Bid to Retire?
What You’ll Learn
- Calculate price from time, wages, overhead, and profit
- Check the final hourly billing rate against local competition
- Follow the math-based price when submitting the bid
Short Summary
Bids fail when the price jumps at the end of a quote. A good bid starts with a time estimate for the work. Add wages and expenses then add overhead and profit. Some owners then start doubling the price after the math to chase big pay. In a commercial environment other firms stay near a competitive price. That means the bid loses, or the account becomes easy for others to underbid. A high price can also make the company look out of line later. Check the final hourly billing rate and submit the math price.
Frequently Asked Questions
Is a higher price ever okay?
Yes, when the time and costs truly support it. The hourly rate still needs to fit local competition.
What if the math price seems too low?
Recheck the time estimate and the costs. Do not fix the issue by doubling the price.
Should overhead and profit be included in every bid?
Yes. Overhead and profit need to be part of the price.
What happens if the bid is far above local competition?
The bid often gets rejected. If it wins, another firm can underbid later.
What is the main number to compare across bids?
Use the hourly billing rate. It helps compare prices across job sizes.
Transcript
Click to view full text
Well, hi there. Welcome back. Dan again from CleanGuru.
So, the message today is: don’t bid to retire. When I’m reviewing bids with cleaning businesses, I’m often surprised. It’s happened so often that I thought I would make a little message about it.
Sometimes when a person is bidding a job, the cleaning business owner starts off with a good time estimate. They put in their wage, and they have their expenses and overhead and profit, and they come up with a price that reflects what the reality is for the job they’re bidding on.
But then something happens. Even though the math was good, they move away from that math and they start to have feelings or thoughts. Like, “I wonder if I could do better on this job. It really would be nice. I think I deserve to make quite a bit more than this. I think if I could get this up to quite a bit higher.”
And they’ll double the price from what they thought they priced it out to be. They’ll double it. Now they’re maybe making $75 or $100 an hour, and they’re feeling like, “Man, I deserve to have this. If I got this one, I’d be all set, and that would be great.”
It would be terrific if we could all get jobs at a very high hourly billing rate. But the thing is, other businesses aren’t bidding to retire. They’re bidding to build a business, and we have to remember that.
Because you’re going against competition where they’re not going to double the price and end up at $100 an hour. They’re bidding at maybe $18 an hour wage. Let’s just say the hourly billing rate turns out to be $36 an hour, and they’re bidding it competitively in the commercial environment. Let’s say a standard office cleaning job, and you’ll go up against them in competition. You may not get the job.
So the job that you thought would set you up for life—this would be terrific, this is all I need—you never really get, because you bid too high.
By the way, if you do get it, you’re really vulnerable. Because if someone else bids that job, they could bid quite a bit less and still make good money profit-wise. Why? Because they’re hiring a cleaner, and they’re training them and supervising and working with them. They’re building a business.
They’re building a business, not bidding to—like I say jokingly, tongue-in-cheek—not bidding to retire. I wish it could be that way, but in most cases it can’t.
So it’s something to keep in mind: stick to your guns when you figure out what the job takes, and what the reasonable competitive, maybe the high end of competitive, price would be that reflects the reality of time and cost and profit. That’s the way to go to build a business, and something to remember as you move forward.
Till next time, remember you can do this. You really can.
Leave a Reply