[aviqularia]

hi 

I'm just starting a contract cleaning company in scotland.

I'm a wee bit confused about how to charge. Should I stick to a set hourly rate or should I add a percentage on top of costs?

Which is the best method?

[martin19842]

hi there,

so am i by your question.

an hourly rate would be calculated, by labour plus material plus insurance etc plus profit,  loking at it another way costs add percentage equals price

they are in effect the same thing.

one thing to be aware of, is that costs dilute as your business grows therefore creating economies of scale.

regards

martin

[Tim Downer]

Hi Martin!
Sorry mate, i have had a long day.....but what do you mean by "costs dilute as your business grows therefore creating economies of scale."?!

Was at the cleaning show yesterday (done a lot of walking!!) and had to catch up on yesterdays work with todays....so feeling rather dense at the moment. Oh, and mushy in the head too!!

Regards

Tim

[martin19842]

tim,

fixed overheads, ie insurance, admin costs, some material costs,

as your business grows, and sales levels increase some overhead costs, will become diluted further by a larger turnover therefore creating two possible scenarios.

1.) maintian pricing at current levels and therefore increase profit levels.

2.) the possiblility to reduce to prices and maintian profit margin, but then providing the springboard to again increase turnover and therefore more profit.

also your purchasing power increases as your business increases, therefore reducing the overheads costings.

yes i went up to nec yesterday,

we have had some more good news this week  so far, and now got a hospital extension build clean to quote, including high level.

regards

martin

[Tim Downer]

Thanx Martin....understand now, you made that sound a lot clearer.

Good to hear that you are keeping busy.

I was chatting to a site manager yesterday, and said he had just recieved and sent back a fax from another developer, asking for a reference on our company - good sign!! - He gave a very favourable response. He said that he obviously wouldn't be able to let me read it!!.....As he handed it to me under his desk!!

Its good to know that you work hard at setting up teams, specs, organising jobs etc.... and you get things like that to make it all worth the hassle.

Anyway, time will tell wether the reference goes our way or not?

Regards

Tim

[aviqularia]

Thanks for that

Just one other thing though if its not too much trouble.

Does that mean that the hourly rate I charge will be different for each customer?

Sorry if I sound a bit daft, but I am just getting started 

Thanks

[martin19842]

hi there,

your core business should be set upon a standard hourly rate,  otherwise you will set yourself up for complete confusion.

for our non core work we do vary our prices dependant upon the situation

regards

martin

[Tim Downer]

Hi there
When we did contract cleaning, i worked out how much it would cost to staff the project i.e how many hours per week (2 hours per night...2 staff = 20 hours wages per week) plus taking into concideration how much it is going to cost you in materials and equipment. Are you going to leave the equipment and cleaning materials on the property you are cleaning? (i.e a cleaning cupboard?) Then make sure it is covered for in the first year.
For example you may have to provide 2 vacuums onsite. Say it costs you £100 per vacuum! =£100 x 2 = £200 divided between 52 weeks = £3.85 per week....then by the end of the year your customer has paid for the vacuums etc etc.
Second year of business is a bonus as the machinery etc has been paid for......More profit for you!!
So when you have worked out all the details, add your profit margin and hay presto!! You have your weekly rate for the customer.
They are not interested in an hourly rate....they just want to know how much it is going to cost them in total.
If you get your presentation right with all the relevant information as discussed on another posting a week or two back, work on getting the pricing right you will be on the right track to running a good cleaning business.

All the best in your venture

Tim