How much should I charge?

Probably the most commonly asked question we hear from professional cleaners is “how much should I charge?” While the often quoted answer is “whatever the market will bear” may sound cute, it does not really answer the question. Why? Because within every market; within every service offering; there are several different “markets.” A lot of what your price should be is determined by the type of market you are going after. The biggest mistake that many new professional cleaners make is using the local competition to set up their price – either being slightly cheaper or slightly more expensive. So what are the most important factors that determine what to charge?

Your cost of doing business

The most important consideration is your cost of doing the service. You may be saying “duh” right now, but it continues to amaze me how many professional cleaners have no clue what their actual costs are. Charging 28 cents a square foot can launch one guy into retirement and send another to the unemployment line! – Everyone’s costs are different. Home based vs. facility, single vs. multi-truck, regional costs, etc.

A reasonable profit margin

If you can not make enough money to stay in business, you are doing your customers a big disservice. You have to be able to make money in order to provide the service that your customer wants and needs. If your customers are not willing to pay a price that allows you to make a reasonable profit, you have one of two choices – get new customers or get a new business.

Your competition

There is something to be said for what your competition is priced at – but not much. Make sure you are comparing apples to apples. Do they offer the same services you do? Really? Are you sure? What is your service level and how does it differentiate you from other cleaners? The value of your service as determined by your customers is more important than what the competition is charging. Why? Because there are different markets

Determining your market

Your market and the clientele you are directing your service at will greatly influence your price. There are at least three distinctive categories of residential customers who have their carpets professionally cleaned. Howard Partridge calls them KIA customers, Chevy customers, and Mercedes customers. The Mercedes Client (high end) is primarily concerned with your reputation and experience, and is looking for a client experience that goes well beyond having a clean carpet. The Chevy customer is concerned with the value they will get for their investment. The KIA customer is looking for the lowest price .In our industry they have also been defined as “bait and switch” customers, value customers, and high end customers. The wants, needs, and motivations of these three markets are decidedly different.

Reinvesting Strategies

Most people would say that reinvesting strategies would be the same as a “reasonable profit margin,” but not necessarily. This really relates to what type of business you are desiring to build long term. Are you looking to stay an owner operator or become multi-truck? Are you going to expand into restoration? Do you want to have a building dedicated to your business or are you happy with operating out of your home. Wanting your business to become something is not good enough. Planning for it to be something requires that you build in a profit margin to allow you to reinvest in the company toward that goal from day one. This does not preclude you from taking whatever job you can get when you are new or cash-starved. There are plenty of pricing and marketing strategies available to you that can be designed to build your price toward a stronger future and still get the business you need now to make the lease payment or put food on the table.

Your degree of professionalism

In order to reach high end clients, you have to be willing to “play the part.” This does not necessarily mean you have to wear a tuxedo as your company uniform. It does mean you have to make your client comfortable with how you dress, talk, walk, and even letter your van. Have you every heard the term “birds of a feather flock together?” People associate with people who are like them and make them comfortable. It comes down to conformity. If you pride yourself on being a “non-conformist,” that may limit what kind of clientele you seek and what kind of “mark-up” you can put on your services.

Business author Lawrence Steinmetz has defined nine reasons you do not want to deal with a customer who only buys on price. You will have to decide whether you are willing to make the steps in your business that allow you to move your price beyond the latest set of coupons in the local “Val-Pak.”

• They take all of your time
• They do all the complaining
• They forget to pay you
• They tell other customers how little they paid
• They drive off good customers
• They’re not going to buy from you again
• They’ll require you to “invest up” to supply their needs – and then they’ll blackmail you for yet a lower price.\
• They destroy the credibility of your price and your product (service) in the eyes of your consumers
• They will steal any knowledge they can get their hands on so they can do the work themselves

Getting the right kind of advice

If you are relatively new to the cleaning business, you won’t find a shortage of strong opinions about how much to charge and the way to do it. You will find a whole slew of folks talking about how high a price they can get for their cleaning services and a whole other set complaining no one will pay those prices in “their town.” Just be careful about whose advice you listen to. If you determine your price by an unemotional, strategic evaluation like the one above, that needs to be your price. Spend less time asking how much to charge and more time getting advice on how to market your business to get the price you determined you must have to accomplish your personal and business goals.