How do you workload (i.e. allocate the labor) for a janitorial bid when you’re the one doing all of the work? I’ll answer that question in a moment. First, let me just lay a little groundwork. I’m posting this particular blog in response to the many small business owners – those just starting out and doing all the work themselves – that have asked me this very question.
To create an accurate, competitive and profitable janitorial bid, you need to accurately calculate what it will cost you to clean this building every month. First, you need to know how many total hours a day are required to clean this building. Then, you need to figure out who will work these hours and at what wage (workloading). The hourly wage that you pay your workers determines your labor cost for the month.
Okay, simple enough, when you have actual employees, but back to the original question, how should you workload a bid when you’re the only cleaner? Here’s the straightforward answer that most people seem to resist: Use the same hourly hourly wage that you would pay an employee (if you had one). If you want to grow your janitorial business – and I’m assuming that you do – you’re going to have to hire employees at some point. So from day one you need to think in terms of “What’s my profit margin on this bid” rather than “What’s my desired personal hourly wage”.
Most new business owners tell me that they price a job to make $20 to $30 (or more) per hour doing all the work themselves. That’s fine to think like that early on and it even motivated me 32 ago when I cleaned my sister’s house for $40 for two hours of work (plus I raided the fridge for leftovers, snacks and cold beverages)… PLEASE NOTE: I do NOT recommend that you raid your customer’s refrigerators! Although.. if you happen to find a box of Krispy Kreme donuts with a few perfectly good donuts in your customer’s break-room trash, it’s fair game! Just sayin…
But when you inflate your wages when pricing a job, you’ve skewed your Profit Margin analysis. In other words, you’ve left no room to gauge your real profit over costs. When you workload using a fair employee wage (albeit a future employee) for your area, you can accurately determine your market costs and derive a bid’s true Profit Margin (which can range from 15% – 40% depending on the type and size of the job)… That’s a fundamental best practice for janitorial business growth!
I’m Drake Thomas (Co-founder of CleanlyRun Janitorial Bidware) and I’ve been pricing janitorial bids for over three decades. Let’s look at an example of the right way and the wrong way to workload a bid…
CORRECT BID WORKLOADING, Employee Wage, $8.75/hr
- 10,000 sq’ Building, 5 days per week
- Calculated Cleaning Production Rate by Employee: 2,500 sq’ per hour
- 4 Total Daily Hours x $8.75/hr = $35 a day cost/ $757.75 a month cost for labor
- $757 Labor Cost + 30% for payroll taxes, chemicals, misc, etc. = $985.08 YOUR TOTAL MONTHLY COSTS to clean this building.
- Now add a fair Cost Markup of 33% (which is equivalent to a Profit Margin of 25%) for a Monthly Bid Price of $1,313.44.
- Your Monthly Profit on this bid is $328.36 a month.
And looking ahead to when you have employees, you’ll only spend about 2.5 hrs a week – say 10 hours a month – on this account (i.e. dropping supplies, inspecting, scheduling, talking to customer, etc.). Which you can also think of as making $32/hr for your time actually spent on this job!
INCORRECT BID WORKLOADING, Owner Wage, $20/hr
- 10,000 sq’ Building, 5 days per week
- Calculated Cleaning Production Rate by Owner: 2,500 sq’ per hour
- 4 Total Daily Hours x $20/hr = $80 a day (which covers both your cost + your profit).
- If you charge $20/hr for this bid, you will charge them $1,732.00 per month. The problem is that unless your sister owns this building, you WILL NOT win this bid 99.99% of the time! You’ll be the highest bidder…
Want to see the best practices of Janitorial Workloading in action? (After a lot of hard work, it’s been automated.) Check out the Workloading and Pricing screen (i.e. Step 4 of the Bid Creation process) in my CleanlyRun Janitorial Bidware. Over two years of development went into the creation of this software that was designed to workload and price and win bids the way that I’ve done hundreds and hundreds of times. There’s a free 30 day trial, and I’d love to hear what you have to say about it…
But no matter how you generate a janitorial cleaning proposal, always think in terms of “What’s my profit margin on this bid?”.