[paul@ctcs]

Hi Guys,

I'm just about to submit a quote for a commercial contract but thought I'd see what you chaps would charge, The staff wages are £6.50 an hour and there are 72 hours a week, £2500 worth of equipment will be needed on site and I have estimated £25 a week in consumables. All staff will benefit from 20 days holiday per annum and sick pay.

Paul

[Ian Rochester]

Paul, Speak to your accountant, they should be able to give you a good idea of what you need to charge to break even based on your NI contributions, holiday sickness cover etc, then you just need to add on your profit margin.

As a broad rule of thumb you should be charging about double what you are going to pay your staff.

[Musicman]

Hi Paul, any chance of a breakdown of staff, ie. numbers, how many hours per cleaner per day, and whether there are any full-time staff? Also is it all Monday to Friday or is there any weekend work?

Do you have sufficient P/L and E/L insurance in place or will the cost for this need to be absorbed into the contract price?

The equipment cost seems particularly high; what is included (scrubber/drier)?

Is the sickness pay SSP or an existing company benefit?

Will it be Site Managed or will you be covering it yourself?

Is it a competitive quote or are you the only one bidding?

Is there a specified contract duration or will it be a rolling contract?

What are the reasons for the client wanting to change? Ie. are the problems with the existing cleaners or the existing contractor (or in-house management)?

A lot of questions but all relevant.

PM me if you prefer.

Best regards

Musicman

PS Having just read Lionheart's reply, for a contract of this size doubling the wage rate could leave you miles out. If you provide me with the above info I'll work out whether you need to build in NI costs etc.

[BSF]

Lionheart in my opinion 48.5k for 72hrs per week is way out,  Paul@ctcs this is a good contract, in my opinion no company of this size would pay that price, as Musicman asks we need to know the staff situation (TUPE) full/part time company sick pay etc, even so I think £10 absolute max per hour,  look at 20-30% profit margin and you wont go far wrong. If you get more you’ve done very very well! Good luck…. If you PM me with all details I’ll work out what I’d quote. But as Musicman said doubling it would be miles out. 

Paul

[CMS]

As has been said previously we need to know about any TUPE issues or whether any 'high cost' plant such as scrubber driers are involved.

Doubling your labour costs would, of course give you a labour to charge ratio of 50%. In my view the largest sized contract where you can get away with this ratio is £18K per annum.

On a contract the size of the one you're looking at I would have my wage bill at about 65% of the charge , no less.

The idea is to win the contract. You won't even make a shortlist with your labour at 50% on this one.

[CMS]

I also feel that your materials estimate is a little high. Unless there are any 'anomilies' such as loads of emulsion polish/stripper etc., the usual estimate for materials would be about 3-3.5% of the labour costs.

That is a difference in excess of £500 per annum on our two estimates. I have lost good business for a smaller difference than that.

Unless you're selling on service rather than cost, of course.............................

I have knocked up a little spreadsheet that may help. Go to my own 'personal hobby site' to view it

http://www.theoldcampfire.co.uk/cost.xls

[Ian Gourlay]

How do you know staff are there 72hrs a week, is this an estimate.

I would like to thank everybody for the useful info on how they would go about it.

Esp helpful to us non contractors who are trying to learn about this side of the industry

[Tim Downer]

If you are spending £25 per week on consumables, then £2500 on equipment sounds about right to me for a contract this size.....although some more details on how many staff etc would help
However, if you add everything up together including a nice 25% profit for yourself and go back to an hourly rate.....this is still only just under the £10 per hour mark.
Why do you want a rough guide to how much an hour it is going to cost? Does the client want to know? Would it not be better to give them a weekly / monthly costing?

Regards

Tim

[paul@ctcs]

Hi Guys,

I would like to thank you all for your help and suggestions, I'm busy putting together my quote tonight, I will report back to let you know if we are lucky with this one I'm going to quote what works out when broken down to £10 per hour.

Fingers crossed!!

Many thanks

Paul

[Ian Rochester]

Paul,

Good thread, interesting to know what people are charging and what customers are paying for this type of service. 

Contract cleaning is a growing sideline for us, we have picked up contracts from customers who have generally either been unhappy with they previous contractors, or more usually, they have had their own employed staff and have been unable to retain regular cleaners and just got sick of the hassle of advertising / recruiting constantly.  We go in and take the hassle away from them having to sort out absence cover, holidays etc. 

Maybe we do work on a good margin, but I have just put your figures into my costing model and I think that at £10/ph your gross margin will be less than 10% and thats only taking into account what you have mentioned, with machinery depreciated over 2 years.  I have not taken into account for any supervisory role, admin role, payroll, recuritment time, payroll software etc which would all add on to the wage bill.  I have assumed that you are using part-time staff and keeping their wage level under the tax threshold.

At £10.00 / hour I would only expect to be paying staff minimum wage, or close to it, and the customer would supply and maintain all equipment and consumables!

Good luck if you get it, but I think at that rate you will find it a lot of work for very little gain.

I would be looking at pricing this job at around the £12.50 - £13.00 / hr mark.  If we got if good, if not, not overly bothered, we are building a good reputation for service, quality and reliability, but people know that comes at a cost.

[CMS]

I would be looking at pricing this job at around the £12.50 - £13.00 / hr mark.  If we got if good, if not, not overly bothered, we are building a good reputation for service, quality and reliability, but people know that comes at a cost.

I admire your stance but I have to disagree with one of the things in the above passage...............................people DO NOT know that it comes at a cost.

And the reason they don't know is that there are too many contractors who will offer a 'loaded' spec for little money. Customers believe that they can actually get that!!!

I always ask my 'prospects' one question...............whether they understand this philosophy..................."Every cleaning task/operation has a time value attached to it and therefore MUST contain an element of cost"

If they don't understand that I don't even want to discuss it further with them as they have obviously been 'got at' by those who promise everything for nothing.

[Musicman]

At the £10 per hour charge out rate and based upon a wage rate of £6.50 per hour a gross return (not including management and admin) would return approx 20-25% margin.

Lionheart if you can sell medium-large size contracts at a charge out figure that is double the wage rate (with decent wages) then please pass on your tips to me.

In return I will show you how to reduce your overheads.

I have to agree with everything that CMS and pfwest have said on their previous posts.

Musicman