Is Your Price RIGHT?
What You’ll Learn
- Calculate wages, overhead, and profit margin
- Check if the price is reasonable for the work
- Clarify the price using time, cost, overhead, and profit
Short Summary
Pricing should not be a guess for any cleaning job. When a company sends a bid for a cleaning job, the number must cover costs and leave profit. Start with pay for the crew and the hours planned. Add overhead costs for the company, then add planned profit. Next, check if the price seems reasonable for the work and the hours. A price set too high can lose the job in a few months. Keep simple notes that clearly explain time and cost. Add notes for overhead costs and profit.
Frequently Asked Questions
What costs should be counted before naming a price?
Count pay for the workers and overhead costs. Add a profit amount.
Should overhead and profit details be shared with the customer?
No. Share a simple reason for the number, not private math.
What if the price feels high after the math is done?
Check the hours and the work again. Then lower the price or decline the job.
Can a price that is too high lose the job later?
Yes. A high price can cause the customer to switch later.
How can the company explain the price in simple words?
Talk about time on site and the main costs. Mention overhead costs and profit.
Transcript
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Well, hi there. Welcome back. Dan again from CleanGuru.
So, how much should I charge? Is my price right? You hear that a lot, don’t you? And you think that a lot, too. I mean, is this the right price to charge?
Well, today I just wanted to give you a few things to think about that will really help, I think, answer that question. And it’s an important question. So, is it the right price?
Well, first of all, is the price profitable? You want to at least make sure that if you do get awarded the contract, you get the job, you’re going to make money. Is the price profitable? Have you figured out all your costs, from wages and overhead, and worked your way to a profit margin to make sure if you get it, you’re happy with it?
Secondly, is it reasonable? Is it fair? It’s tempting to say, “Is it competitive?” And there’s a point to that. I get being competitive, but sometimes you don’t know exactly who is also bidding on a job, and they may not even know competitive prices. So, in some ways, is your price reasonable in your mind as you look at it for that job? Is it reasonable and fair?
And then the third thing is, is it explainable? This may be, most of all, a real tool for you. Because if you say, “Is it explainable?” that means that you’ve thought this through enough to go, “Now wait a minute. For what you need done here, for the work and the hours and the people that we need to get that done, with the equipment and supplies and supervision, this is why we got to this price: by looking at the time, the cost, the overhead, the profit. Here’s where we are.”
Now, that doesn’t mean that you have to reveal every overhead percentage and profit margin to your customer. But to be able to generally explain to them why your price is fair and reasonable, to be able to explain it, means that you put some thought into it, and they’ll pick up on that.
And it also means that you’ve given some thought to it, because what you don’t want to do is be bidding so high that you make great money for three months, but because you overpriced it, you lost the job. You don’t want something where you make a ton of money for a month or two and lose it. You want to keep it for a long time.
So those are three things to remember. Is my price the right price?
Till next time, remember: you can do this. You really can.
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