Case Study #1: The insider details of a highly profitable commercial cleaning account…

Post image for Case Study #1: The insider details of a highly profitable commercial cleaning account…

by Tom Watson on November 18, 2012

Commercial cleaning accounts come in all shapes and sizes. Some you’ll earn a lot on, while others not so much. It’s a bit of “pot luck” in a sense.

At the end of the day you really never know what’s going to come your way. You just have to be happy with whomever is on the other end of the phone calling YOU for a quote.

Anyway… today I wanted to discuss one account in particular to give you an idea of how good fortune can come your way in the commercial market. It all started with the simple strategy of handing out flyers all around our target area. We focused on any offices that were within a mile of our office headquarters.

The flyers we gave out focused on trying to drum up commercial cleaning accounts, but we also made mention that we can clean carpet and scrub & wax different types of hard surface floors as well. We did that to cast a larger “net”.

In other words we were hoping that even if the person reading our flyer didn’t need our cleaning services, maybe we could get a few bucks with the other services we offer. Many times this is a great “back door” method of getting cleaning accounts.

This is because sometimes a company may hire you for a small job, but like your work so much they call you back for bigger and more profitable work. Incidentally this is EXACTLY what happened on this particular account!

So like I was saying we handed out flyers a few hours per day over the course of about a week. This activity directly lead to two smaller commercial accounts that brought in roughly $500.00 per month in revenue between them PLUS one carpet cleaning account.

It’s the carpet cleaning account that is todays focus. This one account was really just looking for monthly carpet cleaning. I happened to be “Johnny on the spot” because they saw my sales flyers. They called me, we hit it off, I created a cleaning proposal and they hired me. It was SWEET.

This carpet cleaning brought in about $225.00 to $300.00 bucks worth of revenue per month. It wasn’t a ton of money but I’ll take it! I was certainly happy to have it. But then things got even better. They needed a cleaning company!

This company was doing everything “in-house”, meaning they had someone on staff doing the cleaning. This worked quite well until the person doing the cleaning was promoted to greater responsibilities.

So needless to say, they brought up the topic with me. We discussed how often the cleaning needed to be, what needed to be done, what time could we start among other smaller details.

We settled on 4 nights per week, and we could get in to clean AFTER 5 PM. My best guess was no more than 3.5 hours to clean per visit but I figured it would be less in all likelihood. The job consisted of…

  • A mid-sized mens room with 3 toilets, 3 sinks and 3 urinals.
  • A mid-sized ladies room with 4 toilets and 4 sinks.
  • A roomy 30 X 20 lunch room with about 10 tables.
  • A reception area with desks and couches.
  • Roughly 20 executive offices.
  • A large area of cubicles.
  • A copy room.
  • 2 large conference rooms for meetings.
  • Several long hallways to vacuum and 3 entry doors to clean glass on.

The place was in great shape to start with so there would be no heavy cleaning needed to bring the facility up to speed. Another great part to the job was I wasn’t supplying ANYTHING AT ALL! No trash bags, no cleaning solutions to factor in, nothing but an employee!

Money didn’t seem to be an issue with this customer so I bid the job at just under $1,600.00 per month. If we did the cleaning at the 3.5 hour per night figure it would have worked out to $26.13 per hour. If we could figure a way to get the cleaning down to 2.5 hours it would work out to $36.58 per hour!

Well… to make a long story short, I started my employee out at 2.5 hours per night JUST TO SEE if it was possible. The first few weeks it basically worked out to just over 3 hours per night, which was STILL UNDER the estimate price. After a month we settled on 3 hours per visit. A cool $30.48 per hour worked!

Once you did the math for the whole month it effectively looked like this…

  • One employee working 3 hours per night.
  • This employee earns $10.00 per hour.
  • This employee cost me ROUGHLY $13.00 per hour (payroll taxes, insurance etc…)
  • The employee earned about $519.60 per month.
  • This employee cost me about $675.48 per month after all was said and done.

My profit was determined by deducting the cost of the employee from the income the job gave me. So it looked like this…

$1595.00 – $675.48 = $919.52 PROFIT

Of course this is just an “average” monthly profit number. If the employee quit or was fired I would have had to run an ad and train another employee to say the least. But even if that happened every few months, SO WHAT! There was certainly plenty of money to cover it.

Luckily for me, I found a great employee. As an added bonus, the customer and their staff also loved her. It was win-win to say the least. She went on to work for me for several years without incident. Whenever she needed off I had a backup ready just in case.

What was nice about this job is that I had pricing flexibility. Not all customers will give you that! This account was prepared to pay for GREAT SERVICE. If I didn’t deliver, I would be gone. It’s that simple.

Another factor to keep in mind is that I could have bid it much lower and still made good money. For instance if I bid it at $20.00 per hour for 3.5 hours per visit it would have come in at $1,212.40 per month for the cleaning. After expenses I would have still walked away with $536.92 per month!

To go EVEN LOWER I could have bid it at $17.50 per hour for 3.5 hours per night and came up with $909.30 per month cleaning. After expenses I would still profit $233.82!

As you can see, WHAT YOU BID PER HOUR really changes your monthly profit number. The one BIG DOWNSIDE to charging a higher per hour price is that the higher you go, the GREATER CHANCE your offer will be declined. You need to determine HOW BAD you want the job!

When I was new, I bid lower to ensure I got the jobs. As I gained experience I EXPERIMENTED with how far I could take my per hour prices. This trial and error process will cost you some jobs, as you never really know how well a bid will go over with the customer UNTIL you present it!

With that said, if you are looking to maximize profits then you’ll want to see where the high and low per hour prices are in your area. What I can say is DON’T GO BY MY NUMBERS! Every region has its own unique pricing structure.

This means what may work for me, will not work for you in a general sense. So take some time to measure what it is you are actually charging by taking notes on how long it takes you to clean the jobs you have. Then adjust from there as you learn more about your market.

Getting back to the numbers for a minute, this commercial account netted me about $11,034.24 just off the commercial cleaning part. The carpet cleaning probably netted me AT LEAST $200.00 per month for another $2,400.00 per year.

Then on top of that this customer also had a HUGE bi-yearly clean with carpet cleaning that added yet another $1,200 per shot. After expenses I usually earned about $600.00 for each time. This adds another $1,200 a year to my coffers.

To summarize, this adds up to roughly $14,600 per year profit from just this one customer. That’s over $1,200 per month on average. Now like I said earlier, THIS IS NOT THE NORM. This is just a snapshot of one account.

Many accounts will earn much less than that but that’s besides the point. What I want you to keep in mind is that a cleaning business is nothing but a collection of high profit and lower profit cleaning accounts with a bunch falling somewhere in the middle.

“Collectively” these accounts will earn you a nice living once you collect a few. Sometimes these accounts find you early in your career and sometimes they come later. Just keep plugging away and your time will come!

If you liked this post, you can subscribe to our RSS feed. If you are looking for a blueprint that will show you how to start a cleaning business, then check out my Cleaning Business Start Up Guides. If you are badly in need of a first class website then take a look at my Cleaning Business Websites.

{ 16 comments… read them below or add one }

1 Ron November 20, 2012 at 1:33 pm

Thanks for your imformation and advice on the cleaning business. I am just starting out in my cleaning business so is it best to do my own accounts for awhile and then put some one in?

2 Tom Watson November 20, 2012 at 1:51 pm

Hi Ron!

You could go either way… With that said, doing it yourself for a few weeks may be best when you are new because you get to learn the ins and outs of the account PLUS EXACTLY how long it should take to clean per visit (all valuable when you train someone).

Another advantage of doing it yourself for a while is that you get to pocket ALL THE MONEY from the account, giving you more spendable cash to try to get even more accounts (I did that to a degree when starting out).

3 catherine November 27, 2012 at 6:48 am

I am doing cleaning on move-outs. how do u price those.

4 Tom Watson November 27, 2012 at 8:40 am

Hi Catherine! I can’t touch on every last detail of bidding here. It’s not something I can cover in a paragraph or two. The process is not hard, it just depends on lots of little details. I have a whole chapter in my courses (http://www.cleaning-4-profit.com/start-your-own-cleaning-business/) to that topic. I can say you don’t bid any differently just because you are doing a turn over.

5 commercial cleaning  December 11, 2012 at 5:54 am

Indeed a nice post and I really like the manner you have written and explained the cleaning services. I am also a veteran cleaning expert and adapted to reading a lot of informational stuff on the web. I just subscribed to your blog and hope you will keep the good postings up.

6 Tom Watson December 11, 2012 at 1:30 pm

Thanks for the kind words!

7 Commercial cleaning December 13, 2012 at 5:09 pm

Hi Tom, just to make a good comment on all of the advice you give on how to start a cleaning business on your web which is very good. I just wanted to start my own cleaning business which l have the skills and experience for about six year but l don’t no how to get contract or bid everything is just new to me as if l dont have the experience, please you can email back in address.

8 Tom Watson December 13, 2012 at 7:47 pm

Hi! I’ll touch base via email.

9 Sekita December 27, 2012 at 5:19 pm

I have experience in cleaning mainly residential I have started a legal cleaning service but I had to stop due to family issues. I have cleaned 2 small commercial offices. I wanted to know what is the best advice for breaking into that arena. Also do you think it is possible to do both commercial and residential.

10 Tom Watson December 27, 2012 at 5:37 pm

Hi Sekita! You can do both, why not. I did when first starting out. As to how to get those customers… get some flyers into that markets HANDS somehow. Drop them off, mail them.. whatever you need to do to get them to know about you and how YOU can SOLVE their problem. That may sound simplistic, but that is all you do. A good sales letter to go with a good flyer works best.

11 Ronald K. Ouellette January 8, 2013 at 9:44 pm

This is really an informative article. My main work is cleaning houses and I say there is a lot of money involved when you do stuff yourself. Of course, with that said, more money for you and more of your time is required as well. Thanks for this Tom! This really gave me a new perspective. Two Thumbs up!

12 Tom Watson January 8, 2013 at 10:00 pm

Thanks Ronald! I appreciate the kind words.

13 Tom Brown March 26, 2013 at 9:47 pm

Nice fat contract on this one. What would you say is your average sized monthly contract?

14 Tom Watson March 26, 2013 at 10:07 pm

Hi Tom! This may seem like a cop-out, but there really is “no average size account”. Some are tiny, others are mid-sized, a few are big then you have a HUGE one thrown in every now and again. Once you get a head of steam behind you, you really never know what the next phone call will yield. I take whatever comes my way (that is profitable of course).

15 Tom Brown March 27, 2013 at 5:15 pm

I get that they can be all over the ballpark, but take your regular monthly billing / Total monthly clients = ?

16 Tom Watson March 28, 2013 at 9:15 am

Hi Tom! To begin with, the formula is not as easy as you make it out to be (lots of clients have more than one “location” (sometimes many), thereby skewing the numbers in just one of many different ways. Plus the “average” for someone in the business for many years will be different than that of someone new.

Needless to say, doing a bunch of math to come up with a number that doesn’t mean anything or add value isn’t something I want to invest in. I don’t have an off the cuff number either because I never bothered with “average” (there is no value in knowing that number).

Also, just because an account is large does not mean it’s very profitable (In fact the mid-sized accounts are best). What I can say is for someone “new”, accounts that are small may be in the $200 – $400 range, mid-sized accounts may be $600 – $1,200 range and and larger ones may be around $1,600 – $2,500. Some will be much larger as well.

Keep in mind… even those numbers are worthless because IT DEPENDS ON WHO YOU TARGET. Cleaning a bunch of 1000 sf tiny dentists offices vs 8000 sf production facilities would give you COMPLETLY DIFFERENT results right? So it depends on who your customers are. Anyway… the only thing that matters is how much profit, the “size” does mean anything.

Leave a Comment

Previous post:

Next post: