Profit margins

Mike Habib

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Sep 18, 2012
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I had a real interesting conversation with a guy yesterday who owns a heating and air conditioning company.
He was telling me how his profit margin has dropped since 2006. The example he gave me was when he installed a system he would charge $4,000 and now charges $3,500

Now that does not sound to bad until you figure in all of your cost. I do this part time and have very little overhead
but it got me thinking. Do you become a volume cleaner or keep your prices higher and take on less work ?

I had a job scheduled yesterday for a medium size house , 3 bedrooms , hallway and one staircase.
and the carpets were in good shape. My estimate was $179.95. They called back and cancelled
because they found a company to do the whole job for $70.00.

How do you guys keep your doors open and still make a decent living ?
 
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awratchford

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Jun 9, 2014
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I had a real interesting conversation with a guy yesterday who owns a heating and air conditioning company.
He was telling me how his profit margin has dropped since 2006. The example he gave me was when he installed a system he would charge $4,000 and now charges $3,500

Now that does not sound to bad until you figure in all of your cost. I do this part time and have very little overhead
but it got me thinking. Do you become a volume cleaner or keep your prices higher and take on less work ?

I had a job scheduled yesterday for a medium size house , 3 bedrooms , hallway and one staircase.
and the carpets were in good shape. My estimate was $179.95. They called back and cancelled
because they found a company to do the whole job for $70.00.

How do you guys keep your doors open and still make a decent living ?
Tough to answe, there are so many low balling hacks out there working for beer money, it's ridiculous. What keeps me motivated is that hack would have to do 2.5 jobs at his rate to equal your one job. So if you only do half the jobs he does you still make money working less. Personally I'd like to pimp slap every low balling, slimy, good for nothing hack who charges those stupid industry destroying rates
 
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LookNGood

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Joe P
I had a real interesting conversation with a guy yesterday who owns a heating and air conditioning company.
He was telling me how his profit margin has dropped since 2006. The example he gave me was when he installed a system he would charge $4,000 and now charges $3,500

Now that does not sound to bad until you figure in all of your cost. I do this part time and have very little overhead
but it got me thinking. Do you become a volume cleaner or keep your prices higher and take on less work ?

I had a job scheduled yesterday for a medium size house , 3 bedrooms , hallway and one staircase.
and the carpets were in good shape. My estimate was $179.95. They called back and cancelled
because they found a company to do the whole job for $70.00.

How do you guys keep your doors open and still make a decent living ?
My price would have been at least $250, probably more.

There are a lot of factors. Location is big (cost of living and income is going to have some effect on your prices)

Also if there are a lot of coupon cleaners that can be tough.

You almost have to pick, high or low price(which means high or low volume.

You can net $100k a year doing 5 jobs a day at $100 each or 2 jobs a day at $250 each.

Focus on QUALITY and CUSTOMER SERVICE! And charge for it. Slowly build quality clientele.
 

Mike Habib

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I agree , I normally only do work for Real Estate agents who pay a lot more.
.
our area's medium income is above average but there are a zillion low priced guy's out there. One guy is offering two
rooms for $29.95 on CL. CRAZY

I'm more focused on property managers and commercial work at this point. The only reason I bid on the one job was
because it was in my sub division.

Good advice !!!
 

Scott W

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It needs to be about what makes you the most profit, not what brings in the most money. Here is a simple example to check it out. Try it with your own numbers.

Currently doing 10 jobs a week for $200 each = $2,000 gross income
Variable expenses @ $30 per job = $300
Fixed expenses @ $300 per week = $300
TOTAL EXPENSE for the week = $600
NET PROFIT FOR THE WEEK = $1,400

Lower Prices 20% and get 30% more work
Doing 13 jobs per week @ $160 each = $2,080 Gross Income
Variable expenses @ $30 per job = $390
Fixed expenses @ $300 per week = $300
TOTAL EXPENSE for the week = $690
NET PROFIT FOR THE WEEK = $1390

Did 30% more work for $10 less profit per week!

IS that a choice you want to make to raise your gross income and do more business?
 

Mike Krall

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I don't get why people call and cancel after finding a lower price. I always get 3 prices for the job before hand and then make my decision.

The other problem with those hacks is it's doubtful they have insurance. Too bad it's not something home owners ever ask for... until their carpet is destroyed by the hack.
 

SunnyDays Carpet Cleaning

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I had a real interesting conversation with a guy yesterday who owns a heating and air conditioning company.
He was telling me how his profit margin has dropped since 2006. The example he gave me was when he installed a system he would charge $4,000 and now charges $3,500

Now that does not sound to bad until you figure in all of your cost. I do this part time and have very little overhead
but it got me thinking. Do you become a volume cleaner or keep your prices higher and take on less work ?

I had a job scheduled yesterday for a medium size house , 3 bedrooms , hallway and one staircase.
and the carpets were in good shape. My estimate was $179.95. They called back and cancelled
because they found a company to do the whole job for $70.00.

How do you guys keep your doors open and still make a decent living ?
I stopped advertising, now it seems like I'm doing more business. And I had one of my best years, last year. People like that will get what they paid for, next time they need a cleaning customer will call you.
 
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crash1big

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I run my business on profit. If I can't make a profit; what's the point. Most low ballers have no clue what it costs them to run their business. Sure they have cash flow because of some volume, but cash flow isn't profit.
The best thing a person can do once a month is to run a p/l. Profit and loss. TO do that; a person needs to input some information regularly. That information comes from data entry. Keeping track of expenses. ALL the expenses.
If a person is able to track expenses; then they will know where they need to be on their pricing.
Fixed costs are the easy part. Rent, loan payments, advertising and insurance are all fixed costs. Variable costs are a little more difficult and require some time to accumulate, like gasoline, chemicals, and maintenance, but they can still be estimated.
I keep my doors open by understanding what it costs me month to month to run my business and applying an appropriate margin of profit on top of that.

I loose jobs sometimes to the lower guy but I don't fret. It's part of business. I see guys like this come and go all the time and I'm still here about to start my 34th year. Don't let that price shopping customer worry you; your better than that. :)
 

Prosteam-sonomacounty

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Mike Camacho
I had a real interesting conversation with a guy yesterday who owns a heating and air conditioning company.
He was telling me how his profit margin has dropped since 2006. The example he gave me was when he installed a system he would charge $4,000 and now charges $3,500

Now that does not sound to bad until you figure in all of your cost. I do this part time and have very little overhead
but it got me thinking. Do you become a volume cleaner or keep your prices higher and take on less work ?

I had a job scheduled yesterday for a medium size house , 3 bedrooms , hallway and one staircase.
and the carpets were in good shape. My estimate was $179.95. They called back and cancelled
because they found a company to do the whole job for $70.00.

How do you guys keep your doors open and still make a decent living ?
Since 2002, I've been very careful about the brand I offer.
I only address the quality and market heavily to my previous clientele.
I look for prospects that only care about quality and try my best to lock them down for life.
It helps making price shoppers irrelevant when youre busy with the people who really appreciate you
 

John Rockwood

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In over 30 years I've never run into a "hack". When someone underbids you it usually means that they are hungrier than you or they are a price driven service.
Most CC that fall into this area actually are providing the best service that they can but fall short.
They don't see the value in their service so they discount price.
 
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awratchford

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In over 30 years I've never run into a "hack". When someone underbids you it usually means that they are hungrier than you or they are a price driven service.
Most CC that fall into this area actually are providing the best service that they can but fall short.
They don't see the value in their service so they discount price.
A hack is someone who charges less than his operating costs just to work or "Stay busy" usually because he doesn't know any better. If for example, said hack has a TM payment if 400 a month and it costs him a gallon of gas per hour to run the machine plus 300 a month in insurance and 45 a month in prespray, his total fixed is 745 a month plus variable of gas. So the first @900 a month he makes is break even bill money. Lets say he's doing 70 whole house. That means first 13 jobs he does is free.
 

bob519

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It needs to be about what makes you the most profit, not what brings in the most money. Here is a simple example to check it out. Try it with your own numbers.

Currently doing 10 jobs a week for $200 each = $2,000 gross income
Variable expenses @ $30 per job = $300
Fixed expenses @ $300 per week = $300
TOTAL EXPENSE for the week = $600
NET PROFIT FOR THE WEEK = $1,400

Lower Prices 20% and get 30% more work
Doing 13 jobs per week @ $160 each = $2,080 Gross Income
Variable expenses @ $30 per job = $390
Fixed expenses @ $300 per week = $300
TOTAL EXPENSE for the week = $690
NET PROFIT FOR THE WEEK = $1390

Did 30% more work for $10 less profit per week!

IS that a choice you want to make to raise your gross income and do more business?
That's really so clear thankyou
 

Wec

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A hack can just be someone running there business with a employee mind set

They just don't know any better and it just becomes normal living a very disfunction life

It takes a totally different mind set to run a efficient business and for some people it comes easy and for others its just not something that they can do without a lot of effort time and patience
 

John Rockwood

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I've learned one thing over the years. When your cash flow, scheduled jobs and bottom line is in good shape you feel more confident in your abilities to justify your price and shrug it off when you lose some.
Cash flow is usually the demise of even the most sincere CC.
 

ColoradoCleaner

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You're not conveying value to the client. You have to make them want YOUR company to come out, not just any carpet cleaner. That's your problem.

If they called me back and said that I'd give them a little chuckle... $70? Haha... Tell them to keep your number in case the quality is not what they expected. I am very blunt with clients. I laughed some woman off the phone when she wanted me to clean her car's interior for $50 a couple months ago.
 
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aloha one

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You're not conveying value to the client. You have to make them want YOUR company to come out, not just any carpet cleaner. That's your problem.

If they called me back and said that I'd give them a little chuckle... $70? Haha... Tell them to keep your number in case the quality is not what they expected. I am very blunt with clients. I laughed some woman off the phone when she wanted me to clean her car's interior for $50 a couple months ago.
LOL Dumb Hoes..50 Dolla? Yeah Right...50 Cents for a BJ? Alrighty then..we have a DEAL!