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Monday, September 01, 2014

Question

What should we charge for one time residential cleaning, and what should we charge for one a week residential cleaning? We start our employees at $9.00 per hour, and I have been charging $28.50 per hour, 4 hour minimum. Is this way out of bounds?


Answer

You will need to establish your hourly billing rate to return a reasonable and required net profit. This is part of the pricing strategy needed to stay in business. With that said, I know of some residential contractors there in Arkansas who charge a few dollars an hour less than you do, with a $50 minimum. That doesn't mean you will always be too high on your pricing. Somewhere between a double and triple markup (of labor cost) usually turns a good profit and yet remains competitive. Weekly work may need to be closer to a 2 1/2 markup, while one time can usually exceed a triple markup.
Here is another pricing strategy that I teach in my contractor training programs. As a small contractor, if you desire to earn, say, $60,000 a year, and your net, after all expenses, is 33%, then you must bill out $180,000 gross to net that $60K. If you can run crews 6 hours a day (actual job time), 5 days a week, then you must bill out $115 an hour. This would compute to approximately 4 workers at your current price.
If you have excellent references, a professional bid package, and good sales skills, expect to close 50% of your price quotes. If you are unable to close at least above 30%, then your pricing or marketing program may need a tune-up.

Gary Clipperton
National Pro Clean Corp.
(719) 598-5112
www.nationalproclean.com