Last Updated on August 25, 2023 by The ZenMaid Team
Based on Sharon Cowan’s inspiring talk, which took place live at ZenMaid’s 2019 Maid Summit, this article will help you understand exactly how much to charge to clean houses to make your business a profitable one.
Facebook Can’t Tell You How Much Cleaning a House Should Cost
How Much Should You Charge to Make a Profit?
If you want to turn a profit (of course you do), then you need a solid plan to make that happen. It should include all your costs (fixed and variable) and also take your location into account.
Consider a residential cleaning company in New York, New York versus one in Heron, Ohio. If they were to charge the same price, the cleaning company with the higher living wages would make less profit than the one with lower wages.
It therefore follows that the company in the boujee area of town must price higher in order to pay their wages and still make a profit.
Something else to keep in mind is that from the cleaning client’s perspective, a low price can easily be misconstrued as low quality. Which is precisely why it’s so important for you to have an individually constructed rate for your business.
Choosing a Pricing Model for Your House Cleaning Business
Essentially, there are two ways to create a pricing model for your house cleaning business.
1) By the Hour
This involves a minimum fee (which is standard practice), so that you aren’t taking small jobs that make little to no money.
Also, keep in mind:
wealthy homes, higher risk = higher price.
In this case, it makes sense to ask around in Facebook forums, etc. to confirm that your prices are in a similar range to others in your area.
2) Flat Rates
Flat rates can be tricky, because estimations can easily go off track if something unexpected occurs.
Say for example your cleaner has to stay longer to complete a job. You still have to pay them and those wages will come out of your profit margin.
One way around this is to carefully monitor time management. Cleaners should finish at their scheduled time and move on to the next job.
*An additional third option is to charge by the square foot, although this approach is usually reserved for commercial cleaning businesses.
Is Math a Must for Your Maid Service Business?
“But, I hate math.”
However, if you want to own a profitable home cleaning business, light math skills are a must.
It seems daunting, I know, but crunching the numbers plays a vital role in knowing how much to charge for your cleaning services. Familiarizing yourself with percentages in particular, will stand you in good stead when it comes to running your maid service at a profit.
Getting a handle on how they work will also help you better understand your expenses.
There are two main types of expenses:
1) Variable (direct expenses) – These are costs that are directly related to the cleaning that is done, such as cleaner labor.
2) Fixed costs (indirect expenses) – Indirect costs are the things you must pay every month regardless of how many cleaning clients you might have. These include utilities, rent, uniforms, advertising, SEO, social media, software, office staff wages, etc.
These are some of the ways both of these costs can be miscalculated:
- High labor costs (direct expenses) can occur due to underpricing cleaning services or too many hours spent on one job (sometimes both). The actual time spent on a cleaning job must equal the time allocated.
- Indirect expenses such as mileage, travel time or cleaning supplies can always be adjusted to better suit your pricing needs.
These miscalculations can be avoided simply by being aware of them.
Every house cleaning business owner should know their current (and yearly) labor cost percentage. This is your hourly rate you pay for wages and the amount of hours you allocate to the job.
Having this information on hand is a must in order to give a proper estimate for the service you offer.
Additionally, wages for office personnel should never be lumped together with your cleaning labor. If you have an employee who is both a cleaner and part of your office staff, it is very important to keep track of the hours for each role separately.
How Much Is Your Office Staff Costing Your Business?
This is a vital question to ask yourself. Especially for non-income producing staff. These employees should have a clear description of their position.
Having high cost cleaning or office staff that aren’t producing can drive up your fixed costs quickly. This in turn will drive your prices up just to cover that position.
A better approach is to have those payroll dollars go towards someone in your domestic cleaning company who is going to do the job well.
Are You Monitoring Productivity?
A good administrator is a precious thing. They can reduce the stress you have to deal with as the owner and help your cleaning business grow. With someone like that on your team, you only need to monitor costs from a vantage point. Your company’s productivity rate is based on how fast your cleaners clean. Having a firm grasp on this will help you know how many hours are needed for a home cleaning. It’s also a key factor in determining pricing.
This can be measured by the number of square feet per hour that your cleaners clean. Standard formulas won’t help. Only you can know how fast your cleaners’ are.
Another cleaning company may well have faster employees than you, so knowing their rate won’t be of any use to you.
Demonstrating just how important it is to know the productivity rate of your team, take a look at the numbers below. The same sized space (2100 square feet) can be cleaned in as little as 2.3 hours for a team with a productivity rate of 900, or a long as 4.2 hours for the slower-paced cleaners.
Update your average productivity rate every quarter. This will ensure that you stay abreast of your company’s progress. Remember to take several samples from your cleaners periodically.
There can be pros and cons to each rate.
For instance, you could have a fast cleaner who has a poor bedside manner and gets a lot of complaints. Alternatively, you might have a slower cleaner who is adored by your cleaning clients.
Fortunately, adequate training is all it takes to eliminate these types of inconsistencies among your cleaners.
How Do You Track Your Cleaning Company’s Finances?
There are three basic financial reports to take into account for your maid service:
- Cash flow report
- Balance sheet
- Profit and loss statement (income statement)
The latter is a big one. Think of it as your roadmap to profit. If you don’t understand it, you could be losing money without knowing why.
An income statement shows the sales you have made over a given time period (week, month, year, etc.) minus your labor costs. The total is your gross profit (GP).
From the gross profit you then subtract your fixed costs, which will give you the net profit. It will look something like this:
When you run the report, show the percent of sales for accurate monitoring.
Sharon’s detailed presentation offers plenty of insights into how you can adjust and improve your maid service’s pricing to get your profits to where you want them to be.
A quick recap of the main points in determining how you much you should charge are:
- Understand your individual business expenses.
- Decide on your pricing model.
- Determine your minimum fee.
- Know your productivity rate, which should be continuously monitored and improved upon.
With a solid understanding of your finances and pricing structure behind you, all that’s left now is to get out there and make that money, honey!
About the presenter
Sharon is considered by those who work with her to be a “turnaround” specialist. Having had a hand in the growth and profitability of cleaning companies for 30 years, it’s safe to say Sharon knows her stuff.
She’s the founder of the Cleaning Business Consulting Group, a BSCAI award winner for Marketing Expertise and she holds a BSBE designation for commercial cleaning professionals.
With a deep passion for sharing her knowledge with those trying to grow their home cleaning business and increase profitability, Sharon has all the answers you need (and then some).
This talk first aired at the 2019 Maid Service Success Summit.
The Maid Summit is an annual online event that brings together the most successful leaders in the cleaning industry, like Debbie Sardone, Angela Brown, Courtney Wisely, Amy Caris, Chris Schwab and more. Get free access to masterclasses and workshops that will help you to grow, scale and automate your cleaning business so you can get more leads and create more profit. Make sure you’re on our email list to find out how to get free tickets to the next event.
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