Stretching your dollars
When you buy and use cleaning products and equipment, do you know your return on investment or impact on your in-house facility budget?
You can save money and time if you do a little homework and insist that your vendors help you determine your actual costs for these products and machines.
At the same time, building service contractors can maintain or even improve their bottom line, and in-house facility directors can take steps toward winning the never-ending budget battle of doing more with less.
Price vs. cost
A lot of people confuse price and cost and that can cost you a lot of money when it comes to profits and budgets.
Price is what you pay for an item.
Cost is what that item costs you to use.
Thus, it is important to remember that price is only part of the cost.
The first part — price — is easy. Anyone can compare dollars to dollars.
Your cost includes purchase price, cost of using the item, service, repair and replacement.
This cost exercise gets a little bit more complicated, so let’s go through it slowly.
Nickels add up
First, let’s look at the universal cleaning fraction (created by my late partner Oscar Koeppel and myself). That universal cleaning fraction is one over 19, or 1/19.
It simply means that for every $1 you spend on your cleaning budget, one nickel goes for all of the machines, chemicals and custodial hardware that you use, and 19 nickels go to the people that use this material.
One nickel out of $1 is 5 percent, and 19 nickels is 95 percent.
Take a look at your budget and see how it compares to these figures.
Remember, we are talking about 5 percent being used for your cleaning supplies.
Light bulbs, paper towels and tissue are not cleaning supplies.
So, take them out of your cleaning budget if you are paying for things such as light bulbs, etc., that belong in someone else’s budget such as food service, engineering, etc.
Don’t skew the numbers
When calculating equipment, if you purchase a piece of equipment and build it into one month, that could skew your numbers.
In most cases, your finance department will have you amortize that piece of equipment over a period of months, such as 36 months or 60 months, and then 1/36 or 1/60 will be put in your monthly budget.
If you are a building service contractor, it is important that you know what your actual cleaning costs are for competitive reasons.
If you are an in-house provider, it is equally important to know how you compare when it comes to a budget and efficiency.
The right solution
Let’s look at your cost of a couple of examples, not just your price.
Take two different cleaning solutions from two different suppliers.
First, do you know that there are 128 ounces in a U.S. gallon?
Remember, you buy these products by the gallon, but you use them by the ounce.
So what you really need to know is what your cost is per working gallon used. It is much less important to know your price per gallon of concentrate.
Supplier A offers you an all-purpose cleaner for $6.40 per gallon.
Supplier B offers you an all-purpose cleaner for $9.60 per gallon.
Supplier B’s product is priced at 50 percent more than Supplier A, but by reading the directions, you know that Product A is mixed at 2 ounces per gallon and Product B is mixed at 1 ounce per gallon.
Your cost per “working gallon” is 10 cents a gallon for Product A and 7.5 cents a gallon for Product B.
Purchasing Product B — which on the surface looks as though it will cost you 50 percent more — will actually save you 25 percent if (and this is a big if) you measure properly.
If you don’t do this cost comparison and measure properly, you are literally pouring a lot of money down the drain.
More importantly, improper measuring can give your workers more work (the 19 nickels side of the cleaning fraction).
The moral of this story is to know the cost of your diluted cleaning products by the “working gallon” and always measure properly.
Check out the dilution chart on this page, which was created by yours truly. It was known as Dixon’s Dilution Chart many years ago and has become an industry standard.
Just for the fun of it, do the math and check the cost per gallon on a soft drink or bottled water that you probably use every day.
Price isn’t everything
Now let’s look at the price versus cost on a piece of cleaning equipment.
For the sake of discussion, let’s say that it is a battery-powered walk-behind scrubber for your open areas such as hallways, and you are considering a 17-inch and a 24-inch machine.
If you are going to buy on price, obviously the 17-inch is going to be priced less than the 24-inch model, but there is a lot more to it than the price.
Let’s look at the costs.
First you have to know some things such as square feet covered per cleaning, frequency of cleaning per month or week, total square feet covered per month or week, square feet cleaned per hour by each machine, the capacity of the clean water and recovery tanks, and your labor costs including wages and benefits.
Here is where your vendors can give you some help. They should be able to give you their machine’s production rate, which is the minutes it takes for their machine to clean 1,000 square feet.
For the example below, we used the ISSA (International Sanitary Supply Association) 447 Cleaning Times booklet.
You can request the “Equipment Cost Comparison” form (See sidebar) that we have put together.
For this example, we will use a 17-inch battery-powered scrubbing machine and a 24-inch battery-powered scrubbing machine. The cleaning time per thousand square feet for the 17-inch is 10.14 minutes; for the 24-inch, it is 5.39 minutes.
If you do the math, you will see that by using the 24-inch, you will save 4.75 minutes per thousand or a time savings of 47 percent.
Now let’s do the rest of the math. Hours used weekly equals 20, time saved is 47 percent, and hours saved comes to 9.4 hours per week.
At an hourly wage and benefits rate of $20, 9.4 hours saved equals $188 per week; 52 weeks times $188 equals an annual savings of $9,776.
The price of the 17-inch scrubber is $5,000. The price of the 24-inch scrubber is $9,000.
So, while the price of the 17-inch scrubber is $4,000 less than the price of the 24-inch scrubber, the cost of the 17-inch scrubber is $9,776 more than the cost of the 24-inch scrubber.
You do the math and your return on investment (ROI) is approximately four months when you buy the higher-priced scrubber.
Make vendors justify their costs
We have given you two examples — one of a cleaning solution, the other of equipment. This price vs. cost comparison can be done on a lot of other items that you purchase.
We believe that you must have your vendors justify the cost of their products to you.
Too often, the person or department in charge of purchasing buys on price alone, and it ends up increasing your operation’s costs greatly.
It is extremely important that you explain the 1/19 cleaning formula to the purchasing department and that cleaning professionals get involved in these purchases.
This includes items such as wet mops and dust mops, paper towels, toilet tissue, specialty items such as spray and wipe, ready-to-use vs. aerosol, and many other items in your particular cleaning arsenal.
Results are the bottom line
Remember this term: “Isolate to evaluate,” which means that you isolate a cleaner or two and an area or two and evaluate chemicals and equipment before you make a buying decision.
Don’t go whole hog until you are convinced the product will perform as promised and will, in fact, cost less in practice.
Remember, it isn’t just the product that gives you results, it is the cleaning procedure that you use.
In other words, it is “procedure before product and product performance before price.”
Choose the procedure that will get your job done effectively and efficiently, choose the product that best fits that procedure, “isolate to evaluate” and make sure it works to your satisfaction, and then let the price enter into the formula.
Maurice Dixon is president of Dixon & Associates, a Minneapolis, MN-based JanSan consulting firm. Dixon, who has over 45 years of service in the professional cleaning industry, teams with fellow custodial consultant Gary Joyner to produce a “Cleaning and Cruising” seminar and a “Classic Cleaning Course.” Dixon can be reached at email@example.com.