Fixed-price Consumable Supply Provisioning Reduces Contract Profit

Only when you have reliable inventory tracking and stable usage patterns you can verify over time. Without item-level counts, reorder points, and regular audits, fixed monthly pricing can hide overruns until they wipe out profit.

Use usage estimation based on occupant counts, then translate that into expected monthly quantities for each product. An occupant count calculator can standardize the estimate, but it remains an estimate and must be validated with ongoing inventory tracking.

Use a cost-plus markup model: calculate your expected monthly cost for each item, then add a consistent markup for profit and handling. Avoid bundling supplies into a single fixed amount when usage can change unexpectedly.

Set reorder points for each item and require periodic counts of on-site stock. When the count hits the reorder point, trigger the restock workflow so replenishment is predictable and documented.

Invoice consumables separately using an invoice line item tied to each restock event or restock cycle. This keeps cleaning service pricing separate from variable supply usage and makes changes in consumption easier to explain.

Well, hi there. Welcome back. Dan again from CleanGuru.

So, a building that you’re bidding on: when you’re talking to them about the specifications and what they need done, they say, “Hey, by the way, why don’t you include in your price providing all of the consumable poly paper supplies?” Hand towels, hand soap, toilet paper, those kinds of things.

Now, it’s real tempting to say, “Oh, no problem. I will.” And certainly, I get why you want to do that. You’re trying to create connections by adding additional services. But if that ends up costing you money, and you’re losing because you’re not able to track the supplies properly, and you underestimated their usage, or you’re not pricing them in terms of how expensive they are, as far as that goes.

Let’s say you say, “I’ll charge you $350 a month, and I’ll always make sure you have enough toilet paper, hand towels, hand soap, all of your consumable supplies.” A bell should go off, because that’s really hard to do.

Now, there are ways around this to try to deal with this, because if you can do it profitably, that’s a good service to be able to offer to them, and you can make money on providing them. But there are a lot of ifs in there.

First of all, to estimate the usage, like I say, we have a calculator that can help to estimate based on the number of people in the building using the building—restroom to restroom, break room, those kinds of things. But it is an estimate of usage, and then an estimate, therefore, based on not all items, but we have it set up for hand towels, hand soap, toilet tissue—just a few items—because it’s that difficult. And even then, that is a cost estimate.

From there, you would need to mark up from there to make money on that. I think we used to mark up possibly 20%, seems to come to mind, but that’s up to you. The point is it’s an estimate of usage, and then it’s a cost-plus basis of a profit you want built in, percentage-wise.

However, if it’s at all possible, another way to go is to say, “There’s no problem. I can take care of the supplies, but because usage is such a variable thing…” And by the way, let me stop and tell you: sometimes we don’t notice, and you can see this too, sometimes the toilet paper walks out of the building. There’s stealing that goes on. That’s just the truth. Not a lot of this, but it can happen. Or maybe the building, they have a plant down the road or in a nearby city, and all of a sudden they’re emptying all the supplies out of there, and they go, “Hey, we’re out of supplies.” You want to say, “Well, they’re all down the end of the road,” because this can create an awkward situation.

This usage issue can really make it vulnerable. So, if you say, “Well, I’ll tell you what. What we can do is every time, we’ll track it. We’ll track the inventory, and we’ll know there’s a reorder point. And when we notice that the supplies get to this point on all these items, we’ll reorder, and we’ll bring it out here. We’ll restock it, and we’ll just charge you on a line item on your invoice that says the price that we did for providing those.” That’s fine. That’s one way to go.

If they don’t want to go that way and they force your hand to provide them, another way, I suppose, is to say, “Listen, do you happen to have a year or two of your usage?” And they may say, “Well, yeah, here’s a record of what we’ve used for all these different items.” Again, that is an indication, but it’s not a guarantee. So, you do go into that with a little bit of vulnerability as to how that’s going to go.

We like to provide them based on us tracking them, ordering them when they needed them, and then the money we made was simply on the line item: the difference between the cost and the profit markup that we had. And so, that’s how we did it.

So just be careful when this concept, or this idea, of asking you to provide the poly paper consumable supplies comes up. Give it some thought on usage and pricing all along the way so you don’t end up regretting it. Then all of a sudden, the money that you’re maybe making on cleaning, you’re actually losing when you’re providing the supplies.

Till next time, remember: you can do this. You really can.