Know your market

Jimmy Hitt

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So there's been a lot of debate on the price variances for different parts of the country. So how about we try to put some sort of a standard to it. @Prosteam-sonomacounty can get $.50/sqft+ but the homes in his area are insanely high per sqft. Whereas @Spazznout areas home prices are a fraction of that. I've also heard Florida's cleaning prices are pretty cheap compared to the home prices.

I'm not in front of a computer right now so I can't really look up average home values in my area (Nashville) but they've increased dramatically over the past 10 years. I can look up the values when I get home but for a quality company here you'll pay around $.30/sqft+.

Think of this as somewhat of a survey as to what your home values are vs. your average price per sqft and maybe we can get some sort of a standard per state/region/city or something. I know its going to vary from the 4 step process guys to the 30 step process guys but it'll give some newbs an idea.

Maybe it'll help Joe Smo in Mississippi who thinks he can go out & get $.50 if he can just buy that new TM & make the phone ring.

**warning** Another pricing thread.
 

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Lots of factors go into pricing. I bet you could grid it out in Exel or something. Plug in some numbers and an equation spits out a price per sqft. I think Shane has posted that before.
 

Jimmy Hitt

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Lots of factors go into pricing. I bet you could grid it out in Exel or something. Plug in some numbers and an equation spits out a price per sqft. I think Shane has posted that before.
Yea I guess xactimate is standardized to specific areas but how many of us use that. I'm assuming 10%. I could see @shane deubell having good insight on this if it being a pricing thread didn't aggravate him. :D
 

shane deubell

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Its not that pricing threads annoy me...
The context annoys me!!!

Take off your carpet cleaner goggles and look at it coldly.

Not about price its about margins, margins, margins.
WalMart doesn't have low margins they have low prices.

Luxury brands go out of business all the time even tho they charge a lot.
Know why? They have crappy profit margins.

Cleaner A Charges $100 room
Margin of 40%
Advertising cost of 15%
Profit AFTER = 25%

Cleaner B charges $133 room
Margin of 40%
Advertising cost of 20%
Profit AFTER= 20%


How did that happen?
Cleaner B charges more BUT also has higher costs.
 
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Jimmy Hitt

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Its not that pricing threads annoy me...
The context annoys me!!!

Take off your carpet cleaner goggles and look at it coldly.

Not about price its about margins, margins, margins.
WalMart doesn't have low margins they have low prices.

Luxury brands go out of business all the time even tho they charge a lot.
Know why? They have crappy profit margins.

Cleaner A Charges $100 room
Margin of 40%
Advertising cost of 15%
Profit AFTER = 25%

Cleaner B charges $133 room
Margin of 40%
Advertising cost of 20%
Profit AFTER= 20%


How did that happen?
Cleaner B charges more BUT also has higher costs.
I get what you're saying completely, me being just an O/O with very little marketing expense I obviously have better margins than cleaner B. I prefer the cheapest form of marketing, pounding the pavement.

I've actually used a lot of what I've read from you on several of my commercial bids & its done great. Especially since the guys I'm going against have much higher expenses.

But I'm talking more about an average residential price per ft. I know you're geared more toward commercial so its different. I've never really heard much about your resi prices. I wasn't sure if you did much resi or if y'all were strictly cimex pushers.;)

Assuming you do a good share of resi what is your average price per ft vs home values?
 

Steve Toburen

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Its not that pricing threads annoy me...
The context annoys me!!!

Take off your carpet cleaner goggles and look at it coldly.

Not about price its about margins, margins, margins.
WalMart doesn't have low margins they have low prices...
I feel your pain, Shane! Where I get frustrated is carpet cleaners complaining about low pricing on regular commercial accounts.

But as you say, it is the PROFIT that matters, not the per square foot price. And since contract commercial is (usually) incredibly faster/ more efficient than residential work you can actually have a higher profit margin at 1/3 or less the price of residential.

steve

PS Sorry, Jimmy, to high jack your thread. Blame Shane!
 

Jimmy Hitt

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I feel your pain, Shane! Where I get frustrated is carpet cleaners complaining about low pricing on regular commercial accounts.

But as you say, it is the PROFIT that matters, not the per square foot price. And since contract commercial is (usually) incredibly faster/ more efficient than residential work you can actually have a higher profit margin at 1/3 or less the price of residential.

steve

PS Sorry, Jimmy, to high jack your thread. Blame Shane!
Glad to have your input Steve. I'm in total agreement on the commercial pricing. Just last week guys were complaining here about $.10/sqft commercial. Ha I can be very profitable at $.07ish with encap. Obviously I'm talking 10k+ sqft.

I'll clean all day like that and with very little variable costs. No gas, maybe $60+ in chems. And not driving between jobs. Not dealing with 5 housewives in a day, just pushing that machine with headphones on.

Never been to SFS, but I've read every download you've put out and it changed my mindset.
 

Spazznout

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I get what you're saying completely, me being just an O/O with very little marketing expense I obviously have better margins than cleaner B. I prefer the cheapest form of marketing, pounding the pavement.

I've actually used a lot of what I've read from you on several of my commercial bids & its done great. Especially since the guys I'm going against have much higher expenses.

But I'm talking more about an average residential price per ft. I know you're geared more toward commercial so its different. I've never really heard much about your resi prices. I wasn't sure if you did much resi or if y'all were strictly cimex pushers.;)

Assuming you do a good share of resi what is your average price per ft vs home values?
LOL Jimmy

You start off saying you understand what Shane is saying/gets frustrated about. Then in the last paragraph you forgot already????LOL.

The point is there is NO Average. Every cleaner needs to set their price based on there costs + a profit. It does NOT matter what the average for an area is or what Stanley is charging. If you try to emulate or copy those prices and do NOT figure out your own costs and profits needed to stay in business you are very likely setting yourself up to go out of business. You need to set your own prices base on your own costs. NOT based on what someone else is charging or what the average price in an area is.

The fact that you have low fixed and variable costs is a competitive advantage and you should consider that when establishing your prices. You should NOT consider what tommy up the street charges or Coit or Sears as a starting point.

Does that make since?
Do you understand?
 

shane deubell

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Yeah, those numbers are useless without knowing the margin.

Usually i tell owner operators to start putting themselves on commission or hourly rate for any jobs you do.

This way you can see how profitable the business is without you. You want high margins not high prices... thats just ego
 

Jimmy Hitt

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LOL Jimmy

You start off saying you understand what Shane is saying/gets frustrated about. Then in the last paragraph you forgot already????LOL.

The point is there is NO Average. Every cleaner needs to set their price based on there costs + a profit. It does NOT matter what the average for an area is or what Stanley is charging. If you try to emulate or copy those prices and do NOT figure out your own costs and profits needed to stay in business you are very likely setting yourself up to go out of business. You need to set your own prices base on your own costs. NOT based on what someone else is charging or what the average price in an area is.

The fact that you have low fixed and variable costs is a competitive advantage and you should consider that when establishing your prices. You should NOT consider what tommy up the street charges or Coit or Sears as a starting point.

Does that make since?
Do you understand?
Maybe I typed it wrong but what I meant was I know what he's talking about when it comes to commercial.

What I meant in the OP is resi pricing. I'm not trying to get prices so I know what to charge, I know exactly what I need to charge to turn a profit.

@Spazznout I was basically reiterating what you & mike were discussing in the other thread about his area vs your area and how you couldn't get his prices in Ohio because the lower cost of living.

I'm trying to get as much per ft as I can in resi but there's no way I could get mikes prices here.

That was my point, how much per sqft can you get in your region? In residential!!!!!!! Not commercial.

I'm rolling on 3hrs sleep after pulling an all nighter redoing my website so excuse me if I contradicted myself in these posts.

P.S. I'm 70% commercial so it has no bearing on my business what others charge. Just wanted to get a feel for residential prices vs value of homes in your region. I start at $.30/sqft resi depending on the job.
 

Dennis Anderson

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Maybe I typed it wrong but what I meant was I know what he's talking about when it comes to commercial.

What I meant in the OP is resi pricing. I'm not trying to get prices so I know what to charge, I know exactly what I need to charge to turn a profit.

@Spazznout I was basically reiterating what you & mike were discussing in the other thread about his area vs your area and how you couldn't get his prices in Ohio because the lower cost of living.

I'm trying to get as much per ft as I can in resi but there's no way I could get mikes prices here.

That was my point, how much per sqft can you get in your region? In residential!!!!!!! Not commercial.

I'm rolling on 3hrs sleep after pulling an all nighter redoing my website so excuse me if I contradicted myself in these posts.

P.S. I'm 70% commercial so it has no bearing on my business what others charge. Just wanted to get a feel for residential prices vs value of homes in your region. I start at $.30/sqft resi depending on the job.

What difference does it make what you can get? Don't you really have to figure out a way to get what you have to get?
 

Jimmy Hitt

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What difference does it make what you can get? Don't you really have to figure out a way to get what you have to get?
Wtf. This thread has proven pointless. No more pricing threads for me!

Just a simple comparison of price per ft vs median home values. Spazz & Martin had some good input on a different thread about this subject but this one turned into a stinker.

I'm restricting myself from starting threads when I'm running on less than 3hrs sleep.
Delirious!
 

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Wtf. This thread has proven pointless. No more pricing threads for me!

Just a simple comparison of price per ft vs median home values. Spazz & Martin had some good input on a different thread about this subject but this one turned into a stinker.

I'm restricting myself from starting threads when I'm running on less than 3hrs sleep.
Delirious!

I'll help you out lol
I'm in northeast Pa. An upper class home here is in the $300k range. Average home value outside the city is around $150k...and those are nice houses. Inside the city home values are $75k to $100k. My price that is very competitive is $35 a room (250sq). I'm currently running a 3 room $99 and getting a good amount of calls.
Is this what you were looking for, Home values and prices?
 
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Decker

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Wtf. This thread has proven pointless. No more pricing threads for me!

Just a simple comparison of price per ft vs median home values. Spazz & Martin had some good input on a different thread about this subject but this one turned into a stinker.

I'm restricting myself from starting threads when I'm running on less than 3hrs sleep.
Delirious!

I get what you are saying. There is correlation between cost of home per square foot and generally accepted cleaning cost per sq ft.
 
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Jimmy Hitt

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Pretty much Tony. Thanks. Not really for me. The point was for newbs to understand they can't come in thinking their area will support $.50/ft, especially when they're newbs.

But apparently you're not allowed to charge as much as your market permits. From what ive read in this thread you should only charge a certain % above your costs.

#pointlessthread
 

Spazznout

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Maybe I typed it wrong but what I meant was I know what he's talking about when it comes to commercial.

What I meant in the OP is resi pricing. I'm not trying to get prices so I know what to charge, I know exactly what I need to charge to turn a profit.

@Spazznout I was basically reiterating what you & mike were discussing in the other thread about his area vs your area and how you couldn't get his prices in Ohio because the lower cost of living.

I'm trying to get as much per ft as I can in resi but there's no way I could get mikes prices here.

That was my point, how much per sqft can you get in your region? In residential!!!!!!! Not commercial.

I'm rolling on 3hrs sleep after pulling an all nighter redoing my website so excuse me if I contradicted myself in these posts.

P.S. I'm 70% commercial so it has no bearing on my business what others charge. Just wanted to get a feel for residential prices vs value of homes in your region. I start at $.30/sqft resi depending on the job.


No worries bros. we have all been there. posting tired or buzzed on a few. LOL

You would do better just collecting ads from your own city/county/state. Simply looking at them and comparing them with each other and taking in to consideration the years each bizz has been around you should be able to determine what the top of the market is for advertised prices and what the bottom of the market is.
 

Jimmy Hitt

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No worries bros. we have all been their. posting tired or buzzed on a few. LOL

You would do better just collecting ads from your own city/county/state. Simply looking at them and comparing them with each other and taking in to consideration the years each bizz has been around you should be able to determine what the top of the market is for advertised prices and what the bottom of the market is.
Sorry spazz but that wasn't my point. Read my post right above yours. I've been cleaning in the same market for 15yrs. I know every company in towns prices either from working there, knowing someone there, or secret shopping them on the phone.

I was just trying to create an informative post in case someone happened to search "Nashville prices" or whatever town they were in. Basically what you, mike, & martin were discussing in the other pricing thread.
 

Spazznout

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@Jimmy Hitt

now I tell you what a good thread or discussion would be is:

Is there any correlation between advertised price and job averages.

Example company 1. advertises 20 dollar rooms
company 2. advertises 35 dollar rooms.

Does company 1. or company 2. have higher job averages?
Why?
 

Spazznout

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Sorry spazz but that wasn't my point. Read my post right above yours. I've been cleaning in the same market for 15yrs. I know every company in towns prices either from working there, knowing someone there, or secret shopping them on the phone.

I was just trying to create an informative post in case someone happened to search "Nashville prices" or whatever town they were in. Basically what you, mike, & martin were discussing in the other pricing thread.
I know Jimmy, I responded that way because most only read these threads, not respond. You know it, but do the lurkers. I often post longer than needed posts for this reason. Its nothing personal.....lol:cool:
 
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