How do you calculate your cost? | TruckMount Forums #1 Carpet Cleaning Forums

How do you calculate your cost?

B14

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What factors do you use that are included in your final cost of doing business on a daily schedule?

What are some things that are specific to your business/area/services that others probably don't share with you?

And did you always factor in these costs?
 

jtsunbrite

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are you factoring per job? per day? per week? per month?

office costs
van costs
lease or owner monthly costs
chems
labor,,, (your labor included)
each of your insurances
gas
tools
repairs
ETC...

Lets say you run a truckmount and you paid 15000 for it your first year 52 weeks , 5 days a week is 260 = 57.69 a day the second year you divide the 15k into 520 days or 28.85 a day so each year your truckmount costs will go down

you can get a cost per day or week or what ever you want and that will tell you what you need to run each day to break even.
everyone should have what it cost them each day to perform
 
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Scott W

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There are average costs and also incremental costs.

An average cost considers everything it took to acquire and do the job - a portion of your equipment costs, vehicle expenses, advertising, insurance, chemicals and much more. All these items need to be paid. You can figure an average per job or an average cost per sq. ft.

Incremental cost is additional cost for add-on work. For example. You figured your average cost for a job and included all the above. Now she asks you about cleaning one more room. You have already covered travel expense, equipment costs, advertising and such. The incremental costs to clean that one additional room include more chemicals, your time or your employees time, and not much more.

You can give a discount or special deal to encourage those add-on sales. You can still make a profit even if this special deal is less than your average cost. But you will lose money and soon be out of business is most of your work only covers the incremental costs.
 
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B14

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There are average costs and also incremental costs.

An average cost considers everything it took to acquire and do the job - a portion of your equipment costs, vehicle expenses, advertising, insurance, chemicals and much more. All these items need to be paid. You can figure an average per job or an average cost per sq. ft.

Incremental cost is additional cost for add-on work. For example. You figured your average cost for a job and included all the above. Now she asks you about cleaning one more room. You have already covered travel expense, equipment costs, advertising and such. The incremental costs to clean that one additional room include more chemicals, your time or your employees time, and not much more.

You can give a discount or special deal to encourage those add-on sales. You can still make a profit even if this special deal is less than your average cost. But you will lose money and soon be out of business is most of your work only covers the incremental costs.

I am having trouble calculating costs on chemicals specifically. If I was to calculate an average margin per square foot wouldn't I have to be able to determine how much, for example, how many square feet would one scoop of prespray cover?
 

B14

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There are average costs and also incremental costs.

An average cost considers everything it took to acquire and do the job - a portion of your equipment costs, vehicle expenses, advertising, insurance, chemicals and much more. All these items need to be paid. You can figure an average per job or an average cost per sq. ft.

Incremental cost is additional cost for add-on work. For example. You figured your average cost for a job and included all the above. Now she asks you about cleaning one more room. You have already covered travel expense, equipment costs, advertising and such. The incremental costs to clean that one additional room include more chemicals, your time or your employees time, and not much more.

You can give a discount or special deal to encourage those add-on sales. You can still make a profit even if this special deal is less than your average cost. But you will lose money and soon be out of business is most of your work only covers the incremental costs.
Sorry Scott if it's not too much trouble could you go into a little more or maybe a hypothetical scenario as far as how a business owner could make add on sales work for them more effectively. That was actually gonna be my next question/thread after this thread.
 

B14

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are you factoring per job? per day? per week? per month?

office costs
van costs
lease or owner monthly costs
chems
labor,,, (your labor included)
each of your insurances
gas
tools
repairs
ETC...

Lets say you run a truckmount and you paid 15000 for it your first year 52 weeks , 5 days a week is 260 = 57.69 a day the second year you divide the 15k into 520 days or 28.85 a day so each year your truckmount costs will go down

you can get a cost per day or week or what ever you want and that will tell you what you need to run each day to break even.
everyone should have what it cost them each day to perform
What would be the most effective way? Factoring per job, per month, or per day? Would it make a difference which one?

And how do you factor for repairs when you don't know when something will break or how much it will cost? Do you just estimate?
 

Scott W

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I only have a few spare minutes now and then. Get the worksheet and spend some time with it. They may answer some of your questions.

For chemical costs, remember that for most cleaners, chemical costs are less than 3% of all the cost. (This can vary depending upon how you figure your labor and pay yourself or pay employees.) So, don't fret over being overly exact on chemical costs.

But here is a quick example.

Flex Powder with Citrus Solv - Cost is $41.66 if you buy one at a time. Gets cheaper if you buy a case or several cases. Each 2 ounce scoop makes 1 gallon of prespray. So a full jar makes 50 to 60 gallons of prespray. You always spill a little, so we will go with 50 gallons. Cost per gallon is $41.66 / 50 or 83 cents per gallon.

Each gallon will cover about 250 sq. ft. of carpet. In many cases more, maybe 400 or 450 if it is low pile and not super soiled. But for this calculation, we will go with 250 sq. ft. You can always measure how much you use on a few jobs and average it out.

Cost per sq. ft. is 83 cents divided by 250 sq. ft. or 1/3 of a cent per sq. ft.
 
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OldCarpetVet

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In order to know the true costs, you must first be honest with yourself. Include EVERYTHING and then add another 10% for the i
I only have a few spare minutes now and then. Get the worksheet and spend some time with it. They may answer some of your questions.

For chemical costs, remember that for most cleaners, chemical costs are less than 3% of all the cost. (This can vary depending upon how you figure your labor and pay yourself or pay employees.) So, don't fret over being overly exact on chemical costs.

But here is a quick example.

Flex Powder with Citrus Solv - Cost is $41.66 if you buy one at a time. Gets cheaper if you buy a case or several cases. Each 2 ounce scoop makes 1 gallon of prespray. So a full jar makes 50 to 60 gallons of prespray. You always spill a little, so we will go with 50 gallons. Cost per gallon is $41.66 / 50 or 83 cents per gallon.

Each gallon will cover about 250 sq. ft. of carpet. In many cases more, maybe 400 or 450 if it is low pile and not super soiled. But for this calculation, we will go with 250 sq. ft. You can always measure how much you use on a few jobs and average it out.

Cost per sq. ft. is 83 cents divided by 250 sq. ft. or 1/3 of a cent per sq. ft.

I completely agree with Scott. Chemical costs are the very least of your concerns.
In the whole scheme of business things.... it's peanuts.
 
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jtsunbrite

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I am having trouble calculating costs on chemicals specifically. If I was to calculate an average margin per square foot wouldn't I have to be able to determine how much, for example, how many square feet would one scoop of prespray cover?
chem cost varies each week and each month,,, usually its 3-5% of what you run...


So b14 lets say you bought a gallon of cleaner like biobreak 39.95 and need to add in tax and shipping so lets say its 46 bucks
keep a chart in the back of the van and every time you take a scoop out of it write it down,,, I don't know the amount of scoops are in a gallon jar of cleaner.. once you find that out you can divide the number of scoops at what it costs to get a cost per scoop.
 
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Scott W

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chem cost varies each week and each month,,, usually its 3-5% of what you run...


So b14 lets say you bought a gallon of cleaner like biobreak 39.95 and need to add in tax and shipping so lets say its 46 bucks
keep a chart in the back of the van and every time you take a scoop out of it write it down,,, I don't know the amount of scoops are in a gallon jar of cleaner.. once you find that out you can divide the number of scoops at what it costs to get a cost per scoop.
Most powders in a gallon sized container will have more than 50 and less than 64 scoops. The products are sold by weight not volume, so the containers are not usually filled to the brim. Also will be variations due to level scoop or heaped up scoop, if some of the powder is spilled and so forth.

You can pick 50 for easier calculations or 60 or anything in between and be pretty close.
 
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B14

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In order to know the true costs, you must first be honest with yourself. Include EVERYTHING and then add another 10% for the i



I completely agree with Scott. Chemical costs are the very least of your concerns.
In the whole scheme of business things.... it's peanuts.
What would you say is the biggest thing or things?
 

B14

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Most powders in a gallon sized container will have more than 50 and less than 64 scoops. The products are sold by weight not volume, so the containers are not usually filled to the brim. Also will be variations due to level scoop or heaped up scoop, if some of the powder is spilled and so forth.

You can pick 50 for easier calculations or 60 or anything in between and be pretty close.
Ah i see now. So would it be appropriate to include bills outside of the business to calculate costs? For example, my mortgage, my utility bills, or just strictly the cost of Day to Day operations having to do only with the business? My goal is to grow into a 3 van operation one day.
 

B14

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chem cost varies each week and each month,,, usually its 3-5% of what you run...


So b14 lets say you bought a gallon of cleaner like biobreak 39.95 and need to add in tax and shipping so lets say its 46 bucks
keep a chart in the back of the van and every time you take a scoop out of it write it down,,, I don't know the amount of scoops are in a gallon jar of cleaner.. once you find that out you can divide the number of scoops at what it costs to get a cost per scoop.
Yes! Definitely. What's the most unexpected cost you've come across and what's your biggest cost that you've found through the years?
 

Scott W

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Ah i see now. So would it be appropriate to include bills outside of the business to calculate costs? For example, my mortgage, my utility bills, or just strictly the cost of Day to Day operations having to do only with the business? My goal is to grow into a 3 van operation one day.
The key is for you to understand your costs. For the purpose of this exercise, I would only include costs hat increase because of my doing business. Utilities if you have a business office. If you just work from your home, how does your business impact the normal cost of living there.

Now for doing taxes which is not what we are discussing here, talk to an accountant or tax agent. You may be able to deduct some expense for office in your home.
 

B14

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The key is for you to understand your costs. For the purpose of this exercise, I would only include costs hat increase because of my doing business. Utilities if you have a business office. If you just work from your home, how does your business impact the normal cost of living there.

Now for doing taxes which is not what we are discussing here, talk to an accountant or tax agent. You may be able to deduct some expense for office in your home.
In your opinion, what's a general range for a healthy profit margin for our industry in terms for a business that does carpet, tile and upholstery only?