Understanding that a company owner knows the method of pricing so they profit, seems obvious. But in my experience, new and not-so-new commercial cleaning companies often focus on GETTING the work more. Don’t misunderstand me. Landing a new cleaning contract is a crucial step toward growing any janitorial business. But having work and having profitable work are not the same thing. I’ve witnessed many cleaning business owners leave money on the table without even knowing it.

When I talk to contractors about their billable rates, the first thing I hear is, “Well, I’m just matching what my competitors charge.” Those are dangerous words and that’s a recipe for disaster. That’s exactly why so many hardworking entrepreneurs are working 60-plus-hour weeks just to break even and have so much money on float.

The truth is, pricing your services isn’t about matching the market. It’s about understanding what it actually costs you to do business. YES, I DO mean every single expense, every single hidden overhead, every factor that eats into your profit margin. And I mean everything.

The Labor Burden is Just the Beginning of Your Pricing

Most owners think, “I pay my person $18 an hour, so that’s my cost.” Wrong. That $18 is just the starting point.

Your real labor burden includes:

• Payroll taxes (FICA, SUI, FUI, Medicaid—typically 9-12%)
• Workers’ compensation insurance (which can range from 2-12% depending on your state and your claims history)
• Paid holidays and PTO (2-5%)
• Training costs (1-2%)
• Uniforms
• Employee benefits like healthcare

When you add it all up, that $18/hour person actually costs you closer to $22, sometimes more. That’s the fully weighted burden of your hourly rate. This is where most owners lose sight of their profitability.

The Direct Costs Add Up Fast

Then there’s everything else. Are you buying your cleaning chemicals from the dollar store at a dollar per bottle, or are you sourcing concentrated solutions at pennies per quart? That’s a massive difference in your actual cost per job. What about paper products, equipment depreciation, repairs, fuel, vehicle costs, cell phones, and quality inspections? Every single one of these needs to be tracked and factored into your pricing.

Remember Your Overhead When Pricing

Beyond the job itself, you’ve have office staff, marketing, payroll processing and accounting. Have you included legal fees (yes, you should have a business attorney on retainer)? Big ticket items like insurance, rent, utilities, software, and bank fees must be considered. These overhead costs typically add another 10-20% on top of your labor burden.

Pricing and Your Profits

And then, the word that clients hate to hear, profit. You absolutely must build profit into your rates. This isn’t greed; it’s survival. Profit is how you fund equipment upgrades, handle emergencies, and keep your business growing. Most cleaning companies aim for 10-15% profit margin.

The Math That Actually Works

Let’s do the real calculation: an $18/hour employee with a $3.96 labor burden, $2.25 in direct costs, $4.27 in overhead, and $5.03 in profit gives you a billable rate of $33.51 per hour—not the $20 you might be charging right now.

What’s that gap? That’s the difference between a thriving business and one that’s slowly going under. Don’t make the mistake of saying, “I’ll make it up in volume”. That will only mask the problem.

Take Control of Your Numbers

I’ve created a spreadsheet tool that breaks down every single expense category you need to track. It’s just 99 cents to download, and it includes all the fields you need to calculate your true billable rate.

Stop undercutting yourself. Stop joining your competitors in the race to zero. Download the pricing calculator today for 99 Cents, and if you want personalized guidance, my coaching services are here to help you build the profitable business you deserve.

Your numbers don’t lie. But if you’re not tracking them, you’re flying blind. Contact me to schedule your coaching calls and get ready to build a profitable Cleaning Company.

This Week’s Podcast transcript can be downloaded here for free.