Profit Margin - Cleaning Talk - Professional Cleaning and Restoration Forum
 
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post #1 of Old 01-15-2016, 05:15 PM Thread Starter
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Profit Margin

Hello,

I'm doing research. I don't have much business knowledge aside from Google and YouTube. I would greatly appreciate your help.

What is your profit margin for commercial cleaning? What is a healthy range? Please list what services you offer i.e. Carpet Cleaning, Floor Buffing, General Services, etc. Additionally, if you can say how many sq ft and industry your figures come from i.e. retail, office, etc. that would be great too.
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post #2 of Old 01-16-2016, 01:35 AM
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Out of all the silly stuff people ask.... this is actually a great question. I'm very anxious to hear this myself.
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post #3 of Old 01-16-2016, 06:34 PM Thread Starter
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Out of all the silly stuff people ask.... this is actually a great question. I'm very anxious to hear this myself.
Thanks
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post #4 of Old 01-16-2016, 08:53 PM
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I either figure you will get 1 real answer or none but I'd still like to hear a lot of real answers... not from the SPAM people.

In residential I always tried for atleast 40% (before taxes/ins/etc) and tried for much more. Back when we did carpet cleaning I charged $ .50sf. The other highest guy in town at that time charged $ .29sf. I'd charge $600 for a job that would take 7 man hours, pay out $70 labor, $15 Procyon, $15 Dupont Protectant.... by the time it was all said and done I'd profit about $475 or so. Where lots of guys liked to charge $1 a minute, I liked to profit $1 a minute.

But just so you know.... what anyone else charges has nothing to do with your business. That's why different people charge different prices. 1 guy might do it solo.... a guy might have a helper and someone might have 5 guys that works for him. Each guy would need to charge different. Solo guy can do what ever he wants pretty much. That's why there is so much 'low-balling'. The guy with a helper needs to charge enough to pay his helper and after that he can do what he wants. The guy with 5 people working needs to charge enough to pay his workers, probably an office to work out of, maybe a secretary.... all kinds of stuff the solo guy doesn't have to worry about. And then.... out of those 3... who pays taxes and who doesn't? The guy that doesn't pay taxes figures he can charge less because it goes straight in his pocket. So many different ways to run things it is impossible to answer your question... but maybe someone will give what they do. I doubt it because I bet most on here don't pay taxes so they don't want to put out there what they make.
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post #5 of Old 01-16-2016, 10:20 PM Thread Starter
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Quote:
Originally Posted by sprintcar93 View Post
Out of all the silly stuff people ask.... this is actually a great question. I'm very anxious to hear this myself.
Quote:
Originally Posted by sprintcar93 View Post
I either figure you will get 1 real answer or none but I'd still like to hear a lot of real answers... not from the SPAM people.

In residential I always tried for atleast 40% (before taxes/ins/etc) and tried for much more. Back when we did carpet cleaning I charged $ .50sf. The other highest guy in town at that time charged $ .29sf. I'd charge $600 for a job that would take 7 man hours, pay out $70 labor, $15 Procyon, $15 Dupont Protectant.... by the time it was all said and done I'd profit about $475 or so. Where lots of guys liked to charge $1 a minute, I liked to profit $1 a minute.

But just so you know.... what anyone else charges has nothing to do with your business. That's why different people charge different prices. 1 guy might do it solo.... a guy might have a helper and someone might have 5 guys that works for him. Each guy would need to charge different. Solo guy can do what ever he wants pretty much. That's why there is so much 'low-balling'. The guy with a helper needs to charge enough to pay his helper and after that he can do what he wants. The guy with 5 people working needs to charge enough to pay his workers, probably an office to work out of, maybe a secretary.... all kinds of stuff the solo guy doesn't have to worry about. And then.... out of those 3... who pays taxes and who doesn't? The guy that doesn't pay taxes figures he can charge less because it goes straight in his pocket. So many different ways to run things it is impossible to answer your question... but maybe someone will give what they do. I doubt it because I bet most on here don't pay taxes so they don't want to put out there what they make.
No worries! Thanks for responding. So basically, for regular commercial cleaning I'm looking at 30% profit margin?

Your carpet cleaning story makes sense. I expect margins to be 50-60%. From your story, your margin is 79%! That is very good.

Last edited by Bro; 01-16-2016 at 10:24 PM.
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post #6 of Old 01-16-2016, 11:17 PM
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I doubt it. I didn't have commercial accounts because of a few reasons. Harder to get and not enough profit. Back when I was looking in to adding commercial work it was at $18-$22 an hour. At that time residential was at $25-$35 an hour and for residential that is the lowest unlike commercial that was about the full range. I've had residential accounts that were a constant $50-$100 an hour. In residential once I was inside the house talking with the customer on the bid I could almost set any price I wanted right then and there. Commercial you gotta do a walk through.... go back and figure up a bid.... submit the bid.... if you aren't the lowballer of the year you didn't get the bid. I know it's not that way sometimes but compared to residential it is that way MUCH more of the time. I can sweet talk a house wife or old lady in to letting us clean... I can't talk a man or woman at his or her job in to letting me clean for 4x as much as they should when they are dealing with their yearly budget.

if I had to take a wild guess at commercial I'd say under 15%. But I could be way off in 2016...

I know big lawn care companies that make 5%-8% doing commercial work. In residential mowing I average 63%. That is someone else doing the work, not me. Apples to Apples comparison.
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post #7 of Old 01-17-2016, 07:03 PM
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Everyone might be different but project work is where I make a large amount of our profits. I feel that we can charge much higher prices for floor stripping/waxing and carpet cleaning work then the competition because we are already cleaning the account. Customers know we have the key and can take care of the work without supervision or the manager needing to open and lock up the building afterwards. We are already set up for billing and send the invoice at the end of the month. Our quality of work is excellent so it's just easier to always come back to us. We really only perform project work for current commercial cleaning customers. When I am called on to bid for a non-customer is when I find they are getting many bids and the lowest one wins, which is never us! I'll tell you about some of our project work for this weekend just for the hell of it. Stripping and waxing multiple areas of office space at a huge steel mill in preparation of the President arriving on Monday. Will bill approx. $8,000.00 and will pay labor/chemical cost of $5,000.00. Machine scrubbed 500 sq.ft. of new tile flooring with no wax for $295.00 with cost of $150.00. Strip and wax small medical office with 3 exam rooms, kitchen and bathroom for $495.00 with cost of $300.00. Carpet cleaning at surgery center of 1,000 sq.ft.at $495.00 with cost of $250.00. I pay my subcontractor high prices for this work as they make a lot of their profits from project work as well. I want excellent results and done professionally for the cost; which I get. The way I always looked at commercial cleaning is the more customers we have, the more project work and additional profit we will generate.
Peter Weiss
Total Maintenance Services
www.totalservices.org

Last edited by jahra352; 01-17-2016 at 07:05 PM.
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post #8 of Old 01-17-2016, 10:44 PM Thread Starter
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Originally Posted by jahra352 View Post
Everyone might be different but project work is where I make a large amount of our profits. I feel that we can charge much higher prices for floor stripping/waxing and carpet cleaning work then the competition because we are already cleaning the account. Customers know we have the key and can take care of the work without supervision or the manager needing to open and lock up the building afterwards. We are already set up for billing and send the invoice at the end of the month. Our quality of work is excellent so it's just easier to always come back to us. We really only perform project work for current commercial cleaning customers. When I am called on to bid for a non-customer is when I find they are getting many bids and the lowest one wins, which is never us! I'll tell you about some of our project work for this weekend just for the hell of it. Stripping and waxing multiple areas of office space at a huge steel mill in preparation of the President arriving on Monday. Will bill approx. $8,000.00 and will pay labor/chemical cost of $5,000.00. Machine scrubbed 500 sq.ft. of new tile flooring with no wax for $295.00 with cost of $150.00. Strip and wax small medical office with 3 exam rooms, kitchen and bathroom for $495.00 with cost of $300.00. Carpet cleaning at surgery center of 1,000 sq.ft.at $495.00 with cost of $250.00. I pay my subcontractor high prices for this work as they make a lot of their profits from project work as well. I want excellent results and done professionally for the cost; which I get. The way I always looked at commercial cleaning is the more customers we have, the more project work and additional profit we will generate.
Peter Weiss
Total Maintenance Services
Thanks for responding in detail. Your margins are good. 30-50%. Does your cost include taxes and your salary?

I could really use your advice:

1. How do I collect a high volume of payments for residential cleaning without leaving my home office and hurting my bottom line minimally?

2. If I use PayPal or accept online payments, how long does it take for customer payments to be sent to my bank account?

Cheers

Bro
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post #9 of Old 01-17-2016, 11:04 PM
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Since I use a subcontractor and give a 1099 at years end, that covers a majority of expenses. Only exception would be some additional liability insurance costs. Doesn't include my salary but the profit goes to my business. If your business has low overhead then it would go to your salary. Can't help much with the residential question except that I don't clean any accounts myself so calculating customer pricing to reflect your labor cost is extremely important! I do send payments to some employees through Paypal and payment seems to be immediate and sent to their bank accounts immediately.
Peter Weiss
Total Maintenance Services
www.totalservices.org

Last edited by jahra352; 01-17-2016 at 11:50 PM.
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post #10 of Old 01-17-2016, 11:10 PM Thread Starter
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Originally Posted by jahra352 View Post
Since I use a subcontractor and give a 1099 at years end, that covers a majority of expenses. Only exception would be some additional liability insurance costs. Doesn't include my salary but the profit goes to my business. If your business has low overhead then it would go to your salary. Can't help much with the residential question except that I don't clean any accounts myself so calculation customer pricing to reflect your labor cost is extremely important! I do send payments to some employees through Paypal and payment seems to be immediate and sent to their bank accounts immediately.
Peter Weiss
Total Maintenance Services
Cheers Peter.
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post #11 of Old 01-18-2016, 04:10 AM
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Originally Posted by sprintcar93 View Post
I doubt it. I didn't have commercial accounts because of a few reasons. Harder to get and not enough profit. Back when I was looking in to adding commercial work it was at $18-$22 an hour. At that time residential was at $25-$35 an hour and for residential that is the lowest unlike commercial that was about the full range. I've had residential accounts that were a constant $50-$100 an hour. In residential once I was inside the house talking with the customer on the bid I could almost set any price I wanted right then and there. Commercial you gotta do a walk through.... go back and figure up a bid.... submit the bid.... if you aren't the lowballer of the year you didn't get the bid. I know it's not that way sometimes but compared to residential it is that way MUCH more of the time. I can sweet talk a house wife or old lady in to letting us clean... I can't talk a man or woman at his or her job in to letting me clean for 4x as much as they should when they are dealing with their yearly budget.

if I had to take a wild guess at commercial I'd say under 15%. But I could be way off in 2016...

I know big lawn care companies that make 5%-8% doing commercial work. In residential mowing I average 63%. That is someone else doing the work, not me. Apples to Apples comparison.
Commercial cleaning for me is in the $20-$25 per hour margin and I've been under bid by ServiceMaster sometimes even at that price. So the margins can definitely be slim. Project work is higher in margin, but more difficult to create a consistent schedule.
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post #12 of Old 01-18-2016, 08:32 AM Thread Starter
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Originally Posted by sprintcar93 View Post
I doubt it. I didn't have commercial accounts because of a few reasons. Harder to get and not enough profit. Back when I was looking in to adding commercial work it was at $18-$22 an hour. At that time residential was at $25-$35 an hour and for residential that is the lowest unlike commercial that was about the full range. I've had residential accounts that were a constant $50-$100 an hour. In residential once I was inside the house talking with the customer on the bid I could almost set any price I wanted right then and there. Commercial you gotta do a walk through.... go back and figure up a bid.... submit the bid.... if you aren't the lowballer of the year you didn't get the bid. I know it's not that way sometimes but compared to residential it is that way MUCH more of the time. I can sweet talk a house wife or old lady in to letting us clean... I can't talk a man or woman at his or her job in to letting me clean for 4x as much as they should when they are dealing with their yearly budget.

if I had to take a wild guess at commercial I'd say under 15%. But I could be way off in 2016...

I know big lawn care companies that make 5%-8% doing commercial work. In residential mowing I average 63%. That is someone else doing the work, not me. Apples to Apples comparison.
Am I expecting too much for a 50-60% margin for residential cleaning?

How often do you get repeat customers for residential cleaning? Can I expect the same customer to contact me once a month if I do a good job?
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post #13 of Old 01-18-2016, 09:22 AM
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It depends how good of a salesperson you are. That's probably a little high for a new person to bid at. I mean... you might bid it but you probably don't have what it takes to get many at a high price.

We have weekly cleans, bi-weekly cleans and every 4 week cleans.

If you are wanting to be in the cleaning business, commercial or residential.... then do it. It is what it is. No need to worry about this and that... go out and get a few jobs and you will see how it is working for you in your town. It is different for every business. Do it today.... why not? Are you waiting for a better time? There will never be a better time... always some excuse to put it off until next week. It's not going to give you the almighty 'bad name' if you get 5 customers and end up screwing it up because you didn't know what you was doing.
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post #14 of Old 01-18-2016, 09:53 AM Thread Starter
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Originally Posted by sprintcar93 View Post
It depends how good of a salesperson you are. That's probably a little high for a new person to bid at. I mean... you might bid it but you probably don't have what it takes to get many at a high price.

We have weekly cleans, bi-weekly cleans and every 4 week cleans.

If you are wanting to be in the cleaning business, commercial or residential.... then do it. It is what it is. No need to worry about this and that... go out and get a few jobs and you will see how it is working for you in your town. It is different for every business. Do it today.... why not? Are you waiting for a better time? There will never be a better time... always some excuse to put it off until next week. It's not going to give you the almighty 'bad name' if you get 5 customers and end up screwing it up because you didn't know what you was doing.
True. Cheers man.
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post #15 of Old 05-10-2016, 10:33 AM
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We do 50%
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post #16 of Old 05-10-2016, 03:39 PM Thread Starter
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We do 50%
Cheers.
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