I have met, residential, cleaning service owners, all around the country, who appear to have a great operation. They’re conscientious, hard working and can handle any cleaning challenge. They are exactly what homeowners want and .......... they’re struggling to pay their bills.
Two Possible Issues:
1. They don't know what it costs to do business, so they don't know what price to charge.
2. They know what price they should be charging, but are afraid to ask for it. I call this “fear of pricing.”
Many of us have had these problems.
We, sometimes set our rates based on the “going rate” in our neighborhood or what someone said they charge, with little consideration to expenses and profit.
You must know what you NEED to charge before you decide WHAT to charge.
A method that can help you figure it out
Add up all your expenses - P&L statement (there are downloadable Profit and Loss - P&L sheets, on-line that could be adapted to your use) or simply write all your expenses down - there are more than you 1st think.
Determine how much profit you'll need, this year.
Every Company Needs Profit - Profit is what replaces worn out equipment and allows you to expand your business...... if that's what you want. Profit is when you can write a check for a new truck, because you planned on it. Profit can be putting money away to buy a building (a great asset to have at retirement time!) or income property. Profit can be building an investment portfolio. Profit can be to buy an airplane.... Why not!
Profit is part of your reward for taking all the risks.
Profit is not a luxury, it's a necessity!
With profit you can end up being financially secure.
When you get to the amount of money you need to pay the bills and have the profit you need, determine what % of your income each service is of your total business.
EXAMPLE: Let's say carpet cleaning is half your business. Lets' also say your bills and profit add up to $100,000 this year, so you need to bring in $50,000 from cleaning carpet. Now, you make a guesstimate of how many feet of carpet you expect to clean, based on past history and future projections. You now have an idea of what you need to charge per ft. (hourly rate can also be calculated.... a little more involved)
It's not 100% exact, but it's better than a dart board!
Now, monitor your P&L sheet and, if needed, adjust expenses or ..... your price.
NOTE: Sometimes money spent for an accountant to get you "set up" can be money well spent. Even one truck. This can set you up to be earning profits, regardless of how small or large your comapany.
People who I meet who make money - 6 figures ...... or more! - understand the financial side, of business, as well as technical. In fact, many very succesful cleaning and restoration owners, I meet, are better at the business side of things than the technical. Okay .......... catch your breah........ what did he just say?
NOTE: Commercial and apartment cleaning are different animals. You won't get the price per foot of residential but you must, still, make your profit per hour. In fact .......... with the correct procedures, commercial cleaning, at a lower price per ft, (usually) than residential, can be as profitable, or more, than residential.
What price is too high. Who really knows? There are few who have gone high enough to find out! Some are over-charging at $39.95 for 4 rooms and a hall while others would be grossly under charging at $200 for the same area. It’s all about value. Your customer decides the value of what you give. It is not all about price.
EXAMPLE: I bought an inexpensive computor bag that lasted 6 months before falling apart. I then paid more than 3 times as much for a bag that lasted over 6 years. The 2nd bag had real value. MUCH MORE than the money I spent.
Your customer has a lifetime of buying experience. Many understand the "value" concept and are willing to pay for it, within a range. Complaints about your price doesn't always mean it’s too high. At my company, new customers would comment about our high price and then call us back over and over.
NOTE: Price per ft or room is not the true measure of how you're doing....... profit is the true yardstick. Price/ft or room is a vehicle to get you to a price to present to your customer. Actually, we work by the hr or day.
Your pricing must be based on your costs and profit needs.
EXAMPLE: If your expenses cost you $30 for each hr your truck runs and you want 50% profit, you need to be bringing in, at least, $45/hr.
My company was expensive to run. To pay the bills and have profit, we needed a hi per ft charge. Your company may cost less, to run, so your price per sq ft may be less, than ours, and you COULD be making more profit than us -:)
A certain percentage of customers only care about price. Many more are willing to pay for quality and a great experience. It was not uncommon, after a customer paid us top dollar for our services, to have them tell us, "You guys are great!" The value, they got, was greater than the cost. The value you give, which includes technichal quality and presentation, must always be greater than the cost of your services.
Most of the calls for your cleaning service are from women. Women look at things that, often, men overlook. Pay attention to what makes them feel good about your work and you will be busy.
EXAMPLE: Being on time and calling if you're going to be late. Clean, good looking, uniforms and clean trucks. Door mats to wipe your shoes before entering the home. Shoe covers, to walk through the home or walk on already clean carpet. Good personal grooming (smell good, change of shirt during the day) etc. etc. etc. Think about it. You'll come up with things.
Think appearance isn't important? In our town a large plumbing company placed billboards all over town that had a picture of a well dressed plumber, wearing shoe covers.The caption, "We send clean plumbers to your home." They are not cheap and they are busy. Obviously, they are also good plumbers!
So, figure out what you need to charge, to make money, and then have the courage to ask for it. Many have thanked me for this advice, years later.
OBSERVATION: I go all over the country and see many companys. It seems the busiest ones are also the most expensive. Go figure!
If you are paying the bills and ending up with a "salary" for yourself, you own a job. If you are paying the bills, paying yourself and have profit to do the things you want to do, you own a business.