PTMatt said:
I am just starting to expand the commercial side of my business and need some help with pricing. I've been pricing jobs anywhere from .10-.20 cents for HWE and prices are based on size and frequency of cleaning. I'm in the process of picking up a Cimex for encaping. It seems like I have been getting under bid quite a bit. What are some of you guys pricing commercial at for both HWE and Encap?
You are probably "in the market" at those prices. But instead of fretting about getting "under bid" may I suggest a different approach and a change of attitude? First ...
1. Do some serious financial analysis and find out EXACTLY what it costs you per hour to clean carpet. You'll get this by adding up all your fixed overhead for the month and dividing it by the number of hours you normally work. then you'll need to add your variable expenses per hour such as labor and chemicals. (don't forget to charge for your labor.) Then add in what you want to make in profit plus depreciation which just means an allowance per hour for projected repairs/replacement of equipment. IF you do this right you will be surprised at just how high YOUR own Cost Per Hour number really is.
2. Start keeping a "cleaning diary" of how long it takes you to clean every single commercial job you do including type of carpet, square footage, soiling levels, etc. Pretty soon you will have nailed your production rate on every type of job. So now ...
3. Instead of using the "Scientific Wild Haired Guess" method (Chuck Violand uses a different acronym) of just wildly guessing at a price based on what you think "the market will bear" it now just becomes a logical mathematical exercise. Take the total Effective Cleaning Area square footage and divide by your Cleaning Production Rate and then multiply by your very own Cost Per Hour and ta-da! there is your job amount!
So now with this 3 step logical approach you also get to change your attitude. Instead of "Oh crap! I got 'under bid' on that jb it now becomes, 'poor sucker'. He under bid it and is going to lose his shirt!"
Now for a caveat to the above. In commercial work it is all about production and efficiency. (A Cimex and encapsulation will really help you here.) So BEFORE you engage in all sorts of emotional denial when you "lose a bid" be sure to examine your production efficiency. Maybe the other company just is working harder/ better/ faster? This is capitalism- survival of the fittest!
Respectfully submitted,
Steve Toburen
www.SFS.JonDon.com
PS One more suggestion would be to always promote the option of a regular maintenance agreement at the same time as you turn in your proposal for a one time cleaning. These contracts are where you really clean up with regular, predicatable cash flow plus add long term value to your company. Chapter Four of Jeff Cutshall's new manual on "How to Build Regular Encapsulation Maintenance Routes" is all about how to price this idea. The download is free for anyone who wants to know how to do it.
http://sfs.jondon.com/6994/resources/sp ... tes-part-1
