't be selling a specific product. That means there's not a lot of initial inventory as there would be if you were starting a retail business. However, you may on occasion find it necessary to deal with suppliers of wholesale merchandise, because some clients may demand such merchandise.

If you purchase wholesale merchandise for your clients, it is important that you maintain a good relationship with dependable suppliers of inventory. The better your connections with reliable suppliers, the better your chances of getting those special items for your clients at a good price.

Even though you usually won't be selling a product, you will be selling a service. And you'll need to take just as much care in pricing your service as you would a line of products. Most personal shoppers use one of two common methods for pricing their service:

1) Set a fee based on the total price of the merchandise.

2) Charge an hourly rate.

Whichever pricing method you choose must bring in enough income to cover any overhead you have, your time and labor, and leave you with a reasonable profit. This requires knowing what the market will bear, as well as how much you desire to make your service personally profitable.

Most home-based shopping services initially institute a fee based on the total cost of the merchandise purchased. This fee should be a percentage of the purchase price. The percentage will vary depending on the market area, the type of clientele and the total price of merchandise purchased. It's up to the personal shopper to determine an appropriate percentage.

Generally, the larger the total price of merchandise purchased, the smaller the service charge. For example, if you charge a service fee of 20% on a purchase of $500 or more, your minimum fee will be $100. For a smaller total purchase of merchandise -- say, from $200 to $500, your service charge could be 25%. That would leave you with a minimum fee of $50 and a maximum of $125.

This type of pricing makes good business sense if you do a lot of pre-shopping from newspapers, catalogs and by phone. That way, you've located your merchandise before you actually go shopping. This will save you time and result in a higher degree of profit on your labor.

Hourly billing for this type service usually works best if your service offers a good deal of consultation as well as shopping. In most cases, personal shoppers who also feature wardrobe consulting as part of their service, charge an hourly fee. If your service is in a market that has the potential to support a wardrobe consultant as well as a personal shopper, you may consider billing clients by the hour.

Many personal shoppers who also offer consulting as part of their service charge as much as $45 an hour. The rate you set depends on how much you feel your time and efforts are worth, and how much the market can afford. You'll need to make a profit, but you'll also need to be affordable.

If you limit your service to shopping -- no consultations -- then an hourly rate isn't realistic. Sometimes you may only be shopping for $50 worth of merchandise and charging an hourly rate of $30 to $40 will not be appreciated by the client. Your rate should be such that every client feels it's worth the time saved to pay you to do their shopping. For shopping services only, a service fee based on the total price of the merchandise is more practical, and ultimately more profitable than an hourly rate.