How to price house cleaning services

October 14, 2008: 9:03 AM ET

Ask FSB's experts demystify the math of pricing services in the booming home and office cleaning industry.

Joe Vitale, New York City
I currently own a carpet-cleaning business that is about six years old. I am thinking of expanding into home and office cleaning, but have no idea on how to bid the jobs. I used to work for a large cleaning firm in a large city in California, so the prices were set really high. I now live in a small town where there is not so much cash flow. Is there a source or guide that anyone knows about that is not a scam?

By Myrlande Davermann, Fortune Small Business contributor
Dear Joe: "'How much should I charge' is the million dollar question - literally. The answer is a big part of the difference in what makes a million-dollar cleaning business versus the typical mediocre house cleaning business," says Gary Goranson, founder and president of cleaning company Work Enders and leader of the House Cleaning Biz 101 program. There are so many factors to consider in properly pricing a housecleaning that the answer to the how-much-to-charge question is rarely obvious.

The size of the home does have a bearing on what you should charge, but the time and labor involved in cleaning it is what really matters. The House Cleaning Biz 101 program is based on a formula Goranson refers to as "POM=CP," which stands for "Payroll (what you'll have to pay your worker) + Overhead (average cost per cleaning of administrative and non-payroll expenses) + Markup (the markup required to achieve your desired profit margin percentage on the job) = Cleaning Price." Average markup runs from 25% to 33%, to generate a profit margin of 20% to 25%, according to Goranson.

The formula works because it begins by factoring in what it costs the owner in labor and travel time to perform the job, Goranson says. He trains people to account for both current and future expenses. For example, if you don't have a commercial office space and anticipate needing one, you should factor into your projections how much you think it will cost for you to expand out of your home setting, and include that in your overhead. That way, when you are ready to expand, you will be looking at a realistic picture.

Debby Sardone, president of the Association of Residential Cleaning Services International (ARCSI) notes that the house cleaning business has been booming for years and shows no signs of slowing down. She agrees that pricing jobs is difficult: "There are many complexities."

She does have a few rules of thumb, though. Most house cleaners need about an hour to an hour and 15 minutes for every 1,000 square feet of regular maintenance cleaning. First-time cleanings will take double to triple that length of time to remove built-up grime and bring the house to a "maintenance" level. New clients are expecting to pay more on the first visit - "so don't be afraid to charge more," she says.

While prices vary around the country, the typical rate for professional maid services ranges from $30 to $40 per labor hour, she says.

Finally, Goranson recommends that before quoting prices over the phone, you visit the potential client's home and take a look at the work entailed. For more information, check out the House Cleaning Biz 101 program or follow-up with the ARCSI.

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