This article is based on an inspiring talk by Sharon L. Cowan CBSE that happened live at the 2019 Maid Summit, hosted and organized by ZenMaid.
Check out replays of talks from Sharon and over 40 other cleaning industry experts at MaidSummit.com
– About The Presenter –
Sharon L. Cowan CBSE, is considered by those who work with her to be a “turnaround” specialist.
She has had a hand in the growth and profitability of cleaning businesses for 30 years.
Sharon is not only a BSCAI award winner for Marketing Expertise, she holds a BSBE designation for commercial cleaning professionals.
What’s more, she has a passion for sharing her knowledge with those trying to grow their home cleaning business and increase profitability.
Learn from Sharon how to price cleaning services the right way every time after answering the question:
Pricing is a key element to owning a home cleaning business. In fact, it is an ability that every business owner should utilize and improve on continuously.
It can be difficult, however, to find the perfect number to charge for maid services. There are a lot of things to consider when deciding on prices for you residential cleaning business.
You must at least be aware of the following:
- Your expenses
- Labor costs
- Fixed expenses
- Productivity rate and how that affects costs
A home cleaning business owner also wants to know what NOT to do.
Fortunately, you’ve come to the right place. This article covers many of the most important questions that come up when pricing for your maid service.
How much should I charge for my residential cleaning services?
You can certainly look on Facebook groups, forums and ask others what they charge in the residential cleaning field. There is one big problem with these options however…
Those people, those companies will not know your particular home cleaning business costs. By asking folks who do not know your numbers, you may wind up with a wider range and more confused than ever.
This can happen because YOUR price comes from a combination of the target market you’ve chosen, personal cleaning service costs and cost of living or minimum wages in your particular area.
So… Don’t ask my Facebook friends about my Maid Service costs?
Exactly. Do not do that.
Another person’s advice is coming with their own experiences in their cleaning business. They have their own costs, labor, number of clients and staff, etc.
Furthermore, there are many individual circumstances that can differ widely. Your friend may have someone who does their advertising for free or maybe they don’t have to pay rent for their office space.
There are countless other little differences that can occur from one cleaning company to the next. Create your own calculations to tailor fit your residential cleaning company and avoid time wasted with bogus numbers.
Am I overcharging for my cleaning services?
In short, it is highly likely that you are not.
Whether they’re worried about scaring off cleaning clients with a big price tag or just wanting to offer the customer the best maid service at the lowest price. Most companies are more likely to make the mistake of underpricing, if anything, and it may seem admirable…
Remember though, your home cleaning company cannot survive off of admiration. It is a business and it has its own set of rules when it comes to achieving success.
How do I price my Home Cleaning Business for profit?
Create a plan for your home cleaning business that is directed toward making a profit. It should cover all costs both fixed and variable, taking your location into account.
Consider a residential cleaning company in New York, New York VS Heron, Ohio. If they charge the same price, the cleaning company with the higher living wages will make less profit than the one with lower wages.
Therefore, the residential cleaning company in the boujee area of town must price higher in order to pay the wages and still make a profit.
Besides, to the cleaning client, a low price translates to low quality. Which is exactly why you need to have an individually constructed rate.
How do I choose a pricing model for my residential cleaning service?
There are 2 basic ways to choose your pricing model:
1) By The Hour
This involves a minimum fee (which is standard practice) so that you aren’t taking little jobs that make little money.
Also, keep in mind:
wealthy homes, higher risk = higher price.
In this case you can make a few phone calls or message the Facebook forums in this case to confirm that you are in range with others in your area.
2) Flat Rates
These can be tricky because estimations can be your enemy if something unexpected occurs.
For example, if the cleaner has to stay longer to complete a job, they’ve still got to be paid wages. Those wages then come out of your profits.
Monitor time management. Cleaners should finish at their scheduled time and move on to the next job.
*An additional 3rd way to charge is by the square foot, but this is usually for commercial cleaning businesses.
Must I do math for my maid service?
“But, I hate math”
However, if you want to own a profitable home cleaning business, light math skills are necessary.
It seems daunting, I know, but crunching the numbers is vital in order to find the right price for your cleaning services.
Percentages are the main maths you will want to be comfortable with in regards to your maid service. This way you can better understand your expenses. There are 2 main types.
1) Variable (direct expenses) – These are costs directly related to the cleaning that is done, such as, cleaner labor.
2) Fixed costs (indirect expenses) – Indirect costs that come each month no matter how many cleaning clients you have. Costs such as utilities, rent, uniforms, advertising, SEO, social media, software, office staff wages, etc.
Here are some 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 real time spent on the cleaning job must equal the allocated time for that job.
- 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 home cleaning service owner should know their current (and yearly) labor cost percentage. This is the hourly wages and how many hours you allocate to the job.
This is must have information in order to give a proper estimate for the service.
Additionally, wages for office personnel should never be mixed in with cleaning labor. If there is an employee who is a cleaner and also does office staff hours, it is very important to keep track of the hours for each role.
What is my office staff costing my home cleaning 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.
If you have a high cost cleaning staff or office staff that is not producing, it can drive up your fixed costs quickly. This can drive your prices up just to cover that position.
Better to have those payroll dollars go towards someone in your domestic cleaning company who is going to do the job well.
How can I monitor my residential cleaning business productivity?
A good administrator is a precious thing. They can help relieve some of the stress for you as the owner and help your cleaning business grow. Then you only need to monitor costs from a vantage point.
Your productivity rate is the rate of speed of which your cleaners clean. It helps to determine the hours you’ll need for a home cleaning and is probably the most important factor to determine when pricing.
This can be measured by square feet per hour that cleaners clean. Standard formulas for this will not matter, you are the one who will know your cleaners rate of speed.
Another person’s residential cleaning company may have faster employees so their rate will not help you in this area either.
Even so, here are some sample productivity rates.
Square Footage: Hours
Update your average productivity rate every quarter to stay informed on your home cleaning company’s progress. 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 complaints or you could have a slower cleaner who is adored by cleaning clients.
Fortunately, either way this can be just a matter of training to adjust these inconsistencies among your cleaners.
How do I track my maid service’s finances?
There are 3 Basic Financial Reports to consider for your maid service:
- Cash Flow Report
- Balance Sheet
- Profit and Loss Statement (Income Statement) – This is the big one. The roadmap to profit, if you will. If you don’t understand it, you could be losing money and not know why.
A P&L statement shows the sales you have made for a time period (week, month, year, etc) then subtracts labor costs. This gives you the gross profit (GP).
From the gross profit subtract your fixed costs, which will give you the net profit. Looking something like this:
When you run the report, show the percent of sales for accurate monitoring.
Here is a quick recap:
Hopefully this has given you tons of fun thoughts on how to improve your maid service’s pricing so that you can get to where you want to be.
Now get out there and make that money, honey!
You just gained so many knowledge points by reading this article. It was formed directly from a talk by Sharon L. Cowan CBSE that happened live at the 2019 Maid Summit, hosted and organized by ZenMaid.