What’s the price?

[hogjowl]

How do you determine what price you charge?

 

[Cleanworks]

How do you determine what price you charge?

I ask how much they got.

 

[Desk Jockey]

Overhead costs (materials, vehicles, fuel, insurance, taxes, labor) desired profit.

 

[hogjowl]

Overhead costs (materials, vehicles, fuel, insurance, taxes, labor) desired profit.

That’s a good starting point
But how and where do you get this information
And how do you determine your desired profit?

 

[Cleanworks]

That’s a good starting point
But how and where do you get this information
And how do you determine your desired profit?

If you have a good accounting program, it will print out the facts for you. Can break down the costs per job and let you know if you are making a profit or have a loss.

 

[hogjowl]

Exactly
That’s the starting point
What are some available accounting programs
I use Quick Books
You don’t have to be an accountant or even understand bookkeeping to be able to use Quick Books, but it helps if your Accountant sets it up for you.

 

[Jim Pemberton]

Let me pick on my "family" (trainers and distributors).

To be clear, I think what follows is a TERRIBLE way to establish your pricing.

In the 1970s, "industry leaders" would say things like this at industry events:

"You need to get 100.00 per hour. Truck mounts can clean at 1000 square feet per hour commercial, 500 square feet per hour residential. So as long as you get 10 cents a square foot commercially, and 20 cents a square foot residentially, you're making money"

I don't know where that came from, and while I think the square feet per hour rates were too generous, maybe it made sense in 1978. But we pay people more, and everything costs more today.

But I have to tell you, I still hear the 100.00 per hour thing going around today.

I'm looking forward to seeing where this thread goes.

Nice start Marty.

 

[hogjowl]

Everybody needs a metric … which is nothing more than a fancy term for measurement. We all need to determine how we’re going to measure our price. I use time.

I keep up with total time on the job. ServiceMonster keeps up with that for me.

 

[Desk Jockey]

A fairly simple approach would be 1/3 overhead 1/3 taxes and 1/3 profit. You can refine that quite a bit and drill down to actual numbers if you have the data readily available.

 

[hogjowl]

Keep it simple Richard

 

[Kenny Hayes]

A fairly simple approach would be 1/3 overhead 1/3 taxes and 1/3 profit. You can refine that quite a bit and drill down to actual numbers if you have the data readily available.

I pretty much use that method. You can start with the baseline of numbers such as Jim mentioned and adjust accordingly using 1/3 1/3
and 1/3. When employees are involved you must.

 

[hogjowl]

Why don’t you two go somewhere and mentally masturbate with each other so I can keep this thread simple so most carpet cleaners can understand it.

 

[Desk Jockey]

Why dont you *#$^ *##!

 

[hogjowl]

Well then, explain how your 1/3 principle determines your end price.
I’ll be excited to hear it.

 

[darcie smith]

SFS is the answer I have my spreadsheets from there and I went through and updated material/labor/equipment/vehicle costs yesterday and today. Whenever I have time I can start analyzing jobs and researching whether our pricing needs adjusted. Scott is looking forward to the answer.

 

[Desk Jockey]

Well then, explain how your 1/3 principle determines your end price.
I’ll be excited to hear it.

We rarely used that but it was still a good formula to ballpark figures. Especially time & material work.

I actually used an excel spreadsheet that had our rates built in. You plugged in the sq/ft and chose your profit margin and it calculated what your sq/ft rate would need to be to achieve it. Simple!

 

[hogjowl]

Yeah … that’s what I expected.
Now can we get back to reality here?

 

[Desk Jockey]

 

[Cleanworks]

Exactly
That’s the starting point
What are some available accounting programs
I use Quick Books
You don’t have to be an accountant or even understand bookkeeping to be able to use Quick Books, but it helps if your Accountant sets it up for you.

I use QuickBooks as well. I have a bookkeeper who has me online with it. It can get as detailed as you want. I used to break down all my categories. Carpets, rugs, upholstery, water damage, etc. See what makes the most money, what percentage of my business is in what category. These days, I'm not as concerned with that. I seem always to have money left over at the end of the month. That's good enough. I used to print charts and graphs showing where my money was going. Chemicals, has, insurance, etc. You can get a good handle on your business that way.

 

[Trip Moses]

As long as I get a little rejection on my quotes I feel good about my pricing. Ive come to my price points by going up every year. I feel I still leave some money behind. I’m getting a better at charging for the complete service. I just started using a CRM this year. It has improved by pricing and made me more consistent. Same theory goes for the other services as well. I began paying more attention to the cleanfax benchmark report a few years ago. That’s helped.

 

[Kenny Hayes]

I use QuickBooks as well. I have a bookkeeper who has me online with it. It can get as detailed as you want. I used to break down all my categories. Carpets, rugs, upholstery, water damage, etc. See what makes the most money, what percentage of my business is in what category. These days, I'm not as concerned with that. I seem always to have money left over at the end of the month. That's good enough. I used to print charts and graphs showing where my money was going. Chemicals, has, insurance, etc. You can get a good handle on your business that way.

Did you like this reply more?

 

[hogjowl]

The most important thing is to know your information and to keep up with it. There are sophisticated ways of doing things that education will provide you, but if you know your numbers, you can gain great insight even in ignorance. (As some of you demonstrate.)

 

[Cleanworks]

As long as I get a little rejection on my quotes I feel good about my pricing. Ive come to my price points by going up every year. I feel I still leave some money behind. I’m getting a better at charging for the complete service. I just started using a CRM this year. It has improved by pricing and made me more consistent. Same theory goes for the other services as well. I began paying more attention to the cleanfax benchmark report a few years ago. That’s helped.

Using a CRM to its full potential is the best thing you can do for your business. I don't because I'm old and lazy but a little while ago I had to use one for a company I was helping out. The Customer Factor. I had to measure every job, including the closets, enter all the info, email the invoice, etc. Pain in the neck but all the info is there for next time. You can use that program to send reminders to your customers, thank you letters, links for reviews, etc. It can really help to build your business and it will link up with QuickBooks.

 

[Nomad74]

@Matt Wood recently went to sfs. He may be able to spew some updated info. I would like to attend an SFS class but the timing just never works out.
my view of what to charche has changed greatly over the last year. I now have a building and with that building comes a lot more expenses. I won’t lie. The rug haven’t exactly been coming in like flood waters. I haven’t done any advertising yet or rug marketing. I’m sure if i put some effort into marketing I would be getting more.

I stay very busy cleaning carpets. I won’t post my pricing due to the local lurkers, but Ive come along way since I first started. I just upped my pricing again and with inflation happening, people are more understanding.

I really need to hire a helper. I just don’t want to deal with all the baggage that comes along with a helper. I need to convince myself over that hurdle.

 

[Desk Jockey]

The most important thing is to know your information and to keep up with it. There are sophisticated ways of doing things that education will provide you, but if you know your numbers, you can gain great insight even in ignorance. (As some of you demonstrate.)

Here you big baby!

#1 You have to know your cost of doing business before you can determine your price. Otherwise you're guessing at what you're keeping after everything is all said and done. Charging $75.00 minimum will kill you if it costs you $85.00 to get to the door.

What are your costs?
Your truck, do you have it paid off? What are your monthly payments? All paid off? Then, what is a replacement going to cost you as you wear this one out?

What does the TM cost you to run per hour? Total the cost of replacement and decide on a reasonable longevity. You can come up with what you need to add as cost for your replacement. Don't forget yearly taxes and insurance.

Materials costs, how much do you spend and what does that breakdown to sq/ft?

Fuel, what does it cost monthly for vehicle and cost by hours run for your TM?

Labor, what is your time worth, including vacation, health insurance?

What does that total to an hour? How many sq/ft do you average an hour?

Divide your average sq/ft cleaned in sn hour by your total costs per hour.

You'll come up with your total cost per sq/ft.
For example your total hourly costs come to $100.00 (an arbitrary number, yours could be smaller or larger depending on your overhead)

You can reasonably clean 500 sqft an hour (an arbitrary number used to make calculating easy. You may clean faster if young, slower if older)

$100.00 ÷500=.20
In our example it costs you .20 a sq/ft to clean.
So what should you charge? It better at least be .20 or you're losing money. .10 more will earn you $50.00 on that 500sq/ft job. .35 will get $75.00 profit on it.

With lower overhead your costs will allow you to charge a lower rate and still bring home a reasonable return.

 

[BIG WOOD]

All you guys are goobers.

If you're an owner/op, just give a successful owner/op a call and see what they charge. Then check your profit after 6months. If you like it, stay at that price. If you're broke, raise your prices.

If you're busy enough to have employees and you have employees...good luck.. I'm just an owner/op

 

[BIG WOOD]

I'm on beer #3 tonight. I had a shitty day. Money was good, but the day was stressful.

I'll stay with my prices

 

[Cleanworks]

@Matt Wood recently went to sfs. He may be able to spew some updated info. I would like to attend an SFS class but the timing just never works out.
my view of what to charche has changed greatly over the last year. I now have a building and with that building comes a lot more expenses. I won’t lie. The rug haven’t exactly been coming in like flood waters. I haven’t done any advertising yet or rug marketing. I’m sure if i put some effort into marketing I would be getting more.

I stay very busy cleaning carpets. I won’t post my pricing due to the local lurkers, but Ive come along way since I first started. I just upped my pricing again and with inflation happening, people are more understanding.

I really need to hire a helper. I just don’t want to deal with all the baggage that comes along with a helper. I need to convince myself over that hurdle.

Hire and fire until you get the right one. Don't feel sorry for them. They are there to make you money.

 

[Cleanworks]

Here you big baby!

#1 You have to know your cost of doing business before you can determine your price. Otherwise you're guessing at what you're keeping after everything is all said and done. Charging $75.00 minimum will kill you if it costs you $85.00 to get to the door.

What are your costs?
Your truck, do you have it paid off? What are your monthly payments? All paid off? Then, what is a replacement going to cost you as you wear this one out?

What does the TM cost you to run per hour? Total the cost of replacement and decide on a reasonable longevity. You can come up with what you need to add as cost for your replacement. Don't forget yearly taxes and insurance.

Materials costs, how much do you spend and what does that breakdown to sq/ft?

Fuel, what does it cost monthly for vehicle and cost by hours run for your TM?

Labor, what is your time worth, including vacation, health insurance?

What does that total to an hour? How many sq/ft do you average an hour?

Divide your average sq/ft cleaned in sn hour by your total costs per hour.

You'll come up with your total cost per sq/ft.
For example your total hourly costs come to $100.00 (an arbitrary number, yours could be smaller or larger depending on your overhead)

You can reasonably clean 500 sqft an hour (an arbitrary number used to make calculating easy. You may clean faster if young, slower if older)

$100.00 ÷500=.20
In our example it costs you .20 a sq/ft to clean.
So what should you charge? It better at least be .20 or you're losing money. .10 more will earn you $50.00 on that 500sq/ft job. .35 will get $75.00 profit on it.

With lower overhead your costs will allow you to charge a lower rate and still bring home a reasonable return.

It's all in QuickBooks.

 

[Cleanworks]

I'm on beer #3 tonight. I had a shitty day. Money was good, but the day was stressful.

I'll stay with my prices

Lay off the beer during the week.