Impactful Pricing Strategies for Commercial Carpet Cleaning

How to Price Commercial Carpet Cleaning Services for Maximum Profit

Pricing commercial carpet cleaning services is a significant challenge for many professionals in the industry. It’s a hot topic in forums and social media, with many cleaners struggling to find the right pricing strategy.

Too often, prices are based on what the competition charges or what clients are willing to pay, but this approach fails to consider the unique cost structures of each business. Here’s how to develop a pricing strategy that ensures profitability while remaining competitive.

 

 

Understanding Costs

To set a fair and profitable price, it’s essential to understand your costs, including both variable and fixed expenses. Here are some key terms to understand:

  • Cost of Goods Sold (COGS): These are direct costs attributable to the production of the services provided. For carpet cleaning, this includes labor, detergents, and the wear and tear on your equipment.
  • Fixed Costs: These are costs that do not change with the number of jobs you take. Examples include van payments, insurance, and other overheads.
  • Gross Profit: This is the difference between your revenue and COGS. It does not include fixed costs. Gross profit margin is a key metric to ensure that each job is profitable.

Square Foot Pricing

Square foot pricing is the most straightforward method and widely used in the industry. However, before adopting this method, you need to do some calculations. Create categories based on job size or speed of completion—such as large, medium, and small jobs, or fast, medium, and slow jobs.

Profit Margins

Setting an acceptable gross profit margin is crucial. This margin might vary depending on the job size. For instance, large jobs might aim for a 50% profit margin, medium jobs 60%, and small jobs 70%. Smaller jobs typically require more overhead per square foot due to factors like travel and setup time.

 

 

carpet cleaning production rate worksheet

Calculating Production Rates

Production rates depend on several factors, including your cleaning method, equipment, and the type of office space. For example, a 3000 sq ft hallway can be cleaned faster than a 3000 sq ft office with cubicles. Use your real-world experience to estimate how many square feet your crew can clean per hour.

 

Case Study: 15,000 Square Feet Job

Let’s break down the pricing for a 15,000 sq ft commercial carpet cleaning job using steam cleaning:

  • Method: Steam cleaning, one-time job
  • Target Profit Margin: 70%
  • Production Rate: 1200 sq ft per hour
  • Setup Time: 1 hour
  • Hourly Rate: $300

Calculation:

  1. Total Time: 15,000 sq ft / 1200 sq ft per hour = 12.5 hours + 1 hour setup = 13.5 hours
  2. Labor Cost: 13.5 hours * $300 per hour = $4,050
  3. Price per Square Foot: $4,050 / 15,000 sq ft = 0.27 cents per square foot

 

Using a Job Estimator Tool

To simplify these calculations and ensure accuracy, use a job estimator tool. This tool allows you to input specific data about the job, such as square footage, cost to operate a van, equipment costs, labor rates, and chemical costs. By adjusting these inputs, you can find a price that ensures your desired profit margin.

Example Using the Estimator Tool:

  1. Square Footage: 15,000 sq ft
  2. Van Operation Cost: $0.60 per mile for 30 miles
  3. Equipment Cost: Based on a truck mount system
  4. Labor Cost: 13.5 hours at $50 per hour for two people ($50 per hour * 13.5 hours * 2 people = $1,350)
  5. Chemicals and Miscellaneous: $44

Revenue Adjustment:

  • Start with an estimated revenue (e.g., $4,500 for 15,000 sq ft)
  • Adjust until you reach the desired profit margin (e.g., 70% margin at $0.30 per sq ft)

 

Conclusion

Proper pricing of commercial carpet cleaning services requires a thorough understanding of your costs and realistic production rates. By using a job estimator tool and adjusting for job size and complexity, you can set prices that ensure profitability while staying competitive.

Remember, each job is unique, so continually refine your approach based on actual job performance and costs.

For more detailed calculations and a hands-on approach, visit our job calculator at https://methodcleanbiz.com/calculator/

 

For more information on commercial carpet cleaning standards and best practices, visit the IICRC at iicrc.org.