How Much Should I Charge Per Hour (or Per Square Foot)?

TLDR: Don't price by square feet or by the hour.

Ever see that GIF of the clueless person with numbers and formulas swirling around? Is that how you feel about pricing? If presented with an 8,000 sqft property 2X/week, do your palms get all sweaty when thinking about pricing it? Or, better yet, you get the opportunity to bid on a 90,000 sqft office building. How are you feeling now? What if there was a better way?

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Yep, that was me too, and I'm numbers-minded. As you may know, I got my start in the industry doing contracts and later commercial cleaning sales. Part of that sales process was pricing. My go-to? Hourly. Later on my focus was on square feet. But why do we chase after these two methods in our pricing as cleaning business owners? It's a universal standard. Every property has the same 24-hours in a day and every property has a square footage. Simple, right? Nope, and I'll demonstrate why it's a bad standard to use and I'll share a better way to price your next winning bid.

Hourly

Hourly is easy. If you're bidding a property, and come up with a summary rate per hour, then you know that X hours times Y rate equals your price, So if that property takes 4 hours and you're pricing at $50/hour, then you know that your price is $200. You can multiply that by 4.33 weeks (# of avg. weeks in a month) and come up with a monthly rate. Easy peasy. Better yet, you can invoice upon completion with the exact hours.

Lots of industries charge hourly. Freelancers, designers, some marketers, consultants, and even my attorney charges hourly to keep me out of trouble. The challenge with our industry is that our clients will watch you like a hawk on every minute you're there. They'll judge your service by your efficiency. If they see you working slower, they'll let you know in one form or another, either by complaining or canceling services with you. 

We never charge hourly unless tasked to do so by our client/cleaning prospect. We always present a fixed monthly rate. We also encourage our teams to rest and take breaks when needed, and there's no extra charge to our clients. Cleaning can be physically demanding. Even when we're taking breaks, we've received complaints that they're not working enough. That'd be compounded if we charged an hourly rate.

Square Feet

The other pricing structure cleaners tend to focus on is pricing by square feet. You take the square footage and multiply that by your rate to come up with a price. If a client tells you that their property is 5,000 sqft, and your price is 3 cents per sqft, then your price is $150/visit. Be careful with this method though. There are some challenges with it.

What if you don't know the square footage? How are you going to price it with this method. I'm in the Washington, DC region and there are many properties we've bid on over the years where the decision-maker or point of contact didn't know the square footage. Some of the properties here are hundreds of years old. There are no official records.

In some cases, the prospect offers up a square footage but that square footage is wrong. I give the story all the time of an association prospect who wanted cleaning in their new building in DC. They said it was 12,000 sqft. That seemed small but we rolled with it and did the tour of their new building. We've done over 1000 walkthroughs over the years and you know that you know that you know when the sqft is wrong. It comes with practice. After the tour I tracked down the architect thanks to a Google Street View image. That 12,000 sqft building was really 18,000 sqft. Had we focused on square footage, our price would have been 33% lower. 

The other challenge with this method is knowing the rate. if you were to go to Google right now and google, "What is the price per square foot for commercial cleaning?" this is what pops up:

So, let me get this right. If you have a 100,000 sqft office building you're bidding on, that price should be between $10,000 to $30,000 PER VISIT??! Highway robbery! Maybe I should quit and start a cleaning business.....oh yea... It's bananas! Prices tossed out there are completely absurd and we're not serving our clients by offering up rates like this. Now, I need to be clear here: if you're in the DC area you should always offer rates like this if I'm bidding with you (just kidding...sort of). Never trust what the internet says. In a large property like this, I'm closer to 1 cent per square foot when calculated off my monthly/annual rate. In a small office, like 1,000 sqft, I might be around 10 cents per sqft. And this leads us to my next point....

Pricing isn't meant to be linear

Remember logic class in school? What's true of the parts isn't true of the whole? If by this point you haven't abandoned fixed-basis pricing, know that your rate shouldn't be the same for all locations. You shouldn't charge the same hourly or sqft rate for a small 4-classroom preschool as you would for a 14-classroom K-8 school. Your price for a 1,000 office shouldn't be the same for a 100,000 sqft office building. If you graph out your rates across an X- and Y-Axis, and your pricing forms a straight line, then you're leaving money on the table. 

I'm not going into the "HOW" on pricing in this post. Be sure to check out "How Do You Price a Cleaning Bid?" both in the blog and the podcast. You can also get additional info through an 1-hour course by the same name within our Start from Scratch to $100K Community. In that course I take your P&L and transform it to a pricing machine that guarantees profit every single time. The trap many cleaners fall in to is that they'll come up with a price they think is profitable and they apply it again and again and again throughout all of their bids, only to end up a dollar short and unprofitable. Because of economies of scale your price should go down as you add more work and hours. If you doubled your business tomorrow, your expenses don't double, right? They may increase, but they won't double. This is why a billion dollar company like ABM can get away with charging commercial in the $20's per hour.

Eleventh Commandment: Knoweth Thy Numbers

I don't know if the stone tablet wasn't big enough for an 11th commandment or if the knowledge was implied many millennia ago, but you need to know your numbers. If you're "borrowing" someone's 10 cent per sqft rate or $50/hour cleaning rate, or worse, from Google, how do you really know if you're making or losing money? What's true of the parts is not true of the whole. It may be profitable for your competitor but using their rates can lose you money. 

You need to be able to track down to the penny how much that contract covers each for your marketing, accounting costs, and other overhead, including labor, supplies, and even your pay as the business owner. If you cannot, then is it really profitable?