How much should I charge?
Many people contact our site asking this question. Unfortunately there really is no exact answer to it. The price that cleaning companies charge varies from region to region around the country. It can also vary widely from business to business within an area.
You can find businesses that charge high prices and have all the work they want and other companies, in the same area, that charge much less yet barely get enough work to keep going.
How much do you need?
Before you start worrying about what the competition charges, decide what you need for your time to earn a good living. If you can’t make at least that much then what’s the point of having your own business? Moreover, if you compete strictly on cost you will never prosper because there will always be someone who will charge less than you.
On the other hand, if you promote your business on the quality of your service then your business will grow and price won’t be the main issue with your customers.
Pricing the market
Pricing the market means determining what your competitors charge so that you don’t price your service too high or too low. The easiest way to do this is to call them up and ask for an over-the-phone estimate.
If you do house cleaning work you might say something like this, “Hi, I’m interested in getting an estimate of what you’d charge to clean a house once a week. It has three bedrooms, one and a half baths and is around 1,600 square feet in size.”
If you are interested in doing business cleans you could say, “Hi, I’m interested in getting an estimate of what you’d charge to clean a small business office once a week. It has two small rooms, each about 120 square feet, one large room, about 400 square feet, and two small restrooms — one toilet each.”
Once you get their estimate you can thank them and hang up. (Notice you don’t have to say anything untruthful if you do it this way.)
This approach doesn’t always work. People can be reluctant to give even “guesstimates” over the phone but it is worth trying.
Many people, when they start, subcontract for others. In other words, they do the work for another company and are paid by that company, not the original client. This is not only a good way to pull in income fast when you start your business; it’s also a good way to learn about local prices for cleaning work. In general, as an independent contractor you will get around seventy percent of the total price of the job.
I’m still not sure how to price a job
We go over how to price a job in detail in our manual:
How to Start a Cleaning Company (And Make It Pay!)
but here is a quick way to estimate your bid price that you may find helpful.
Labor cost will be the major part of your expenses in any cleaning work you do — if you can calculate that, you can easily estimate the overall price for a job. Here are a couple of generally used production rates for common cleaning tasks.
Let’s say the density of people in an office you want to bid on is somewhat higher than average, set it to 1/3 of the Density cleaning variance or 6%. It has a high percentage of smaller rooms, set this variance to 6% (2/3 x 9% = 6%). And you will only clean it one time a week so set this variance to 9%.
If everything else looks good we can easily add up the results. It’s 21% (6% + 6% +9% = 21%). So it will take twenty one percent longer to clean than you would estimate just using standard cleaning production numbers.
For instance, if, using standard cleaning production numbers, you estimated it would take a crew three and a half hours to clean this building you would now increase your estimate to 4.24 hours (1.21 X 3.5 = 4.24).
Once you have your estimate of how long it will take to do the work multiply that number by your hourly labor rate. This gives you the labor cost for the job. Labor costs are around 70% of total costs so if you multiply that amount by 1.43 (1.43 * 70% = 100%) you will get a reasonable estimate of the total price you should charge.
For instance, let’s say you figure your labor costs to clean a building once a week for one month is $595.00. You then multiply $595.00 by 1.43 to get a total monthly bid price for the job of $850.00
While most people find that labor cost as 70% of total cost is a good estimate you might find yours are somewhat higher or lower. Adjust these numbers according to your own experience.
The examples used above are simplifications of the bidding process. In our manual, we go through nine steps to determine the bid price for an account (see the list below).
1. Do your Walk Through (Site Inspection)
2. Determine your labor cost for one clean
3. Figure out what your total monthly labor cost will be
4. Use your total monthly labor cost to estimate your total bid price
5. Estimate total monthly cost of supplies
6. Estimate your amortized monthly cost of cleaning equipment & tools
7. Use your estimated bid price (from step 4) to determine how much of your indirect costs to charge to this bid
8. Add direct costs (labor, supplies, cleaning equipment & tools) to indirect costs (office costs, insurance, advertising, etc) to find total costs
9. Add in your profit margin to find your actual (not estimated) bid price
Get a Bidding/Estimating Expert as your Mentor
Well sure, great idea but it’s probably a lot easier said than done.
Customer want to renegotiate after the agreement has been made?
There are no hard and fast rules when a customer tries to negotiate downward after the agreement. There is Latin term “quid pro quo” which means “something for something”. Since the customer is trying to drop the price by 40% you could always reduce your crew size by one or two workers. Explain that you have other jobs needing attention and you will get the job done – it will just take a day or two longer. $31 an hour for fire restoration work is not out of line. Check with a local insurance adjustor or the “Blue Book” for pricing in your area.
National Pro Clean Corp
govt and builder’s contracts?
For city, county, and state contracts, phone the purchasing department of each. Request the RFQ (Request for Quotation) for all office cleaning bids. Ask to be placed on their automatic notification list. An Internet search of “government contracts” shows companies who claim they can help you with this. Keep in mind, the contracts are very exact and you will need competitive prices, an impressive bid packet, and references proving your experience. To prospect construction cleanup, drop your literature packet by each general contractor and ask for an appointment, or the name of the job superintendent who handles final-cleaning bids. It takes time to work your way in, but persistence pays off. Sometimes you can prospect at the job sites, but just be prepared to make it brief. While there, find out who the new tenants are and contact their manager about submitting nightly janitorial bid. Position yourself as one who makes free backup bids. It sharpens your skills and brings you closer to winning more contracts.
National Pro Clean Corp.