Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: Colin finney on January 26, 2009, 10:00:00 pm
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Things are quiet at the moment so here is something some of you might like to think about as a marketing system.
We use a reactive market / sales system which is something we use each day to make sure that every week we maximise our sales and therefore our profit. Some of you will like, this others won’t but here it is see what you think.
This system is based on you knowing where your breakeven point is which is a point at which your sales have reached a level where all of your business expenses / running costs have been met but you haven’t made a profit. If anyone doesn’t know how to calculate your own breakeven point I will post the formula on here, but you must know it otherwise you cannot make any of the decisions that are required to make your business profitable.
So the first objective in your week is to reach breakeven, fall short of it and you are making a loss. So lets say breakeven is achieved at £450 sales, divide that by 5 days and you know that you need to earn £90 per day, divide that by 6 hours each day and you find that you need to be charging £15 per hour in order to breakeven. You can carry on from here and work out that if you clean 35 sqm per hour you need to charge your customer 42.8p psqm. If takes you 2 hours to clean a suite you must charge a minimum of £30 to clean the whole suite.
From these very simple calculations, all of which come from the calculations you did to get your breakeven point you now know that the absolute minimum you can charge a customer to clean a suite is 42.8psqm and £30 to clean a suite, go below these figures and your losing money which is not good.
So , to reach breakeven point you need £450 worth of sales. A reactive market system is a system that reacts on a weekly /daily basis to two things, the number of bookings in your diary and the number of times your phone is ringing. If you have a full diary then you don’t need to react to anything but if the phone isn’t ringing and your diary has gaps then you have to fill those gaps and so you have to do things to make it ring. We use leaflets an awful lot and we never advertise a price just prices from as little as £’s and the price is obviously at the lowest end of the scale to provoke the phone calls. We use leaflets because they are targeted and all of the work you get from them is in one or two areas so less fuel and travelling costs. In quiet spells you do more leafleting, door knocking and advertising in papers etc and the level of advertising you do should be a reaction to the state of your diary and the number of phone calls you are getting.
So during a quiet spell you react by increasing the leaflet deliveries which increases the phone calls. So here is the controversial bit. When the phone rings the girls already know that they cannot sell carpet cleaning for less than 42.8p and suites for less than £30, our usual prices are around £2.25psqm and £100. Most established business will have there diary pages part filled by existing customers but what about the gaps especially when we are in a quiet spell, do you risk those gaps remaining blank and earn nothing or do you reduce your price a little and fill them with off peak jobs that have say a 25% reduction. The suite job is still £100 job and the bill shows –25% off peak discount so the customer knows she has got a £100 job done but has to do it at our convenience and not hers. I have seen people on here who say I only work for x£’s which is fine if your diary is full but are you seriously going to allow gaps in your diary to go unfilled week upon week and right off all of that profit just because your too pigheaded to do a £100 job for £75? What about the weeks where the phone is so quite you won’t even reach breakeven are you going to allow that before you react to the market?
The only thing that matters especially to all you newbies is filling your diary so react to the market, increase your flexible advertising when its quiet and reduce it when your busy. If you are not busy this week look at next weeks pages and move as many jobs as you can to this week (give them a discount to do it) and worry about next week when you have filled this weeks pages. All that matters this week is that you pass breakeven and hopefully go on to make money.
Flexible advertising is leaflets, door knockers, the five around becomes 10 then 20 when your guys aren’t busy, a website which must have a special offers page which you can change at a moments notice.
Let me make it absolutely clear I am not suggesting that you clean suites for £30 or carpet for 42.8p the reason you should know these figures is because you should know that if you clean a suite for £75 you will have made a profit of £45 which is better than nothing.
Col
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BUT if you keep your prices at say £100 or if you like at your yearly price then the other monies can be spent on extra advertising so that your quieter times will be far less.
If you react to the market by dropping your prices consumers may start 'offering you the price' and sods law is that if they do and you say no then out of humilation they walk!
Keeping your price uniform adds confidence and if you do work out your break even figure you have options to either work to your 'happy wage' or reinvest the extra into more advertising which inturn will give you more calls and give you less slack times which IMO is a better business builder.
Shaun
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I see a rather big problem with this system and perhaps yes, it is one way of increasing business a little, but ,
but what about the next time a custy rings for a clean and wants the lowest price you did it for before?
Do you suddemly say , sorry that was just a one off? do you say no problem its filling a gap? and what happens when these cheap prices you are cleaning for get passed on to all the friends and neigbhors ? Do you clean cheap ?
Lots of questions , i know .
personaly I will stick to my pricing structure, if i,mquite 1 week i,ll make it up the next :)
geoff
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I can see how it could work, but only if customers didn't talk to each other.... I was told that if a customer looks like they can afford it, charge more...
The thing is I have a brother who lives in a minging house, 33 and never worked. If he had the same job done as me, and I had to pay more because I live on a "Posh" estate, would I use that service again...? No I wouldn't!
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Boys, I think you are missing the point because you are of the opinion that you only work for x£’s and so you won’t even consider working for less which is fine when your diary is full. But we are in a recession and that could mean you looking at empty pages in your diary. With the phone not ringing your competitors are going to do what everyone else is doing, cutting there prices. But Iam not suggesting you cut your prices I am suggesting that you offer people a discount which gets you away from your normal price by selling it as on off peak job, you still show the £100 charge on the invoice but with the % discount showing. The customer knows they have bought £100 job and only go the off peak discount because it is being done at our not there convenience. Don’t forget everyone who rings you has money they are willing to spend, if they don’t spend it with you they will spend it with your competitors, is that what you want when work is slack?
This isn’t new lots of highly successful businesses use an identical system using either lower prices or discounts from there normal prices in order to win your business. When Tesco, Asda and other supermarkets reduce a product for a limited period eg a loaf of bread at half price, when the offer has finished you can’t go in and expect them to let you have it reduced again. You’ll probably find all your customers are used to these type of offers and wouldn’t dream of asking you to reduce it again next time round. If they do you didn’t sell it right to them in the first place
Geoff, the customer was sold £100 job for say £75 in exchange for doing it at our convenience not hers. She knows she has bought £100 job it even says so on the bill and if she rings back next time wanting the same deal you give her a time that you know won’t be that convenient to her but convenient to you. If she wants to pick her time and day she has to pay full price. If it were just a one off cheap price as you that can be a problem if she recommends you but when her friends call and you give the full price and they say you did it for my friend for £75 you tell her why, if she wants the same deal so what, it’s business its a customer.
You never make up for last week with this week because if you look at it logically that means the first few jobs you do this week are only to make up for last weeks shortfall. What if you have three or four weeks where you have been short. You can’t play catch up all the time which is what you are proposing. The only week that matters is this week, if your diary is full of full price jobs then you don’t have a problem and you don’t need to reduce anything, but what about when you are quiet?
Last week we did 6 off peak jobs bringing in an extra £420 revenue can you lads afford to lose that much money ?
Col
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If you have so much time on your hands to write such long posts I take it you are charging at the cheaper end at the moment. Come and clean my sofa for £50, at a time to suit you is fine.
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well today all I have done is a £90 job,
I am pricing two jobs later 1 a suite, the other a village hall to be cleaned every month, but
tommorow I have 3 jobs , 1 for £500 , another for landing and en-suite bedroom £140 and another one an en-suite bedroom for £90 .
now that is going to make up for todays calmer day :)
Geoff
ps. yes all on my own before you ask
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changed my mind.
ive deleted my post
sorry i posted
carry on.
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mr nobody,
why you change your mind?
what did you say ?
Geoff
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changed my mind.
ive deleted my post
sorry i posted
carry on.
yes Sir.............. :D :D :D :D :D
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don't get paranoid geoff.
i was answering the initial topic and decided against it, me and colin or whoever he is do not see eye to eye, and i have been advised by many people to keep my BM shut, and for once (all be it very hard for me) i will take that advice.
hence the deletion of my post.
neil eric body
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wasnt getting paronoid ;D
would still love to know your veiws, nothing wrong in voicing opinions........ as for advised to keeping your big mouth shut , well I wouldnt take any notice ;)
unless of course your been insulting, undermining, giving bad info, advertising, pimping ;D then you had better heed the advise.
Actually thinking about it :-\ we had all better shut up ;)
geoff
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i never advertise geoff ;D ;D