Episode 44: How To Level Up Your Pricing in The Cleaning Industry

Episode 44: How To Level Up Your Pricing in The Cleaning Industry

Brandon Condrey:
Pricing is a very sensitive thing, depending on what kind of industry you're in. And so we've got this list here of like expenses and insurance and all these things, but the reality of a service-based business is labor. Labor is going to be super duper expensive. And like right now, I think labor, including office staff and everything is taking up 75% of our revenue. So that's just to give you an idea of where this is going to go. So yeah, you can get crazy with it and tell us how much your insurance costs and how much you were cleaning equipment costs and all those things. But realistically, you got to cover labor.

Announcer:
Grow your cleaning business, make more money, have more time. This is the Profit Cleaners podcast with your host Brandon Condrey and Brandon Schoen.

Brandon Schoen:
Welcome back everyone to another episode of the Profit Cleaners. I'm your host Brandon Schoen I'm joined by my cohost..

Brandon Condrey:
Brandon Condrey.

Brandon Schoen:
That's right. And we're here to help you guys take it to the next level. We're here to grow your cleaning business, grow your service business, level up your game and help you win in this market. So let's get started today. We've got a very special episode for you guys. It's all about pricing, and we get so many questions about pricing. A lot of people are always asking how you guys doing pricing and how are you winning those bids? And what's your strategy and what's your mindset behind that? So we're gonna be talking about pricing even more in depth today. Stay tuned until the end, because we've got a really cool tool that we're going to be giving away pricing matrix tool that's kind of tie all this together, Make it really, really clear and clarify how you can get to those numbers. We're going to share how we got this matrix put in place in the first place, how we reverse-engineered it in the beginning. So yeah, guys, then we're going to dive into some examples on just some houses, what a typical, maybe 2000 square foot house or something like that might look like and how you price all this stuff. So let's dive into the episode because this is a big one.

Brandon Condrey:
So we had previously a different episode about pricing. Here's how you do it. Call some competition and figure it out for your market. We needed a bit more detail. So we're going to give you guys a little bit more detail on it. So there are a variety of pricing methods, hourly flat rate per job, whatever the one that we have landed on and this worked well for us, we've never changed it. It's been that way since the beginning is square footage based. So ours is a square footage basis, but it's not linear. If that makes sense, it's not $20 per square foot. There's a minimum. And then there's tiers afterwards. And we'll explain all that right here in a second. So how did we get to the rate matrix?

Brandon Schoen:
Well, I guess we'll start out saying a lot of people target the one-time customers, which we do have still one-time customers. And obviously it's a big part of our business still, but we're moving more towards the recurring. So you have to start out in the beginning, just doing whatever businesses you can get just to get bootstrap and get going. But as you get going more, you're going to notice that you're probably going to want to focus on those recurring clients. That's where the bread and butter is. And so you're moving the pricing maybe less from hourly or one-time to more of that recurring area. And that's where you want to go.

Brandon Condrey:
So let's just break it down for you. Okay. So the rate matrix that came from the original software we use, which was called service autopilot. And the way that that worked was you plugged in a minimum. And then every tier beyond that in terms of square footage increase the amount by X. So we had used numbers that our mentor was using as a jumping off point. And then we slowly retooled those over time. And that was based on getting a feel for the market, for the competition. Like what was the big franchises charging for cleaning that took a long time to hone it in. So we're trying to give you a little bit of a shortcut on how to get there faster. So the way the matrix is broken up, we have seven different service types that are in there. So we have a one-time clean, an initial clean weekly bi-weekly and monthly, and then move in and move out clean, move in and move out. And really the same thing, the same procedure, whether you're moving in or moving out a socialist, a moving clean. The difference between one time initial is that if you, as a customer are not going to give me the time of day to be able to clean your house in a recurring basis, like your, we just want a deep clean once a year. Fine. I'm going to charge you for the annoyance of having to come out there once a year, instead of all the time. So we charge more for those, we charge more for a one-time clean than we do while moving clean is the most expensive, but any normal clean them, or we're not cleaning inside of cabinets and appliances. That's the most expensive one.

Brandon Schoen:
Yeah. And the reason why is because there's so many variables, there's so many factors that could go wrong. It's extra dirty. There's all these things that you don't even normally clean in and move out clean. Cause there's furniture smooth it out of the way. And lot more dust and things that can be related.

Brandon Condrey:
So what do you mean on the one-time clean light? The reason we're charging more, there is not because the customer is annoying. It's like in front of me coming in there once every 12 months, I don't know what you did to that house in the last 12 months. Like you will get some of that from the estimate. We'll see it if they chose to do a zoom estimate, but we need to account for that variability of you're just a crazy dirty person and we're going to clean up after you. So that's how we do it. The jumping off point for the rate matrix is what it costs to clean a thousand square foot house every two weeks. Everything else in the tool is built off of that. Right? So what do we base that cost of? How did we get there? Pricing is a very sensitive thing, depending on what kind of industry you're in. And so we've got this list here of like expenses and insurance and all these things, but the reality of a service-based business is labor. Labor is going to be super duper expensive. Like right now, I think labor, including office staff and everything is taking up 75% of our revenue. So that's just to give you an idea of where this is going to go. So yeah, you can get crazy with it and tell us how much your insurance costs and how much your cleaning equipment costs and all those things. But realistically, you got to cover labor that's right.

Brandon Schoen:
Like realistically, yeah. Like the cleaning equipment we thought and like a lot of the tools and the, and the chemicals are very minimal. When you look at the comparison to the labor, it's very, very minimal. So Yeah.

Brandon Condrey:
And even then you have some play there. Like we were just talking this morning about him, scrapping disposable gloves in exchange for heavier duty reusable ones that would still get sanitized in between the houses. But that was one of the things over the course of 2020 in the pandemic, the gloves just got so expensive. So like in that case, like doing pricing related to those things, we actually had to do a price adjustment. We had a fee in place to cover PPE personal protective equipment. So even if you're going to take that into a pricing, those are little dials that you can tweak by swapping out tools or buying from a different supplier. I don't want you to think so much about what are the expenses on the back end that we're trying to cover in the beginning, it's going to be expensive. So like in the beginning, like you're going to have to cover rent and lots of other fixed costs that will get more and more diluted. Every fixed cost you have just becomes a less bigger percentage as you get bigger and bigger and bigger. So you do need to take into all those things account. But really what we're trying to cover is the hourly and you, the owner's salary got to cover that.

Brandon Schoen:
Yeah. And everyone's market is going to be different. I mean, everyone's going to have expenses and they're going to need to buy equipment and tools and the labor of course, but your market's always going to be different. So if you're in Canada, we're down here in Albuquerque and it's going to be drastically different, how much you're paying your people. And also in general, how much people are willing to pay because the market's different. The economy is different. Their salaries are different. The demographics, there's all different everywhere you go.

Brandon Condrey:
So we got specific questions. Like how much would you charge to clean a 500 foot house every week? Well, man, that is going to be so much different. If we are in Albuquerque where New Mexico has gross receipts tax. So that means that we have to charge sales tax on every dollar that we bring in as a business, Colorado does not charge sales tax if you are performing a service, they only charged sales tax on physical goods. So up there, we could be more aggressive with the pricing because we weren't having to cover the tax on top of it. You know what I'm saying? So that question, how much do you charge for a 5,000 square foot house that is so heavily market dependent and not going to develop this tool for me to tell you about that at the end, that's going to give you a little bit more control over those numbers. So if we were cleaning in LA versus tiny town in Arkansas, there's different things happening in those markets who, where to all the people that live there work, if you're in LA, people are working for movies or this or that, or these big companies. And they're making a lot of money, but California is expensive to live in. So you're going to have to charge a lot more because you're paying your cleaners a lot more and there's regulations around taxes and insurance, all these things that are going to be different compared to a rural setting where everyone works at the local mill or something. I don't know. So like the pricing is going to be heavily dependent on what your target niche is, what kind of customer you're shooting for.

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Brandon Condrey:
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Brandon Schoen:
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Brandon Condrey:
What this all boils down to is that it is a really hard question to answer. Like I would love to be able to have you send me an email saying, hey, how much do I charge for this house? Like, oh, well it's $250, but if you're in the wrong market and you told the customer $250 and be like, oh my God, that is highway robbery. I'm never sending anyone your way or worse. They're like, oh yeah, I'll take that all day because you under priced it to such a degree that now you're going to go bankrupt. Right? These are the variables that we're trying to cover.

Brandon Schoen:
Yeah, absolutely. So since there's not like it really A great way to definitively define, like, this is exactly how much you should charge in your market. Maybe we could give people some examples, show them the spreadsheet tool we're talking about. And I guess in general, maybe average house square footage would be like 2,500 square feet somewhere around there, if it's a pretty average house. Right? Yeah. So if we just take that example, and as a matter of fact, I'll open the spreadsheet here. And guys, this is a tool that we're working on to make it more robust in the future. But again, as Brandon said, it started out very much as it is now, we've evolved it. But we're working on changing this into a much more robust tool that you guys can just plug and play a lot easier. But in the meantime, it's going to be super helpful because you guys can see, you can plug in these numbers and play With the spreadsheet. Yeah. And really work with it.

Brandon Condrey:
We'll just describe it to you. So what we're going to do is we're in the show notes, you'll have a link here and it will be on the Profit Cleaners website. It's going to be a spreadsheet. This is not fancy. It's not going to be a software that you install. It's not an app on your phone. It is going to be either a Google sheet or an Excel sheet. And so what we're going to do is there'll be a data entry tab where you say, we're going to ask you for a couple of data points. We're going to ask you to call for competitors. And it's going to be like a mom and pop two big franchises and something in your niche. So like, if you're trying to do environmentally friendly cleaning, like we are call someone who does that. And then we need at least three data points out of you. So we need the thousand square foot house, the big, big one, like whatever the biggest one in your market is. So if that's 6,000 square feet, then get us that number. And then you may want the one that's in the middle. So I think a pretty common square footage in the Albuquerque area is about 2000 square feet. That's a three bedroom, two bath house. That's probably what we cleaned the most of. So you plug in those numbers, tell us what the competition is charging for you. We're going to spreadsheet ninja some math on the back end. And on another tab, it's going to develop this rate matrix for you. Now, this obviously comes with a caveat. If the numbers on here spit out that you should be charging $400 for a 2000 square foot house. And that seems way off to you. Don't do it like this does it. You don't have to take this as gospel and commit and put this in writing. This is just a way to give you an idea of how we would do it. We were going to come into your market, call these people, reverse engineer, this math boom. Here's what we would charge, right? So for instance, what we're charging right now in Albuquerque 2,500 square feet, we base it all off the price. Our bi-weekly for that in Albuquerque is 160 bucks before the gross receipts tax, which is 7.875% in Albuquerque. So one 60. And then if you jump to monthly, like if we're going to come clean every two, every four weeks, instead of every two weeks, it's going to go up to 185 that I figured that was that it's the same square footage, but it's a little bit dirtier. So this thing's going to take a little bit longer. So we have three people in there making at least 12 bucks an hour, 25 bucks is going to cover about 45 extra minutes of cost. So you could get crazy with that and try and get more margin on those. But I was just trying to account for the labor. That's actually going to go into it and make sure that we cover that. So a $25 difference weekly, you get a discount. We did that one on a percentage. So our weekly costs are a bit funky. So that one's 126.75 cents $126.75 cents. If he came every week, those are typically very high margin jobs. Cause we're usually in there even on a 2000 square foot house, I don't think we're going to be in there an hour if we're coming every four weeks. I mean, sorry, every week, four times a month. So, and these again are numbers that you would tweak and then move in and move out, charge as much as you can. Yeah. Like whatever the market will bear. The nice thing about moving and move outs is that those are typically contractually obligated. Someone sold a house. Part of that house deal says that you have to have it professionally cleaned before we close on the deal. So they're going to do it. They have to do it. So the seller of that house has to cough up to pay it from a company. Sometimes those people will ask for proof that you did it like a receipt from a company, not yourself. I remember when my wife and I bought our first house, it was in there contractually obligated to clean. She did it herself. It was terrible, but we wanted the house. So we weren't going to come back and be like, ah, we're returning this house cause it's dirty. So those are great. Do that. And then the last thing is the initial. So the initial is we ran into this a lot, especially with the franchises for the first clean, they were charging a grip load, man. Like we were charging 200 bucks and they were charging like 500. And so, all right, if you want to get with the extreme capitalism, you could argue that like, yeah, just charge whatever you can squeeze out of him, but I'm not interested in getting as much money out of you as I can one time. We want the long-term yes. I want you to have our house cleaned at a reasonable rate five years, every two weeks. That's what I want. So if it's an initial clean, they specifically stated we're going to get recurring service every week, every other week, every four weeks. We're going to give you a break on the initial. So for instance, for that 2,500 square foot house on our end, the initial clean is 244 for the one-time clean. If someone's going to come in and request a one-time service, I don't like recurring cleaning services. I just have a deep, clean every quarter or something. We're going to up that by $50. So that'd be 294 instead of 244. And by doing that, you also get a little bit of a leeway with a deal like a scarcity carrot that you can dangle in the form of some pricing info. So if you, yeah, the person on the fence, I'm on addition your company, I don't trust you. Right? Fine. One-time cost. It's more expensive, but I'll tell you up front that if you do up for recurring cleaning, we will give you the discount on that second clean. If it was 50 more dollars to go from initial to one time, when you get that second clean, we'll give you the $50 credit cause you were wowed by our service. And so you kept it.

Brandon Schoen:
And we actually did that for a long time and we still do it. But when we were just starting to get new business, it was always a discount on that second clean, which kind of got people In the mindset of this is long-term, I'm going to do more than one clean and they're looking forward to that discount. So they would oftentimes try the first one and say, okay, I liked it. I'll try one more and I'll get that discount. And after a couple of times, and it's really hard for people to change. They've set up this estimate and had someone to come out. And now if someone knows how to clean their house, it's very hard for people to change after they're kind of a creature of habit and they've started this cleaning service with you. So try to get them in the door. That's the biggest thing. And I think if you guys will notice too, on these numbers, we're actually rewarding people for being more loyal and actually having more services, more often more frequency with us. So the pricing is lower for the people that are more loyal that are more frequent than our weekly or bi-weekly or monthly. And we're not penalizing, But we're just not incentivizing people to do the one times or the move-out cleans. And actually those throw off our variables at time. Like we're all about efficiencies. And if you want to be efficient, you can't be doing all these services and all these things like totally efficiently, unless you're totally focused on the biweeklies, the monthly, the recurring, that's our really big focus. We'd still pick up the one times and then that's because it's still revenue, but it really does throw off our efficiencies and our variables, meaning like sometimes the teams will take three or four hours sometimes with these houses, normally it's two hours. And so then the whole day gets pushed back and then there's overtime and there's all these things that get missed.

Brandon Condrey:
Yeah. So it's a double-edged sword. I mean, in a perfect world, we wouldn't do one times and move outs at all. But on the other hand, like our office manager does like the one-time services move outs because they're good schedule fillers. So if we had a customer cancel and we have this whole they're at the 11 o'clock spot, they bailed that day. Well, now we have this gap in the middle of the day. That's a good place to slot that in where you get in trouble is like what you mentioned, where it takes way longer than you thought it was. And now you've pissed off your recurring customers down below. So again, like all things good in business, it's a balance. You've got to balance that stuff out. So the end result is go to the website, check the link in the show notes. We're going to have the sheet that you can download, or you can go to the Google sheet link online and run it and then print it from there. So you'll plug in some info, it'll spit out, hey, this is our best guests without knowing your market at all. We, all we know is this competition data, that's it. This is what we think that you should charge. And you can run with that, do it from the get-go listen to your customers though, if everyone's telling you that you are super expensive, even with all the cool, fancy stuff that you would do on top of it, you probably are and you need to adjust a little bit. And so that's what we're trying to steer you towards.

Brandon Schoen:
Yeah, absolutely. So I don't know if We want to give them any more examples. I think that was pretty.

Brandon Condrey:
Yeah. I mean that, I mean, that's a basic one. So they go down by tier, so we do two or 300 square feet and that's what your pricing matrix is going to be. As soon as we, as soon as you go to the website, it's gonna be the same thing. And you can take this as an example and then tweak it. So if you think 300 square feet is too big of an increment and change it to 150 and get more out of it. Yeah. So that's up to you, but that's what we found over four years in business and pushing $2 million in revenue this year. That's where we've landed. So hopefully that helps you out.

Brandon Schoen:
Yeah. And this is, again, guys, just an evolution of what our mentor had been using and this outdated software that we're not even using anymore. We pulled out of there. We innovated it to this level. We're continuing to work on it and make it better. But this has really proven to be an amazing tool. I mean, we usually use it from the beginning was plastered on our wall in the office. Remember people would call up and say how much for this. And you know, like it was our guide in the beginning. It still is obviously, but it's really a great tool. I think this is a structure and organization that is really going to help people.

Brandon Condrey:
Yeah. So that's the goal. So I hope that helps. And in the meantime, keep it clean!

Brandon Schoen:
Keep it clean guys. If you have any comments, Leave them below. If you're watching on YouTube, if you're on the podcast, like subscribe, help us out, guys, we're doing this for free. We're giving out this amazing tool for free as well. So come help us out. And like the video subscribe if you're on YouTube or on the Podcast. And yeah, as Brandon said, keep it going. Keep it clean.

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