The Basics Of Bidding
What you need to know to accurately bid a job.
Most of the questions we get at “Ask the Experts” start like this: “I need to know how much to charge to clean______________?”
Unfortunately, the question is too vague to provide an accurate answer.
Janitorial bidding takes time and practice to learn.
There is basic information that needs to be known in order to calculate what it will cost to do any job.
Once you know your costs, you can then figure out what you should charge.
These are two different things.
The difference between the two is known as profit.
To calculate your cost, at a minimum you need to know the following:
- How much are you going to pay the person doing the work? What you pay the person per hour is not the same as what the worker will cost you per hour. If you don’t know for sure, and you pay $10.00 per hour add 30 percent to the hourly rate for taxes and other benefit costs. Figure the burdened rate at $13.33 per hour.
- What are your supply and equipment costs? If you don’t know for sure, add at least 5 precent to the cost of wages, if you are supplying paper, plastic and soap, add 12 percent to the cost of wages.
- What are your overhead costs? (things like rent, phone, insurance, vehicle, gas, management) If you don’t know for sure, add 15 percent to the burdened cost of the worker’s wages.
- Error factor. Add 5 percent to the cost of wage, just in case you are wrong or missed something in your calculations.
Now that you know your breakeven point, it is time to add profit.
How much profit do you need to make doing the job worthwhile?
If you don’t know for sure, and it’s a job under $1,500 a month add at least 30 percent to the cost of wages, overhead and supplies.
At $5,000 per month add at least 20 precent to the cost of wages, overhead and supplies.
If it’s over $5000 per month, add 15 percent.
A rule of thumb is that as the size of the job increases, the rate of profit decreases.
Doing the above will give you fair ideas of what your costs are and what you should charge.
You may not be as competitive as you’d like or as someone who actually knows their costs, but if you do get the job, at least you won’t lose money because you haven’t covered your actual costs.
Next you need to gather facts about the job, which will help you, determine how long it will take to do the work.
How long it takes to do the work is always the key factor, as this will help you determine your labor costs, which normally accounts for 60 to 70 precent or more of your costs.
Here’s the basic information you need to know about the area, building or account you are bidding on:
- What services are you expected to provide? Full service (everything is included); trash, restrooms and vacuum only (partial service). What about carpet cleaning, hard floor care and windows? (Are they included in the monthly cost or billed out as extras when scheduled, requested or needed and if so, at what rate?) Are paper products, soap and liners provided by the customer or will you provide them at your cost as part of the monthly or square foot cost?
- How often will you service the account? Daily (five or seven days a week) or less frequently, such as one, two or three times per week or month?
- How big is the account? (square feet)
- How many square feet of carpeting and hard flooring are in the areas you will service?
- Is there anything unique, special or restrictive about the account, customer or location that will increase labor, supply or overhead costs?
- How much travel and supervision is involved in servicing the account?
There are many other factors that would help you prepare a more accurate and competitive bid, but knowing the above information will give you at least the basics you need to roughly calculate how much time it will take to service the account.
Multiply the hours needed to do the work times (X) your burdened hourly rate, plus (+), overhead, supply and equipment costs, plus (+) profit and you have a basic price.
Multiply this by the number of cleanings per month and you have the monthly charge.
Not sure about production rates, go on line and search Google for “Janitorial Production Rates” and you’ll find plenty of information to further confuse the issue.
One resource that you should be aware of is the ISSA’s 540 Cleaning Times.
It’s a $12.00 booklet that is a great starting resource and work loading tool for comparing times and production rates for different type of equipment and areas.
You can buy it online at:
Another great resource is an inexpensive bidding software available from Cleaning Management Institute (CMI), which can be found at:
Accurate and competitive bidding and estimating is a learned combination of art and science.
Like most anything else, the more you do it, the better you will get at it and sooner or later, you will come to understand the process.
In the meantime, best of luck to you in 2014.