Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: Mike Halliday on May 03, 2008, 02:36:07 pm
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there's been quite lot said about how much carpet cleaners charge so I thought I'd start a thread on how I see it.
(using myself as a example but not actually using my own earnings)
I aim to earn as much as possible without going over the vat amount so let say thats 70K (as we all stick a couple of cash jobs in our back pockets ;) ;) ) ;)
I take 6 weeks holday a year in total so that leaves 46 weeks to earn a living which mean I have to earn just over £1500 a week...............................which is £300 a day
So the biggest question is... HOW MUCH WORK MUST i DO TO EARN £300? the answer to this gives me my prices
here's some examples of a days work (6hours);
I can clean 2 suites a day (so that £150 a suite)
I can clean 2 x 3 bedroom houses.
1 suite & 1 x 3 bed house.
I can clean 4 big through lounges.
I can clean 4 big hall-stair-landings
from this you can see how much I must be charging to hit my earning goal.
but what if I charge £80 for a suite or £60 for a full 3 bed house or £45 for a through lounge? my yearly income will never reach my goal
So to answer how much should I charge just ask yourself how much do I want to earn per year
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£67k is the amount for vat, i was vat registered its alright if you do a lot of commercial work but not if most of your work is domestic. your theory looks good.
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This brings me back to the other thread, how long do you spend on each job?
Mike can do 2 x 3 bed houses a day, how many are the £60 per house guys doing in a day?
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Exactly, doing the work cheap means you have to do more jobs per day, which invariably means not doing them as thorough as those who spends longer on the same type of job. However as 'You get what you pay for' the customer paying the higher price expects more than the customer paying a low price (Generally speaking) and this is how the low priced operators get away with not spending sufficient time on a job to do it Thoroughly (imo).
With that in mind it is still possible to reach the same weekly turnover as in Mikes example, doing the work cheap, (and its easier to get work if you are cheap), but I think Mike has the work rate in the right proportion, and charges accordingly.
Dave.
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Hi Guys
I think Michael (Pro Dry) would say that he was in the band of CC's rushing around like a loony to earn decent money at cheap rates, whereas he has now joined the more sedate CC's who charge enough to have time for other things .
Basically we are supplying labour, skill and equipment.
I prefer to operate at the more skilled end of the market where customers want stain removal, green chemicals etc, anything to add value, makes the job financially rewarding and gives job satisfaction.
I don't get stressed about cheap CC's because there will always be a market for them, I just do not go after that market.
Cheers
Doug
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Would rather do five £300 jobs a week than three hundred £5 ones ;D
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Mike,
Working on your figures you charge more than me for a 3 piece, slightly less than me for a 3 bed house and about the same as me for large through lounge and large stairs.
I know I should be charging more for suites and I don't really like doing them either, however I'm already the most expensive in the area, plus we're vat registered so we appear even more expensive than the competition already.
I would much prefer doing carpets than suites, unless they were leather, which I enjoy.
Anyway, if we all did exactly the same as each other we'd have nothing to gripe about ;D
Did my £300 (well nearly) this morning, then mowed the lawn, chopped down next doors overgrown shrubs (at her request) and cleaned mine and the neighbours windows.
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So out of the 70k
advertising 10k
chems 5k
Vehicle costs 10k
Repairs and renewals 5k
Phone/office 3k
misc, casual labour, shows,subs,training 5k
Total 38k
32 NET LESS TAX AND STAMP = 7K TOTAL IN POCKET £500/WEEK.
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Blimey J
Thats alot on advertising. You need to find why ways of making that cheaper ;)
Pete
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Ian, these prices are just an example, of how to earn the £300,
I personally charge £140 for a suite and closer to the 200 for a 3 bed house, £75ish for an average T/L a big one would cost an extra £10.
I really think a lone carpet cleaner should aim for this yearly income, but to be truthful if you don't have the jobs coming in then its pie in the sky. I'm hitting this amount, but it cost alot in leafleting to bring in The jobs constantly week after week. So my target now is to keep the income high, but without spending so much to bring it in
you could also work it out by using your average job value, if its £100 then you need 3 jobs a day if its £50 then you need 6........ then if you keep going you get to Chris's example.
Jason your figure are bollox ;D £100 a week on chemicals :o, £100 a week repair & renewals ???, your £10k on advertising is the only one I agree with
mike
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hi Guys
Jason's figures are obviously exagerated but he makes a reasonable point, if you are taking 1000 a week and spending 600 then you are making 400.
Too many people claim takings as earnings.
Cheers
Doug
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actually Jason now I've thought about it I think you figures are too low!!
last year I had a lot more expenses that your example and ended up earning very little profit, luckily this meant quite a small tax bill.
but this opens up another can of worms should we spend our money or keep it and pay tax on it. which means we end up with more profit in our pockets, but if we can spend our profit on mutually beneficial expenses(private/business), we can still 'profit ' from it.
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£100 per week on chems is a lot too :P
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Thats a good point Mike and I do it this way. I have luxurious pack lunches for work yet for tea we eat cheap basic food ;)
Other obvious ways are other halfs diesel, mobile bill, insurance, tax servicing etc
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My breakdown for last financial year as a percentage of turnover:
Capital investment 4.9%
Travel costs 8.03% (vehicles, fuel, insurance, servicing)
Marketing 4.41%
Cleaning materials 0.88%
Other 9.7%
Other is a multitude of little things like phones etc that at the moment don't warrant a separate sub account.
What you should charge should be a profit margin from what it costs you
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Ian's figures are realistic, something to be added would be depreciaion, which is usually 25% of the capital cost annually.
The man thing I learned about running a business, came when I worked with a large retailer and had to complete weekly sales and more importantly, monthly returns, in which every penny was accounted for.
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At night I go scromping and foraging for food and use that for my daily sustenance saving me money for the finer things in life.
Many a time I've come across an old car battery to use in my van and a car tyre that I have shoe horned onto my van wheels, you'll be surprised what my TM runs on when I found a porcelain chair in an out house!
Shaun
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Those figures were from 1999 .. the last year I did 70k, and my chems were from CD= overpriced my percentage is now about 2% of turnover thankfully
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Thats a good point Mike and I do it this way. I have luxurious pack lunches for work yet for tea we eat cheap basic food ;)
Other obvious ways are other halfs diesel, mobile bill, insurance, tax servicing etc
Pete
Technically of course these would be caught on your P11d and be subject to tax.
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At night I go scromping and foraging for food and use that for my daily sustenance saving me money for the finer things in life.
Many a time I've come across an old car battery to use in my van and a car tyre that I have shoe horned onto my van wheels, you'll be surprised what my TM runs on when I found a porcelain chair in an out house!
Shaun
I sympathise with you Shaun,
Know what your saying, its tough round here as well. I find though if I drink enough alcohol of a night and pee in the t/m fuel tank next morning it does me for the day!
Recycling or what ;D
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Having a limited vocabulary, could Shaun elaborate on what he understands the word "scromping" to mean
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I think scrompimg means scraping barrels which in turns equates to getting the best deal on everything possible...
Including chems and everything else associated with our buniness...
I'm the same, although probably not as good as Shaun as he's been in the business longer.
Still learning though ;D
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Below I have cut and pasted a topic that I posted on here a few years ago. :)
In this trade its easy to fall into the trap of thinking that you are making more money than you actually are.
You do a days work and turnover £200 or £300, the chemical costs may only be £5, plus your fuel cost, so you “feel” that you have made a big profit.
But it can be very interesting to work out your true NET PROFIT!
Get your last set of accounts out and make a note of the Total Expenditure amount ( the total of all of your costs, Chemicals, adverts, van and machine cost, telephone etc)
Then divide your total expenditure amount by your turnover.
This will give you the percentage that your total costs are in relation to your turnover.
The results can be surprising.
So, for example,
Expenditure = £10,000 divided by turnover of £50,000 = (0.2) = 20% costs
So if you turnover £50,000 in a year, but it costs you £10,000 to run the business, then for every £100 that you turnover, £20 is actually gone to cover your running costs.
So that £300 days work actually cost you £60 in costs !
That’s a bit more than most people would have guessed ?
On top of that you need to also deduct your years income tax bill ( not included in your business expenditure).
Examples.
Expenditure £10,000 – turnover £30,000 = 33.37% or £33.37 out of every £100 you earn
Exp £10,000 – T/O £40,000 = 25% ( £25 out of every £100 you T/O )
Exp 10,000 – T/O £50,000 = 20%
Exp 10,000 – T/O £60,000 = 16%
Or
Exp £13,000 – T/O £40,000 = 32.5% £32.50 out of every £100 you T/O)
Exp £13,000 – T/O £50,000 = 26%
Exp £13,000 – T/O £60,000 = 21%
Work out yours, you WILL be surprised !
Cheers
Chris
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I use Dock leaves on my feet as I don't want to wear out my 'Sunday shoes' but getting back to the thread, Chris is correct he obviously does his homework! and that is why we should be charging better rates, I bet there are a few on here that are working for far less than they originally thought BUT there are 2 things to add.
1.(as Mike says) get your tax bill down legally by putting in all of your outgoings (hunt round B+Q carparks for stray reciepts ;D)
2.use your gross money (I know talking money is gross) and make it work for you, we get paid in many instances upfront before we settle up with our suppliers so it's a free over draft.
At the end of the day it's the money in your pocket that counts.
Shaun
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The principals behind Mike's, and others, business model is sound. This or that figure may vary a little for individuals as already discussed.
But it's not the only business model. I'll use myself as an example.
My turnover is considerably lower than many here. But I'm in a blessed position. I don't need to advertise, but I choose to do what I call Community Advertising. It covers it's costs (barely) but I don't expect a return. I use the NCCA Corporate Advertising facility in Yellow Pages. This is for the benefit of regular customers who've lost my number. Total advertising costs <£300 pa.
My borrowings: Nil
My overall business expenses: Low
My Mortgage: Nil
My turnover: relatively low.
Now the important one. My disposable income: High
Am I happy with my personal circumstances? Definately yes.
Safe and happy cleaning :)
Ken
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Lend us a fiver Ken ;D
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You won't get far an a fiver Pete.
Probably get from Birmingham to Stratford-upon Avon before your tank runs dry ;)
Safe and happy cleaning :)
Ken
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Ken, I'll have the fiver then. It will run my truckmount for an hour, so it will make me a couple of hundred quid and I can pay you back quick and with interest
Best, Dave.
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Now the important one. My disposable income: High
If you have a turn over of say £40k a year and your business expenditure is say £5k that's a taxable profit of £35k with little out goings you may have say £25k left over but who's to say that disposable income is high?
That's down to the individual.
The Führer and I have 3 businesses with a turnover of £250k, yes we have loads of out goings the % profit is lower than Ken's but I think she may have more disposable profit.
Politicians are also good at massaging the figures but it depends on how you read them.
Shaun
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when people say its profit not takings that's important this not entirely true. a lot of business expenses crossover and benefit our personal lives.
EG; although we spend £5k on motoring expenses how many of us use our company van for personal reasons & how many of us claim our mobile phone bill through our business? do you never use it for personal calls?
So if you earn £50,000 and have expenditure of £45000 you have only £5,000 for yourself, are you saying you lifestyle is the same as a labourer earning £5k a year?.
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I'm really hoping once you get established the costs start to be a smaller proportion. Once you have your key kit, and you are getting people coming back or referring you it's got to be far easier on the wallet.
The biggest investment for most is marketing but it is an investment the comes back many fold.
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Not always, invest in the wrong type of marketing and you could be throwing money down the drain, we have all done and it's hard to know which is the best advertising until you've tried it.
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Hi Guys
One of the big advantages newcomers to CC have is they can, through this forum, learn from the mistakes of the established guys so less money is wasted.
It takes a quite a number of years to establish a CC business but it's good to be your own boss and in charge of your destiny.
It is better in my view to charge reasonable prices and spend more on advertising than to be cheap.
Cheers
Doug
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Interesting reading.
As the business experts keep telling us you need to have reason for being in business and then plan to meet those goals. Too many of us never plan, have no idea of the true cost of running a business and no wonder why we never make the 'big' money. It amazes me people on here think their making money making £30 an hour.
I agree that the more you make the more you spend and you have to spend it to make it.
Mark
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Your old Mother used to say "don't spend more than you earn" and it' true.
Shaun
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thats cause you could never spend everything you earn shaun ;D
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My grandmother (Irish wished she was Welsh) and mother always said Mums the word and get a good accountant last year I ran at loss what a bummer bank still loves me ::)
Len
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How can you possibly set up a business and not spend more than you earn? If you can I'd really like to know what it is.
And there's a big difference between going out and buying a 42" flatscreen on tick and spending the same on a decent marketing campaign.
I don't think it matters what someones reasons are for being in business, what's important is you revisit the reason WHY regularly and adapt them to your needs otherwise you will loose motivation.
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I think there is a big gap between cc's working full time at it, and some who do it for a few extra quid..
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I work for pennies!
Shaun
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and pennies make pounds....... and lots of pennies make lots of pounds!
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it depends on how long it makes to get the pennies in the first place?
Shaun
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Anyone care to venture a guess as to in which year pennies/cents will become so insignificant and we will only be working in £s or Euros
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I've only come off groats.
Shaun