She started her cleaning business to make a profit and make a living. Most cleaning companies, whether they do residential or commercial cleaning, start with the owner doing everything: marketing, cleaning, buying supplies, and even the book work. As your business grows and you hire employees and add more customers, your expenses grow as well. When you started, you may have underpriced your services to gain new clients or because you lacked bidding experience. So now that your expenses are rising and you found that you underpriced your services, what do you do?
First of all, understand that raising prices is necessary in any business. Just take a look at the things you routinely buy: gas, milk, cleaning supplies, electricity – prices go up and sometimes take a big jump!
Before you jack up prices on your cleaning customers, go back and take a look at your original contract. Does your contact indicate that the original offer price will be good for a certain period of time? If you do, you will not be able to increase your price until that time period has expired. If not, how long have you been cleaning for that client? Even if you originally underpriced your services, you may not want to increase your price if you’ve only been cleaning for the client for a short time. Most cleaning companies wait at least a year before raising prices. If you don’t have anything written in your cleaning contract about price increases, you should start adding a clause about it with your next client. Many companies guarantee their price for one year and claim that they take on cost of living increases each year (eg 4%). Or they may say something like “we reserve the right to increase prices after one year.”
Before calculating a new price, review your original offer and make sure you have everything covered to make a profit. If your utility costs have increased dramatically or you’ve added expenses (workers’ compensation or more insurance due to hiring employees), make sure the price increase covers the additional expenses.
Another factor to consider before raising prices is your current customer satisfaction level. Are you happy with the job your cleaning company is doing? Most people understand price increases and will stay with their cleaning company as long as they are happy with the job they are doing. After all, searching for a new cleaning company takes time, and your client may not get a better price or the quality of work they want from someone new.
But don’t be afraid to raise the price for a constantly complaining customer, especially if their complaints are not justified. You may need to increase your price to cover the extra time you spend in your office (or home).
Once you have all the data and the new price to charge, send a letter to your client. Let them know that you are raising your prices, why you are raising your prices, and the benefits to them of continuing to use your cleaning company. Be sure to let your client know at least 30 days in advance that the price will go up. Keep in mind that large corporations and government agencies may need more time if they have to submit price increases through a committee or get board approval.
The phrase “you get what you pay for” is often true when it comes to cleaning companies. Too low a price may mean that the company is not doing a satisfactory job or that the company has undervalued its services and will soon go out of business.
Pricing your services so that you make a profit is not a bad thing. The survival of your cleaning business depends on charging your customers properly so you can stay in business and make a profit. Good customers will understand a price increase and will be happy to continue using your services. And don’t be surprised if a customer who leaves because of a price increase returns soon! Many people eventually realize that a lower priced offer from another cleaning company means their building (or home) is not as clean as it was when their company provided their cleaning services.
Copyright (c) 2007 The Cleaning Shop
