In my 30-plus years as a cleaning consultant, the two most often asked questions have always been:
How Long Should Janitorial Bidding Take and How Much Should it Cost?
- Bidding and estimating is a blend of art, experiencem and science. And, the more you do it, the better you get at it.
- Your costs and experience may be different than what is presented here because there is only so much that can be covered in a short article.
- If you have verifiable, accurate numbers that are based on your actual costs, by all means, use them.
- When it comes to estimating cleaning costs, it is important to remember that the largest percentage of your costs is labor.
- Typically, labor will account for at least 55 percent and generally not more than 70 percent of your total costs.
Size Does Matter When Bidding
I break accounts into the following size categories:
- Micro accounts are those that are serviced less than full-time — less than five days a week — and are less than 2,500 square feet.
- Small accounts are full-service and range in size from 2,500 to 30,000 square feet.
- Medium accounts are 30,000 to 150,000 square feet.
- Large accounts range from 150,000 to 500,000 square feet.
- Mega accounts start at 500,000 square feet and have no upper limit.
Keep in mind that you are not likely ready to bid or clean every size and type of account. You might want to service big buildings, but if you are doing micro or small accounts now, you are not ready to handle the financial, staffing or management responsibilities that go with a medium, large or mega account.
Industry Standards
A widely used production rate standard for many bidding software programs is the International Sanitary Supply Association”s (ISSA) “447 Cleaning Times.” The Building Service Contractors Association International (BSCAI) and other groups, such as the Building Owners and Managers Association (BOMA), also have time standards available for purchase.
Other groups, manufacturers and companies have time standards available for specialty services, such as carpet and hard floor care, stone maintenance, landscaping, insurance work, etc. If you search on the Internet, you will find more than enough time standards and square footage costs to totally confuse you. Moreover, depending on the account, its size and exactly what you”ll be doing, you will need to add in some costs for equipment. Unless there are major dedicated equipment purchases required for a specific account, you can normally figure 2 percent to 4 percent of the total cost to cover equipment purchase and maintenance.
Profits and Overhead
Profit and overhead are not the same. Profit is what”s left after you pay all the costs. Overhead is what it costs to keep your doors open and pays for such things as insurance, vehicles, advertising, office staff, supplies, etc. We used to figure 10 and 10—add on 10 percent for overhead and add on 10 percent for profit. These days, depending on account size, profits can run from as little as 1 percent on business income after taxes to as high as 200 percent for a small-route job.
Normally, in larger accounts the profits are smaller, say 3 percent to 8 percent, and in medium accounts 10 percent to 20 percent, and with small accounts, an average profit could be in the range of 25 percent to 40 percent. With specialty and tag work, the profits can be 400 percent or more. As for overhead, on a large account, 5 percent to 6 percent might be shown, with other costs hidden in floor, window, carpet work and other areas. In small to medium accounts, I have seen the overhead costs account for up to 25 percent of the bid price, with 10 percent to 18 percent probably being closer to average actual costs.
Other Factors Impacting Price:
- Local competition
- The stock market and financial stability
- Skill and knowledge level
- Expectation, training and supervision.
Bid Package/Proposal
One of the basic bidding concepts is that your response should be proportionate to the size of the account that you are bidding on. For example, if it”s a micro account and the customer doesn’t have any specifications, respond with a one-page bid and service agreement. With most accounts like this, you can make a short walk through and get a pretty good idea how long the work will take, what supplies or equipment you’ll need and how much you should charge per service call or per month.
When you step up to a small account and increase the sophistication of your bid response, you may want to include some or all of the following items:
- Cover letter
- References
- Simple specifications and invoice or pricing page
- Short agreement or contract for services that both parties would sign.
With medium, and especially with large and mega accounts, you will be responding to a bid package, request for proposal (RFP) or request for quote (RFQ). Your response should be organized in one or more three-ring binders with a color cover and spine, tabs, a table of contents and back-up documentation for each item requested in the RFP. I always suggest doing several walkthroughs, taking measurements and looking over the blueprints; don’t trust any numbers or prints to be current or accurate. Look for ways to reduce your costs and increase your profit internally.
Any time you ask the customer for a price increase you put the account at risk of going out to bid. You don’t control your customer’s budget or decision-making process, but you do control how you run your business.
Janitorial Bidding Software
While things have changed in recent year with the advent of real-time janitorial bidding software, it’s best for management and leaders to understand how to bid cleaning jobs the old way-manually. With that said, things are changing quickly in the cleaning industry. It important that you stay current on the new technology as many of the new items on the market have an impact on production, time and costs.
Updated May 17, 2018 from an article originally posted September 10, 2010
