Tag: janitorial profit margin

Janitorial Bid Analysis: At-a-Glance

CleanlyRun Janitorial Bidware Features

From time to time, we like to highlight some of the system features of CleanlyRun (aka CleanGuidePro) Janitorial Bidware.

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The At-a-Glance button:  CleanlyRun‘s Janitorial Bidware includes a speedy — and color-coded — way to spot any high-level bid issues as you navigate the system’s bid creation process.   Specifically, the At-a-Glance button for each bid will turn either Red, Yellow or Green based on step-by-step analysis.

 

 Bid Status: Good – The At-a-Glance Bid Analysis detected no problems.

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 Bid Status: Warning – The At-a-Glance Bid Analysis detected one or more issues that were flagged as Warnings.

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 Bid Status: Error – The At-a-Glance Bid Analysis detected one or more Errors.

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Good to Know:  The way to make the At-a-Glance button “go green” is for a proposal to pass all of the Bidware’s standard checks.  However, any Warning/Error flags are for your eyes only — they’re not included on the final proposal — so you are free to proceed with a “flagged” bid as you see fit.

For example, the system might flag a bid for having a low Profit Margin, which means that you’d be – statistically speaking – leaving money on the table. (More about Profit Margin here.) You can then choose to edit this flagged bid, or move forward without changing anything; the At-a-Glance button is just there to “offer its opinion”.

Just a little help, at a glance… CleanGuidePro Successful bidder

Janitorial Profit Margin versus Janitorial Cost Markup. Which to choose?

Not understanding the difference between Janitorial Profit Margin and Janitorial Cost Markup is one of the most common pricing mistakes in the cleaning industry.  I’ve seen way too many new business owners decide to price their janitorial bids solely on Markup – “I’d like to make $500 on this job” – rather consider the Margin of Profitability for the work…

Both terms – Margin and Markup – help you calculate profit, but prioritizing the wrong one could hurt your bottom line.

Let me break it down.
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Margin: (a.k.a. Profit Margin) is the percentage of the final selling price that is profit. In the highly competitive janitorial services industry, Profit Margins can trend low for very large jobs — say, 12 to 15% — but that range is unprofitable for small to medium clients.

Markup: (a.k.a. Cost Markup) is either the (a) Dollar amount above cost, or the (b) Percentage of the cost that you add on to get to a bid price.

So which approach should you use? As a general guideline, it is probably better to focus on your Profit Margin rather than a Cost Markup in a service business. A higher Profit Margin percentage matters more than a higher Cost Markup percentage. For example, a 25% Cost Markup only yields a 20% Profit Margin, which means that your markup isn’t as profitable as it may seem at first glance.

With margins, a 50% Margin means that half the selling price is profit. So, a 50% Margin means there is a 100% Markup — as you have added 100% of the cost price to make the selling price. (With margins, a 100% Margin is only possible if the cost price is zero.) In short, a focus on Profit Margin is more effective when it comes to pricing your janitorial bid.

Of course, situations and customers vary, and the choice to prioritize Margin or Markup is yours. Fortunately, CleanlyRun Janitorial Bidware displays Markup and Margin right next to each other, so you always know what is your Profit Margin’s equivalent Cost Markup — and vice versa.  In addition, we’ll suggest a minimum Profit Margin/Cost Markup for each bid that you can adjust as you see fit.

On a related note, I’ve touched on how the Profit Margins of smaller businesses can be higher than bigger ones, even with a lower Fair Market Price.

That’s enough math for now! 😉

CleanGuidePro Successful bidderDrake