How Much To Mark Up Your Janitorial Bids
I often get asked, "How should I price my jobs? How can I bid in such a way that I'm profitable, yet don't price myself out of the job?" Assuming the prospect likes you and your company, this is THE KEY question that must be answered. Do you bid based on price per square foot? Do you find out the budget then make it work? How much do you mark up your costs? Let me offer 3 suggestions for pricing your cleaning jobs.
Know Your Numbers
I can't tell you how many people I talk to in the industry that don't really know their costs or production rates. But when you are bidding on new jobs, there are essentially two key things that affect your price, labor and supplies. You must know how long it takes you to clean each type of building you service. How many square feet per hour can you clean medium density offices? How long do plant restrooms take you to clean per fixture? To get these numbers, let me suggest you go out in the field and time your team in a variety of settings to gather this info. Second, look at all of your existing buildings and find the average time it takes to clean each one. These two methods should give you enough data to get a good handle on your company's cleaning rate. The same tactics would apply to your supply's expense. Use history to determine future expenses.
Know Your Customer's Budget
Ok, I know this sounds crazy, but it is really helpful to know approximately what the customer is currently paying or what they are hoping to pay. You can build a Cadillac or Pinto budget for the customer, but knowing their price expectation level helps you determine which is best. Remember, "clean" is a subjective term and expectations can vary wildly from customer to customer. Ask questions such as, "What is your approximate annual budget for cleaning services" or "Do you have a number you are trying to stay under." These sorts of questions help you know how to build your program.
Mark Up Based On Size And Desire To Get The Job
If you know your costs well and you have a general idea of where the customer wants to be financially, you can now finagle with the markup. As a general rule, markup ranges from 15% to 50%, depending upon the size of the job. Smaller jobs get a higher markup and larger jobs get a smaller markup. At the end of the day, you must decide how much you are willing to make (as a dollar amount) for the work, management, and financial risk you are taking.
For those interested in seeing what other companies are marking up their cleaning bids, let me encourage you to check out our mastermind group. We have a discussion going on right now where owners from all over the country are discussing how much they mark up accounts.