In the competitive landscape of post-construction cleaning contracts, pricing plays a crucial role in determining success. To secure contracts, cleaning companies need to approach pricing strategically, considering factors such as competition, project budgets, cost analysis, and pricing methodologies.
This article explores key strategies and considerations for setting the right price that satisfies project managers while ensuring profitability.
Understand the Competitive Landscape: Recognize that project managers often consider multiple vendors before making a decision. In fact, Project Managers review a minimum of 5 proposals before deciding who to go with.
To position yourself effectively, you should resist the temptation of wanting to make so much out of a particular project. Do not be emotional or overly excited about a particular project. Do not think that the PM was super nice so he will go with your price. He was super nice to the other cleaning crew.
Put in mind that you are not the only one submitting a proposal to the Project Manager.
Consider the Project Manager’s Budget: Sometimes, the smart thing to do is to engage in a conversation with the project manager and directly ask what his budget is.
Although project managers may not always disclose their budget directly, by asking, you can gather valuable information.
Oh yes, sometimes they will just tell you. This insight will help you determine if you can meet their budget requirements while maintaining profitability. If the budget appears too low, consider submitting a bid anyway and let them know why you can’t go as low as they are asking. You might be lucky!
A bid is better than nothing submitted.
Conduct a Cost and Profit Analysis: To set the right price, conduct a comprehensive cost and profit analysis. Start by estimating your labor costs, taking into account the number of hours or days required to complete the job.
Also, confirm if the job has special pricing requirements. Davis Bacon prevailing wage, Union, etc. Factor in other costs such as equipment, materials, and any subcontracted services. Once you have determined your costs, apply a suitable profit margin that ensures profitability while remaining competitive.
Depending on the state where you reside, you should expect to pay your crew anywhere between $12 to $35 an hour.
Say you have 2 people on a small job site who work for 6 hours at $15 an hour, your labor cost translates to $180 a day. Say they work for two days, your labor cost becomes $360.
Add cleaning suppliers and gas, say $90. That should bring the total estimated cost to $450.
Here is the tricky part, most cleaning companies want 100% profit and would be tempted to submit a $900 price to the GC.
If you already have a solid relationship with the GC, maybe you have worked with that PM before and you’re sure he will take your bid as a priority, then go ahead.
However, if this is your first attempt at winning a contract with that company, I will suggest going low. Not more than 50% markup. Add $225, the winning price should be between $675 and $700.
This is basic and for a small job. What if it was a hotel with multiple units and multiple floors needing a rough, final, and fluff cleaning done?
Say a 150-room (unit) hotel on a 3-floor building assuming no exterior window cleaning is needed.
Let’s say it takes 1 hour for rough cleaning, 2 and half hours for Final Clean, and 30 minutes for fluff cleaning per unit. That’s a total of 4 hours. Ideally, for estimating purposes, I will add another hour to make it a total of 5 hours. At $15 an hour, we would have a total labor cost of $75 for all 3 scopes. Add supplies and other unseen costs, $50.
I would charge $$188 per unit, total cost = $28,200.
Explore Per Square Foot Pricing: Per square foot pricing can offer a more accurate and transparent approach for pricing post-construction cleaning contracts. The industry average in the USA is between 20 cents to 30 cents per square foot.
However, it’s important to adjust this rate based on project complexities, specific requirements, and geographical variations. Consider factors such as the scope of work, specific job type, the condition of the site, and any additional services requested by the client.
Evaluate if you can offer a slightly lower price per square foot while still maintaining profitability.
For more clarity, these are our recommended pricing guides:
Unit/Apartment project that needs all 3 scopes of work, should ideally go for 35 to 45 cents per square foot.
A Retail store with lots of glass can go for 30 cents per square foot
An Industrial warehouse with only concrete flooring and few windows can go for around 15 cents per square foot
Restaurant, 25 cents per square foot
School, 25 cents per square foot
Autobay, 25 cents per square foot
Church, 25 cents per square foot
Police station, 25 cents per square
A Fire department, 25 cents per square
Pricing is a critical factor in winning post-construction cleaning contracts.
By adopting a strategic approach, considering the competitive landscape, understanding project budgets, conducting a thorough cost and profit analysis, and exploring per-square-foot pricing, cleaning companies can enhance their chances of success.
Remember, pricing is an art that requires understanding the market, evaluating costs accurately, and aligning with the project requirements. By implementing these strategies, you can position your company competitively and secure more post-construction cleaning contracts