I'm raising my minimum to get rid of low end clients

Discussion in 'Carpet Cleaning Marketing' started by Chris Wharry, Dec 23, 2014.

  1. Chris Wharry

    Chris Wharry Active Member

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    I currently have a minimum of $119 and am considering raising it to $149.. I have found over the past 3 years of being in business that it is just not worth my time to travel to a job, spend 20 min unloading a truck, 15 to load back up to do 3 rooms of carpet that takes a total of 2 hrs total time or more depending on travel for 119 bucks. These clients that ponder what rooms to have done just to meet the minimum usually have the dirtiest carpet requiring the most amount of time and in my opinion they deserve the hacks that will even go less than that just to get work.

    There was a period in time when I was just starting out that I would let these ppl run all over me for 119 to get work but I now realize that my services far out value their dirty carpets and outragous expections. What will you guys start your trucks for and what is your minimum and why?
     
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  2. jaymark

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    Unless you work in a depressed area, most people wont bat an eye at that minimum.
     
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  3. Carlo Pro

    Carlo Pro Well-Known Member

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    Funny with a lot of people charging $15 bucks a room here, I am thinking lower my price for a 3 rooms deal; or stay home watching movies.
     
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  4. 1ST CHOICE CLEANING

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    I must work in a depressed area :(
     
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  5. jaymark

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    Its only going to get worse for TX if oil keeps slumpingo_O
     
  6. Chris Wharry

    Chris Wharry Active Member

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    Were here in the South Suburbs of Chicago and there are 2 outfits that have been around for 10 plus years that work on volume and will go out for 20 bucks a room. I get calls from ppl who have used them and are in shock at the suggestion of a minimum.

    My business model is based on quality and I try to explain this yet there are so many ppl that believe carpet cleaning is carpet cleaning. I feel like I have to re-educate half the calls I get. I am ok with that to win over a customer and have them experience quality, but there are still ppl.. who just don;t get it.

    I have on occasion asked the bull headed ones, "If so.. and so... was such a value why are you calling me?". or "there;s an old saying and you;ve probably heard it.....you get what you pay for!" I probably sound crass but when they don't understand why someone with 17 - 5 star reviews on Google won't come out for 60 bucks I figure... What the hell !..
     
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  7. 1ST CHOICE CLEANING

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    It's more the boarder town (you can look into Juarez from I-10) attitude of thinking cheap then the oil prices here. Even my wife is still stuck in her mexican thinking and says my upholstery prices are expensive, I charge $30 for a recliner, $50 love seat, $60 sofa and $90 sectional. I hardly do any upholstery jobs, maybe 1-2 a month.
     
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  8. Chris Wharry

    Chris Wharry Active Member

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    I charge 35 for a recliner and 25 per seat on up. love seat $50, couch $75 and 5 seat sectional $125. Ottoman $25. If they balk at the price I just explain that if I was to lay out all the fabric on a sofa it would be almost 75 sq/ft. of and I have to use a 3" upholstery tool to clean it.

    I also sell them on the fact that I use a internal jet upholstery tool {hydro-force Dri-master} that controls the amount of moisture resulting in quicker dry times and that I use a air mover to increase the dry times as well. I also set up a portable table I got at Walmart.com so they get the full show.

    There are still customers who ask the price on a sectional and then when you show up to do it there are a half dozen over-sized pillow and the couch itself is over-sized. That's when we pull out my price sheet that show what ovet-stuffed pillows cost. Now they realize the price they are trying to hold you too, because of your phone estimate, is just not going to hold... or I just say, "Listen I completely understand. I have a family as well and everyone is on a budget. I can just leave now and let you find someone who is more accomadating to your budget: I have only had 2 ppl in the last 3 years tell me they couldn't afford it.

    My pricing reflects what I need to run a business and support a family. Those numbers are non negotiable or I don't say in business of feed my 2 kids. When the onsite negotiations start and they say would you do it for......II would love to be able to say " Well my son needs new clothes for school, should I tell him NO: LOL haven;t gotten to that point yet. but I am sure the day is coming....
     
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  9. mike$

    mike$ Active Member

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    I thought I was cheap on this. $17 per linear foot with $70 minimum. A sectional runs about 225 and up.

    The minimum is just for uphol....CC minimum is 99 if you are within a 5 mile radius.
     
  10. Chris Wharry

    Chris Wharry Active Member

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    That is great. I guess it depends on what your cost of living is, which I know in Cali is much higher. In the south suburbs of Chicago, it is mostly upper middle class, however unlike the northern suburbs of Chicago, this is 1st.generation money, so by the time they have money, they have developed such a frugal mentality that they are always looking for a bargain. In my mind the bargain they are getting is that it is done well and they can feel comfortable knowing they didn't waste their money on a hack!
     
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  11. Blacktiedetailing

    Blacktiedetailing www.crsurfacecare.com
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    I have said this for a long time. Raise your minimum and standard cleaning price, weed out the people dont appreciate quality, work less and make more. I have a minimum of $149 and basically $40 per room. My last 2 jobs were $55 per room which were nice. My customers dont even ask now how much, just a, "what do I owe ya"..

    Work smarter, charge more.. easy..
     
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  12. Spazznout

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    Every day

    Business is cumulative

    NOT linear.........................

    as you and some of the other posters in this thread are looking at it now.......

    Unless you are gonna die with the wand in your hand as an O/O.............

    you will figure it out eventually........................

    Good luck.
     
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  13. mike$

    mike$ Active Member

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    When they pull the so and so card I explain to them that "Good work cost money and I don't do good work,,,I do great work."
     
  14. Chris Wharry

    Chris Wharry Active Member

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    #14 Chris Wharry, Dec 24, 2014
    Last edited: Dec 24, 2014
    Jeff, What is your sq/ft. area per $40/room? I have seen everything here from chem dry at 150 sq.ft. defined as an area, to Stanley Steamer defining an area as 300 sq/ft. My customers always tell me how expensive they are though.. Kills me to have a day not working and running around and see a SS truck 2 or 3 times that day. The SS operation here runs 6 trucks. What type of advertising are you doing in Vegas? I am mainly Google places and 1st page for 5 suburbs. Tried a EDDM campaign put together by Ryan Kettering, but I believe my offers didn't entice. I hit 2 areas 4 times each every 2 weeks for a total of 4500 pieces and got 6 jobs. I broke even.
     
  15. Spazznout

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    #15 Spazznout, Dec 24, 2014
    Last edited: Dec 24, 2014
    What is SS minimum

    Bet it is not 149


    again business is cumulative Cris.

    NOT linear.
     
  16. Spazznout

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    @Chris Wharry

    here is a post I put up on this very subject earlier this year. Someone smarter than me broke it down like this to me a long time ago. Sure it sounds "cool" to raise your minimum on the forum, but is it right for your bizz. Is sitting home cause you have a high minimum really gonna make you more money at the end of the year.

    No
    and
    Hell no



    Let me first say I am NOT the best with words.
    So if something I say does NOT make sense please speak up and say ..............."WTF are you trying to say hillbilly"

    I hate the $100 dollar an hour number for many reasons.
    The first is that it is an arbitrary number pulled out of a hat ... Its dangerous to try to run a business with numbers pulled out of a hat.

    The second reason is it makes business owners think about their businesses in the wrong way.
    It makes owners look at their path to profit in a linear fashion instead of cumulatively.
    It creates a lot of problems as cleaners are chasing a made up number that means nothing, instead real consistent numbers that lead to profit.

    What do I mean by linear and cumulative???????
    Linear is the $100 dollar an hour method. You either pick out an arbitrary number out of a hat OR preferably you sit down and figure out how much an hour you need to make to pay all fixed and variable costs and then a good profit margin on top. Then you aim yourself at that target number and you shoot like an arrow towards your goal. In a linear fashion.

    This leaves you only taking jobs that will get you to 100 bucks an hour. You feel bad if you dont get to that number and you are unsure if you are making money, or even successful..............l.


    What do I mean by cumulative??????

    This is the way you will find most businesses run their operations and basic model they use when working future projections on profitability.

    First you have to understand your Fixed Costs.

    fixed costs
    noun
    plural noun: fixed costs
    1. 1.
      business costs, such as rent, that are constant whatever the quantity of goods or services produced.

    Fixed costs also includes Insurance payments, TM loan payments, advertising etc......

    So this is how much money you have to bring in each and every month to stay in business.
    All other expenses for your business are expenses generated by actually going out doing jobs.
    These are called Variable Costs.

    noun
    plural noun: variable costs

    Second you need to understand what a Variable Cost is.

    variable costs
    1. 1.
      a cost that varies with the level of output.

    Variable costs include; Gas, labor, ware and tear on equipment(depreciation), Chemicals etc.
    The expenses you generate actually completing each job.


    I will NOT posts an actual PnL....... but here is a rough synopsis of my numbers from last year in the example below. Make sure you understand exactly what fixed costs and variable costs are or what I say next will still not help you understand your profit. If you do NOT understand how to figure out YOUR fixed and variable costs please ask here or in PM and I will help you.



    Monthly Fixed Costs

    Shop rent.................................................$0 (use my 2 car garage and a parking pad for 3 vans)
    TM Loan payment.................................$0
    Van Loan Payment................................$0
    Commercial Auto insurance 3 vans.....$680
    business insurance.................................$438
    Marketing ..............................................$3840
    Electricity/water...................................$300

    Monthly Total........................................$5258

    So to keep my doors open every month I MUST bring in at least $5258 to break even and be able to pay for my Fixed Costs.

    Now for Variable Costs per job

    Cost Per Job

    Labor........................................$47
    Gas............................................$8
    Chemicals.................................$2
    equipment replacement.........$1
    Maintenance on van/TM.........$.50

    Per Job Total costs.........................$58.50

    Ok ..................so now I know each month I need to bring in $5258 to cover all my expenses for the month, and while doing the jobs to get to that break even number it will cost me an additional 58.50 to pay for the expenses on each and every job.

    Now here is where the cumulative part comes in.

    I like using Job Averages as a goal post. Notice I said Average. Tracked per day, week, month and year. You will find this is a very good number to track for many reasons. First off it is consistent when tracked over time. You can see how you are doing with up-sells. You can see if a certain ad drove higher job averages than normal. You can see how efficient your employees or you yourself are working. Nearly everything in your business can be measured up against this number. It does NOT matter if you are an O/O or a multi truck operation.

    To figure out your job average

    Take the number of jobs you did last year and divided by your total sales (the amount of money you took from customers)
    This is your per job average.

    Last year my companies job average was $292. (We do a lot of Duct cleaning so this will be higher than most CC only)

    So to cover my Monthly fixed costs I needed to do 18 Jobs (18 jobs X $292 job average = $5256)
    And then an additional 4 more jobs to cover the Variable costs on doing those jobs (18 jobs X 58.50=1053 divide that by job average of $292 =3.6 so round to 4 more jobs)

    So that means I needed 18+4 = 22 completed jobs to break even each month.

    After I completed 22 jobs each Month, every job that my company did was profit after I paid for my variable costs of $58.50 to complete the job. So with my $292 dollar job average minus my 58.50 in costs per job, I made $233.50 in PROFIT for each completed job each month after 22 jobs.

    This is where I will not be sharing all of my numbers and using an example.

    Last year I had 2 vans average which is accurate.
    Lets pretend each van did only 15 jobs per week each so 30 jobs total for the company per week or 120 jobs per month. We know from above I needed 22 jobs to cover my fixed costs each month from the above calculations. So 120 jobs per month minus the 22 to cover expenses = 98 jobs that give us $233.50 in Profit per job. $233.50 x 98 jobs =$22,883 in profit per month.

    What if you did 20 jobs per week per van.

    20jobs x 2 vans =40 x 4 weeks =160 jobs.
    need 22 to cover fixed costs. 22-160 = 138 profit jobs
    138 profit jobs x $233.50 profit average per job = $32,223 in profit per month

    So now the goal becomes how many jobs can we complete and maintain our job average. This is how a company can offer a $99 dollar 4 room deal. They only need to do so many jobs to cover their fixed costs. Once they get those expenses paid each month, everything after their variable costs for each job is pure profits.

    This way of looking at your business is best for the "high end" o/o and the multi truck company and everyone in between.

    Job averages
    completed jobs
    those are the numbers that matter when looking at your business finances and establishing where you are. Once you establish that it allows you to have a way to measure if you are reaching your goals. Be it better upsells, higher job averages, etc which all leads to a better profit. That is because your Fixed and Variable Costs do NOT change on you. They are a consistent you can measure against.

    If you start looking at your company in these terms it will be easier to understand where you are and how to get where you want to be as then it will be as simple as I need to do 10 more jobs this month to make the money I want.[/QUOTE]
     
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  17. Chris Wharry

    Chris Wharry Active Member

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    Hi Matt,
    I just checked the Stanley Steamer website for area code 60477 and they are at 62 dollars for the first room and 47 for the second room. Not sure what the minimum is, I understand about accumulative business, however these customers after fuel, taxes and time to unload, load and actually do the job, make it difficult to make a living when a 23,000 truck
    mount rolls up onto the driveway, not including the van that got it there.
     
  18. Spazznout

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    Cris,
    What are your monthly fixed costs?
    Do NOT answer here on the forum please just want you to think about it.
    How many jobs with your current job average do you need to complete to fulfill your monthly fixed costs?

    How much do you currently have budgeted in your fixed costs each month for marketing?

    Do you know you will need to spend 15-30% of the amount you want to Gross this year on marketing.

    So if you want to gross 200K you need to be spending $3,500. a month in ads and marketing.

    Forget about the rest.....
    Its just a distraction....

    only numbers and facts matter in bizz.
     
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  19. Blacktiedetailing

    Blacktiedetailing www.crsurfacecare.com
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    almost $4000 for marketing per month??? I dont advertise at all. Word of mouth and BNI is it.

    My room area is roughly 13x13 to 15x15 average. Basically your average size kids bedroom.

    I am doing a EDDM campaign to certain areas with my picture on it so the moms get an idea of who is coming to the door...
     
  20. Blacktiedetailing

    Blacktiedetailing www.crsurfacecare.com
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    almost $4000 for marketing per month??? I dont advertise at all. Word of mouth and BNI is it.

    My room area is roughly 13x13 to 15x15 average. Basically your average size kids bedroom.

    I am doing a EDDM campaign to certain areas with my picture on it so the moms get an idea of who is coming to the door...
     
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