Guides
Commercial cleaning pricing: from cost to profit
Commercial cleaning pricing and profit, built from your own walkthrough: task-time versus square-foot bidding, the arithmetic in named variables, and consumables.
What to take away
- A janitorial price is a labor-hours forecast with a margin on top. Everything else on the estimate, from consumables to the fee for a missed key, exists to protect that forecast.
- Bidding by square footage is fast and wrong for small buildings; bidding by task time is slow and right. Use square footage to screen, task time to price.
- Decide before the first bid whether consumables are a pass-through or your margin. Silence on paper products is the most common reason a profitable account becomes an unprofitable one.
- The janitorial closet, the dumpster walk, and the alarm panel are costs the customer never mentions and the walkthrough must find.
- Discounts, credits, and waived charges need one approver and a written reason each, or the price you set in January is gone by June.
Why one national price does not exist
Nobody can tell you what to charge per square foot for an office in your county. Anyone who does is guessing.
The number depends on the local wage that gets a reliable person into a locked building at ten p.m. It depends on whether the buildings you bid have a mop sink or a fifth-floor walk-up, and what the incumbent contractor charged the customer last year.
This guide does not supply a rate. It supplies the structure a rate has to fit, so you can build your own from your own walkthroughs and payroll.
The three supporting articles in this cluster carry the pieces: a step-by-step method for pricing a single building, the break-even arithmetic for the company as a whole, and a quote template with the fields a facility manager expects to see. This piece is the frame they hang off.
Fields a facility manager expects on the quote:
- Customer legal name and building address
- Service start date and contract term
- Scope by area and task
- Frequency for each task
- Monthly price
- Periodic work with frequency and price
- Consumables line and who pays
- Escalation clause
- Exclusions
- Insurance requirements
- Termination notice
- Payment terms
- Signature block
Define the terms at the scale of one building
Commercial cleaning pricing has its own vocabulary, and using it loosely is how estimates go wrong.
Pricing terms and sources
Term
- Cleanable square footage
- Walkthrough measurement
- Production rate
- Timed shifts
- Nightly labor minutes
- Tasks times rates
- Loaded labor cost
- Payroll and insurance
- Periodic work
- Scope document
- Consumables
- Supply clause
Source
- Cleanable square footage
- Production rate
- Nightly labor minutes
- Loaded labor cost
- Periodic work
- Consumables
Define the terms at one building
| Term | What it means on a bid | Where the number comes from |
|---|---|---|
| Cleanable square footage | Floor area the crew actually touches, not the gross area on the lease | Your own walkthrough measurement, by area type |
| Production rate | Square feet or fixtures one worker completes per hour on a given task | Your own timed shifts, never a published table you have not tested |
| Nightly labor minutes | Sum of every task's minutes on a normal night | Walkthrough inputs multiplied by production rates |
| Loaded labor cost | Wage plus payroll taxes, insurance tied to payroll, and paid non-productive time | Your payroll records and your insurance agent |
| Periodic work | Tasks done monthly, quarterly, or yearly: strip and wax, carpet extraction, high dusting | The scope document, each with a frequency and its own price |
| Consumables | Paper, soap, liners, and anything the building uses up | The contract's supply clause, in writing |
Write your own version of this table with your own sources before the first estimate. The price is only as good as the weakest row.
Square footage or task time
The trade uses two bidding methods, and the choice is the first real pricing decision.
Bidding methods compared
Method
- Square footage
- Uniform floors
- Task time
- Any building
- Blend
- Screen and price
Honest
- Square footage
- Many restrooms
- Task time
- Rushed walkthrough
- Blend
- If task-time done
Lies
- Square footage
- Task time
- Blend
How it works
- Square footage
- One rate per square foot per month, adjusted by building type
- Task time
- Each task on the scope gets minutes; minutes become hours; hours become cost
- Blend
- Square footage to screen the lead, task time to price the bid
Where it is honest
- Square footage
- Large, uniform floors: warehouses, open-plan offices, schools
- Task time
- Any building, and it survives a scope dispute because every line is explained
- Blend
- Owners with limited estimating time who still want a defensible number
Where it lies
- Square footage
- Small buildings with many restrooms, where fixtures set the time and area does not
- Task time
- Slow to prepare; a rushed walkthrough produces confident nonsense
- Blend
- Nowhere, if the task-time pass is actually done
Use the blend. A quick area-based figure tells you whether a building is worth a two-hour walkthrough. The task-time figure is what goes on the quote.
The arithmetic in named variables
The relationships come first. The worked example below uses placeholder numbers.
From variables to monthly price
- M: nightly labor minutes
- N: service nights per month
- W: loaded hourly labor cost
- S: monthly supply cost
- T: travel and setup minutes
- O: allocated monthly overhead
- Direct cost = ((M+T)/60)NW + S
- Price = (direct cost + O) / (1 - margin)
Monthly direct cost = ((M + T) / 60) x N x W + S. Add O to get the full monthly cost.
- M: total task minutes for one normal night, in minutes.
- T: setup, travel between floors, and supply restock minutes per night, in minutes.
- N: number of cleaning nights per month, in nights.
- W: loaded labor cost per hour, in dollars per hour.
- S: consumables and supplies charged to the account per month, in dollars.
- O: other monthly account costs, in dollars. Examples are supervision, equipment replacement, account insurance, and billing.
- Margingross margin the account must earn, as a decimal.
The monthly price is full monthly cost divided by (1 minus margin). Set margin as a decision before you open the spreadsheet.
Worked example, using your own numbers in place of these:
- M = 1,200 minutes
- T = 120 minutes
- N = 21 nights
- W = $18 per hour
- S = $140 per month
- O = $300 per month
- Margin = 0.20
Direct labor hours per night: (1,200 + 120) / 60 = 22 hours. Monthly labor cost: 22 x 21 x $18 = $8,316. Monthly direct cost: $8,316 + $140 = $8,456. Full monthly cost: $8,456 + $300 = $8,756. 20) = $10,945. Margin dollars: $10,945 - $8,756 = $2,189. 69 per hour.
The example is arithmetic, not a market rate. Your own M, W, S, and O decide the price.
Two checks catch most mistakes: first, recompute M for a bad night: a tenant party, a flooded restroom, or a missing crew member. If that M is far above the ordinary one, price closer to the bad night.
Second, divide the monthly price by total labor hours and compare that hourly revenue with what you pay. If the gap is thin, the account will not survive a wage increase.
Assess what you already know
Before bidding, gather three sets of your own numbers.
Gather your own numbers
- Production rates from timed crews
- Loaded labor cost from payroll
- Actual supply cost per account
- Production rates from your own crews, timed on at least two nights, for each task family: restrooms by fixture, office floors by area, trash by station, kitchens by count.
- Your loaded labor cost from payroll, not from the wage alone. The Bureau of Labor Statistics wage tables publish local estimates by occupation and metro area. Use them to sanity-check your own wage survey, not to set W. The market rate that gets someone to show up at night is yours to discover.
- Your actual supply cost per account from purchase records. The IRS page on what records a business should keep describes a recordkeeping system. For pricing, the useful part is the discipline: supply receipts filed by account are what let you see which contracts eat their margin in paper towels. The account code on each receipt matters more than the form.
Understand the constraints
Three constraints cap what you can charge, and none of them is the competitor's price.
Constraints on your price
- Labor availability
- Access hours
- Incumbent's contract
- Legal advertising claims
- Labor availability. If your area's night labor pool is thin, your loaded cost is higher and your price must follow. Underbidding to win, then failing to staff, loses the account and the reference.
- Access hours. A building that allows cleaning only between six and nine in the evening forces a larger crew for a shorter window, which changes T and the supervision cost.
- The incumbent's contract. Many buildings are under annual agreements. The realistic bid date is the renewal date, and a good walkthrough now is a bid then.
There is also a legal constraint on what you say about the price. The Federal Trade Commission's advertising guidance for small businesses says claims must be truthful and supported. "Lowest price in the county" or "guaranteed savings" on a flyer is a claim you have to be able to back. Price honestly and describe the price honestly.
Choose the price architecture
A price architecture is the set of rules that turn one building's cost into a quote the customer can read. Decide each of these once and apply them to every bid.
Price architecture decisions
- Base scope by area and frequency
- Periodics listed separately
- Consumables supply clause
- Minimum monthly charge
- Extras priced hourly
- Change request approval
- Minimum account size. Set a monthly revenue floor from O plus the margin floor. Bid below it only when the building fills a route gap and the margin floor still holds.
- Margin floor. Set the lowest gross margin the company will accept. Apply it before any discount.
- Consumables treatment. Choose pass-through at cost plus handling, or built into the monthly price. Write the choice on the quote.
- Escalation clause. Put a yearly increase in the contract. Tie it to your loaded wage index or to a fixed percentage.
- Discount authority. Name one person who can approve a discount, and log each approval with an expiry date.
- Review date. Review the account at ninety days and before renewal. Compare actual M, S, and margin with the priced figures.
Owners who let each quote invent its own rules end up with twenty accounts on twenty different deals and no way to know which ones make money. The services and packages guide covers how to group scope into offers a buyer can compare; the pricing rules here sit underneath those offers.
Discounts and recovery
Every discount is a price cut you chose. Keep a discount log by account, review it monthly, and let the margin floor decide which discounts stay.
The same applies to credits after a complaint: a credit issued to calm a facility manager is a service failure with a cost attached, so review it with the failure itself.
Recovery is the other side: a failed card, a late invoice, a customer who pays in sixty days on thirty-day terms. Your price must survive the gap between Friday payroll and payment next month.
The startup and market guide covers payroll float as a startup cost. Slow-paying accounts need a higher margin or a deposit, and the estimate decides that.
Budget beyond the obvious
The lines owners forget, and where each one hides:
- The janitorial closet. A building without a lockable closet, a mop sink, or running water on the floor adds hauling time to every visit. Price it or require closet access in the contract.
- Dumpster distance. A long carry to an outdoor compactor is minutes per night, every night.
- Alarm and key handling. Signing in with a guard, waiting for an elevator, resetting an alarm: small, and multiplied by N.
- Equipment wear. Vacuums and floor machines bought for one account are consumed by that account. The equipment and setup guide shows what to buy at each stage; the price is where its replacement is funded.
- Compliance and paperwork. Certificates of insurance, safety data sheets, training records, and whatever your jurisdiction requires. The licensing and compliance guide explains how to find out what applies; the cost of finding out belongs in O.
The SBA business guide lays out general business costs. It will not tell you what a fifth-floor walk-up costs you per night. Only your own timing will.
Decide what to hand to a professional
An accountant should set up the chart of accounts so labor, supplies, and overhead are separable by account. An insurance agent should price the coverage a typical contract in your area demands, because the premium is part of W and O. A payroll service should carry tax filings.
None of them should set your production rates. Those are the one thing only your own crews can tell you.
Live with the price
Review every account at ninety days and again before renewal. Compare actual labor hours against the M you priced, actual supply spend against S, and credits issued against the margin.
Raise the price where the gap is real, and drop accounts where the customer will not accept it. Carry corrected production rates into the next bid; the price is a forecast, and the review is where the forecast learns.
Common questions
Should I match the incumbent's price to win the building?
Only if your own model gets there. If the incumbent's price is below your cost, they are either more efficient, underpaying, or losing money. Two of those are not worth copying.
How do I price a building I cannot walk through?
Do not. A price without a walkthrough is a guess with your name on it. Offer a preliminary range subject to a site visit, and put the visit in writing.
Where do consumables belong on the quote?
On their own line, with the answer to who pays. Pass-through at cost plus handling is easiest to defend. Built into the price is acceptable if you have a usage history. Silent is never acceptable.
What margin should a cleaning account earn?
No page can tell you that. Set it from your own overhead, your payroll float, and how many accounts you can lose in a year and still make payroll. Then write it down and apply it to every bid.
