Foreclosure Cleaning: The Easiest Way to Price Foreclosure Cleanup Jobs
There are quite a few ways for foreclosure clean up business owners to price foreclosure cleaning jobs. Some are more complicated. If you’re new to the business, you already have quite a lot on your plate. So here, we’re going to lay out the simplest method for pricing jobs for clients.
What makes it so easy is that it’s straightforward because all you have to do is figure out two things, ie:
Your Costs; and
The Job Markup.
Pricing Foreclosure Cleaning Jobs: The Simple Formula to Remember
Add costs to markup and that will you give the "what to charge" amount. The formula looks like this:
Direct Costs + Indirect Costs + Markup = What to Charge
Example of Foreclosure Cleanup Job Priced Using This Formula
To illustrate in detail, let’s use an actual example (FYI, this is based on an actual job):
Job Particulars: Say you are asked to submit a bid for a simple trashout (debris removal) and a general clean (not a “white glove” clean of a house. Parameters of the home are as follows: 3 bedroom, 1.5 bath 1,150 square foot home); one level (a ranch style home).
Cleaning Particulars: As mentioned above, this is a general “broom-swept clean” and the cleaning of all major appliances in the kitchen and cleaning of tub/shower, toilets and sinks in the bathrooms.
Time to Complete: According to your estimates, the job should take about 6 hours. During the walkthrough, you realize that you’ll need to rent a dumpster for the day to haul away things left behind by the previous occupants.
Since the cleaning is general and not white glove, you only need to hire one person to help you. But, to haul away the things left behind, you’ll need at least two guys because there are some heavy items, eg, an old refrigerator and stove in the garage, some mattresses, a box spring, a bookcase and a few other items.
Note about Cleaning: What is the difference between a broom swept clean and a white glove clean? It’s a general cleaning as opposed to a white glove cleaning, which includes dusting, scouring to the “nth” degree until the place is so clean that you can take a “white glove” and go over it and not find any dirt.
This takes considerably more time than a general cleaning. Hence, make sure the client understands what broom swept cleaning is, as opposed to white glove cleaning because when some people hear the word “clean,” they make take it that you mean white glove clean, not realizing how much more time goes into this.
Estimated Time to Complete Job: 6 hours
So to price this foreclosure cleaning job, let's look at what your direct costs will be:
Dumpster Rental: $300
Dumping Fee: $75
Cleaning Crew: $60 (1 person, $10/hour x 6 hours)
Moving Crew: $150 ($75/day rate x 2 workers)
Miscellaneous Cleaning Supplies: $50 (broom, industrial-strength garbage bags, latex gloves, pine sol, face masks, etc.)
Indirect Job Costs Total: $635
Now, let's figure out your direct costs for this foreclosure cleaning jobs.
Let's say for this example that you know that all of your indirect costs come to $2,000 per year. What are indirect costs? These are ongoing costs that you incur just by being in business, eg, business insurance, phone, gas for running around to job sites, vehicle insurance, office supplies, etc.
Now, let’s say that you count on doing at least one job per week and that you’re starting part time. This means your indirect costs run $166 per month. How do we arrive at this figure:
Total Indirect Costs Per Year / 12 Months
Hence, your indirect cost for each job is $38.60. How did we get this?
$166 per month / 4.3 weeks in a month
Note: Most people forget to figure this it way; usually they’ll calculate four weeks per month. However, some months have five weeks, so the average month actually has 4.3 weeks in it.
Indirect Jobs Costs Total: $38.60
Now you have two of the three figures you need, let’s work towards the next figure – profit (the fun figure!).
Let's say you decided that you want to operate at a 35 percent markup (that is to say, you want to make a minimum o of 35% profit on every job you do). Keep in mind that this will be different for each person. It depends on what the financial needs of the family is, what they consider their time to be worth, the costs of doing business in their jurisdiction, etc.
This is discussed in detail in the chapter on soft pricing in the foreclosure cleaning pricing guide.
So, now that you know what your markup is, you have everything you need to arrive at your profit for this job. The formula looks like this:
Profit Percent (.35) x 673.60 (635 + 38.60). That's $235.76. Not bad for six hours of work on the weekend.
Percentage of Foreclosure Cleaning Job Profit: $235.76
Totals: $235.76 + 38.60 + 650 = $909.36
Foreclosure Cleanup Bid Amount: $910 (rounded up to the nearest whole $5 amount).
Final Note About Pricing Foreclosure Cleaning Jobs
Many small business owners struggle and/or go out of business because they never invest in learning how to price their products/services. They forget those indirect job costs discussed above (eg, insurance, office supplies, etc.). But these are a part of every job that you do. Leave them out, and you’ll constantly be struggling to make a profit – yet wonder why.
No matter what kind of service business you have, eg, a painting company, a general contracting firm, a lawn maintenance company, etc., the foreclosure cleanup pricing guide can help you learn how to price jobs right – right from the very beginning.
Get more specific do’s and don’ts on pricing foreclosure cleaning jobs.