Question: How can I know what to charge?
Steve’s solution: Focus on these six points?
Do you have to be an accountant in order to fully understand what your costs are … as a carpet cleaning/floor finishing/ window washing/ toilet scrubbing service??? I’ve completed my first year in business (and experience) and I still don’t REALLY know how much each job is costing me!
I know, I know, I should know all this stuff but when I have to do EVERYTHING myself I just don’t have the time/ energy/ knowledge. (I have a feeling my accountant doesn’t know much about pricing either.) Why is everyone so tight lipped on this issue? Please be brutally honest…
All Priced Out in Chicago
Brutal honesty, Priced Out? Remember you asked for it. (Before I nail you to the wall let me congratulate you for at least recognizing the problem! See #1 below.)
1. Virtually anybody can “suck rug”. A majority of these individuals can even get them clean. LOL. And quite a few cleaners can please clients and even get them to call them back. (A very select few can consistently turn these repeat clients into Customer Cheerleaders that enthusiastically sing the cleaner’s praises from the rooftops … but I digress.)
Sadly, most carpet cleaners merrily go through life totally ignorant of what their true costs and even worse what their true profits (if any) really are. Consequently they never really make any ‘real money’ and just sort of eke their way through life. The reason to be in business is to make money … and a lot of it! So how do you reverse this sad state of affairs?
2. Educate yourself. You don’t need to come to one of our Strategies for Success training options. (Even though you’ll learn more about practical, “real world” pricing in an afternoon with Chuck Violand or me than you will in months of research on your own!) Buy some books on small business management and accounting. The “Dummies” series aren’t bad. Avoid the big “college textbooks”. They are almost unreadable and most of the stuff doesn’t apply to us. Fortunately, a carpet cleaning business is real simple. Money in – money out – where did it go? (Forgive me, Chuck!)
3. Get computerized. I know a lot of people say to start out manually. But computers are so cheap and Quickbooks is so simple it is actually easier than doing it manually. Plus the investment and ease of use is an incentive. In fact, the tutorials in Quickbooks could provide your education at the same time.
4. Network. Go to industry trade shows, hang out on industry discussion forums or hook up with a local carpet cleaners association.
5. Just do it. No one is worse than me when it comes to self-discipline and accounting. But don’t think of accounting for just paperwork’s sake. Think of it as your children’s education, a new house or even a new Harley!
6. Raise your prices immediately. Do this even before you analyze what your break-even price is because I know (and you do too) that you are too low now. (Because virtually everyone is.) There is no virtue in poverty! And I promise you what almost all of our SFS members have come to realize: When you raise prices– you will lose no (or very few) clients and your profits will skyrocket. (And that is even before you get down in the trenches with your accounting!)
Let me know how you are doing.
P.S. Of course, it does keep coming back to making the Cheerleader out of every single customer, Priced Out. I won’t lie to you. I was terrible to mediocre when it came to accounting and job costing (which is actually more important). But a simple truth that I share with every Strategies for Success class (when Chuck is out of the room) is “When you make the Cheerleader … everything else (including knowing what your costs are) takes care of itself!”
NOTE: One sin to absolutely avoid is setting your prices based on “what the competition is doing”. Since most carpet cleaners are just as confused as you are, Perplexed, it would just be a case of “the blind leading the blind”!