Do You Want To Learn How To Price YOUR Services?

[Wayne Byers]

Our Q2 reports come out next Tuesday. To date we have surpassed $10 Billion in analyzed industry transactions. Please email me if you would like to be benchmarked or would like a copy of the report. Thanks!

 

[longkenn]

One thing I don't understand is if the cost is $230, and the price is $575, that would be 150% markup, not 60%.

Cost - $230
Markup (Cost x 150%) - $345
Total - $575

Cost - $230
Markup (Cost x 60%) - $138
Total - $368

What Shane is showing is a margin and not a mark-up.

 

[Dafloorman]

Nice post Shane! Very nice post!

 

[Dafloorman]

Deron's Method of Determining Pricing;

Storm down to the local Chevrolet dealer and check prices on the newest supercharged Corvette and if single, calculate how much the best looking female is going to cost you to land in your bed (don't be a plunger head; it has nothing to do with love). Now, how much are you going to have to light up these cheap loafer customers in order to fulfill these needs of yours? This is what you charge.

Enough of the hocus pocus, Shane. Can't you see that these poor [email protected] need to get laid (except for Deron fans, of course). Have a heart, trooper.

What part of FL did you move to from NY?

 

[owenscott]

South side or a bit south of Orlando is where dereon lives i think.

 

[shane deubell]

Dayuuum, never thought this thread would get this many views.

 

[chad9229]

Dayuuum, never thought this thread would get this many views.

I think because many new owners come on here looking to learn how to price their services. I have found that figuring out pricing is one of the most difficult aspects of running my business. I bet if you came up with a Pricing Spreadsheet exclusive for residential, there would be many on here that would buy it. I came up with my own, from your information, which I use daily. I can upload it, if it will help others.

 

[ash]

Quit looking at overhead so much, COGS? sure. but never look at overhead when pricing goods. Take a good look at the market and try to hit top mark and push that until you get negative feedback. Also, run A/B testing have two different people give two different prices at the same time each day and see if the higher one gets push back. I think most business owners would be shocked at just how high they can push the price assuming they have a decent reputation and are knowledgeable on the phone.

Also, keep in mind that most of us are not our customer. Many of us do not have an extremely large amount of disposable income and to spend $3,400 on a rug cleaning (while it may be a kick in the pants) is not out of line.

 

[shane deubell]

Quit looking at overhead so much, COGS? sure. but never look at overhead when pricing goods. Take a good look at the market and try to hit top mark and push that until you get negative feedback. Also, run A/B testing have two different people give two different prices at the same time each day and see if the higher one gets push back. I think most business owners would be shocked at just how high they can push the price assuming they have a decent reputation and are knowledgeable on the phone.

Also, keep in mind that most of us are not our customer. Many of us do not have an extremely large amount of disposable income and to spend $3,400 on a rug cleaning (while it may be a kick in the pants) is not out of line.

This is all cogs, no overhead ;

 

[shane deubell]

This is actually more about budgeting than actual.

Vans, equipment need repairing and replacement. We need to be charging for that and saving it, regardless if you need it.

 

[Mohave Commercial Cleaning]

Thank all of you for your input. Damn good learning material here.

 

[Johna]

Now this is something way more useful for me, thanks

 

[Jama]

Stocked at 500 customers a month , not sure what to do

 

[Kilara]

I know how to price my services. Seriously ... it is not rocket science

 

[shane deubell 1]

Maybe not but you have to take into account long term equipment replacement, disability, worker comp, retirement, etc. Most people forget about this stuff.

 

[Jonah Crawford]

You can get 575 for 2000sqft? That is great! I can't even imagine! I live in NV where there is like 500 cleaners in my service area, all price slashing and a major influx of cheap Mexicans with 20 year old shitty vans and no insurance etc. advertising entire houses for $120 and or using old rug doctor portables! These guys have so saturated the market with flyers and ads for rock bottom prices that all I do all day is answer the phone and give quotes, try to sell why we are different only to have those people say we are WAY TO HIGH PRICED. I know this sounds like I'm a complainer bit but I just don't know what to do about this deflation in the market prices! My costs go up every year, fuel, insurance, Chemicals, cost of employees, advertising, maintenance, etc etc.

 

[dynamikcarpetcleaning]

Very nice breakdown. Makes for easy reading. I hate the numbers side of the business.

 

[Ace864]

Thanks for sharing it. This info is quite useful for young entrepreneurs like me

 

[chrismag]

Yes I do want to learn that

 

[AreaRugMasters]

NO not based on what the idiot across the street charges...
Based on YOUR Cost Of Service and gross profit you want to achieve

Pay no attention to actual numbers, the formula is what is important

Cost Of Service- direct costs to physically clean a carpet
2000 sqr ft

Labor- moving at 350 sqr ft hour = 6 hours This includes everything
6 hours x $25 hour = $150
Labor- $150

Materials- 2/3 Gallon of prespray and misc spotters $30
Materials- $30

Equipment- truckmount costs $25k divided by 6000 hours= $4.20 hour
Maintenance $2k divided by 6000= .35
1.5 gallons gas per hour x 6000 hours= 9000 gallons x $3.50 gallon= $31500 / 6000 hours= $5.25
Round it up to $10 hour
Equipment- $10 hour x 4 hours running time = $40
Equipment= $40

Van- $20k divided by 100k miles = .20
$3k in maintenance / by 100k = .03
Gas- 100k miles / by 15 miles gallon = 6666 gallons x $3.50 gal= $23,333
$23333/ 100k miles = .23 mile
Total cost $.46 per mile

Total Cost= Labor $150 + detergents 30 + equipment 40 + 20 miles $9.2
$230 Cost

This is a 1x service, we really want a gross profit of 60% or more

$230 cost /divided by 40% {the cost % we want to be at} = $575

Price for 2000 sqr ft = $575
$575 divided by/ 2000 sqr ft = $.28 per sqr ft

Wow nice