No One Wins the Race to Zero

Episode 112

Lessons From the Field

When I started my cleaning company, I made the same mistake I now warn owners about: chasing the lowest price. The logic felt sound in the moment: if I can beat the competitor by 10%, I’ll win the account and figure out the rest later. Respectfully, this is more than a flawed strategy, it’s a habit with a name: “The race to zero”, and if you and your cleaning company are playing this game, let me warn you. No one wins it.

Reasons Not to Run the Race to Zero

Every company’s cost structure is unique. Insurance alone makes price parity a myth. Questions that YOU have to answer include:

• What’s your liability rate per thousand?
• Your workers’ comp rate per hundred?

Those numbers are influenced by where you operate, your claims history, how long you’ve been in business, the types of buildings you service, even the zip codes where your staff live.

If you’re new, carriers assume the worst because you don’t have a track record. That means your premiums are often higher. Add in vehicle insurance (which depends on driving records), equipment you leave on-site versus transport, and you begin to see how wild it is to promise “10% less than the lowest bid.” Because each of these variables adds a layer of expense.

The Cost of Labor in the Race to Zero

Commercial cleaning is intensely labor-driven, but many buyers and direct clients see it as a commodity. They’ll say, “It’s a six-hour job. Call it $10 an hour.” Keep in mind your customer or prospect may not even be involved in the hiring at their employer. If that’s the case, they have no true grasp of what employees cost that company. And I can almost guarantee you they have no idea what YOUR employees cost you. Minimum wage alone in many states exceeds that “$10 per hour fantasy”, and wages are moving targets. In New York, for example, rates reset annually. These are most often pegged to inflation.

The ”I’ll do it myself” Mistake

Starting a cleaning company usually means an owner is one of, if not the only, front line cleaners. Many owners price their first customers as if they’ll always be the one cleaning it. Remember that reality will show up the moment you need to hire. If you’ve played the race to zero here, your margins vanish and your quality drops. It’s likely in these cases to experience turnover spikes. Suddenly you’re trapped in an unprofitable contract that’s wearing you out.

Opportunity cost is the quiet killer in the Race to Zero

That “one account I’ll do myself” always takes longer than you expect. While you’re tied up doing all that cleaning, you’re not quoting better jobs, training staff, building systems, or nurturing relationships. You traded long-term growth for short-term relief.

Remember variable costs

Gasoline fluctuates week to week, season to season. We drive to buildings—they don’t come to us. Your website is a fixed cost. Your fuel isn’t. Pricing as if variables are fixed is how healthy-looking revenue turns into negative cash flow.

And competition? There are roughly 1.3 million janitorial companies in the United States. Undercutting price is the easiest, laziest lever in a crowded market. And it’s the most self-destructive. If price is your only strategy, you’ll attract price-only buyers who will use-you-and-lose-you when circumstances change.

So, what do you do instead?

• Know your numbers. Separate fixed and variable costs. Model wage scenarios. Include insurance, travel, equipment, consumables, supervision, and profit, not leftovers.
• Stop asking for the lowest price to beat. Lead with scope, outcomes, and risk management. Your bid should reflect your costs and value, not a competitor’s guess.
• Communicate value. Reliability, safety, documented processes, training, QA, and responsiveness matter. Make the invisible visible.
• Price for sustainability. If you can’t afford to replace yourself with a trained tech and still profit, your price is wrong.
• Choose your clients wisely. Say NO to accounts that require you to subsidize their cleaning with your sanity.

Contact me to Outsmart the Race to Zero

I’ve been there. I’ve made the “I’ll just do it myself” promise. It’s a dead end. Build a business that outlasts you instead of one that consumes you. If you own a cleaning company and want better results on pricing, cost modeling, and value-based selling, reach out. I’ll help you build a durable, profitable operation.

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