The Tell All Guide To Bidding
How to bid on commercial and residential properties
Today we have a special podcast as Mike spills a lot of great information on the ins and outs of bidding and everything that goes with it!
What one of the biggest mistakes owners are making is bidding too low! Follow Mikes step by step guide on how to bid, and you will be sure to succeed! Everything good that happens in your business comes from your margin. If there is not enough margin you can’t do things like buying new equipment, surprise and delight your customer or pay your employees well. Everything right for your client comes from the margin, so it is vital that you get your customers to understand the importance and in return they will want to pay for a great experience and service.
As an owner, you will want to conduct a yearly review of your accounts and overview which ones will need price raises. You will want to send out an email or letter explaining why you have raised prices, what the price will now be and utilize the excellent opportunity to thank the customer for continuing their business with you and let them know you are thankful for their continued loyalty. As you analyze your account, you will notice that maybe some of them do not need price raises. For those who don’t you can still take the time to send out a thank you letter explaining that you had a price rise within the company but that they are such a valued customer that you are rewarding their loyalty and business with not raising their rates.
RESOURCE ALERT: How to go about doing the biddinghttps://www.growmycleaningcompany.com/cleaning-contract-bids/
A popular question amongst cleaning nation followers is whether or not you should bid in person, and most of the time the answer is Yes! We break it down according to residential and commercial accounts below.
Residential – You must decide what kind of business you want to be if you want to be a brick and mortar cleaning business especially if you do not have a lot of online traffic you want to bid in person. The reason being is that you can have a conversation with the potential clients and target their particular pain. During the bid, you can ask questions like; why they are reaching out to you, how you can best serve them and make their life better. You are going to close a lot more bids when you go out in person. When going to meet potential clients have it in your mind that you are planning to leave that appointment with a signed credit card authorization form and the first date scheduled or a no. The worst mistake you can make is to go to an appointment look over the property and not give a bid right then and there! In the initial phone consultation, set the tone that you are coming out expecting to be able to hear of their troubles and that at the end of the appointment you are either going to come to the agreement that you can and will solve their pain or that you are not right for the job and leave.
Be prepared! Come with a preprinted bid form that you can fill out there; you do not want to leave and give a bid later. Never give the client the opportunity to think it over, seal the deal while you are there and be ready to set them up as a customer.
Commercial – You always bid in person! No matter the size of the account you will still want to expect to leave with a signed credit card authorization form and a signed service agreement with the first appointment scheduled. Again, at no point do you email the bid! If you need to go back to the office and figure out some numbers, make a second appointment.
While some companies such as franchises like to do everything online, you then become more of an online janitorial company. With having everything online, you have to ensure that you create a great funnel that is going to educate those interested in your business, asks them questions, and lets the customers know why they should hire you and how you can best tend to their pain over your competition.
What customers are looking for is someone to solve their pain, when you big in person you have a huge advantage over those who aren’t meeting in person to conversate, dig deep and explain how you can take away their pains. Ask questions like; “what made you invite me out here, what’s not working, tell me about that, can you give me an example, how does that make you feel, how long have you been dealing with this, what have you tried and how has it worked, what is it costing you.” These are the kinds of questions you want to ask because it will show the client that your primary focus is them and your top priority is solving their pains.
RESOURCE ALERT: What to charge and how to calculate cost of goods soldhttps://www.youtube.com/watch?v=Gm_1jjVrD9A
How do you know how much to charge?
For residential clients be sure to figure out what they want. The customers do not need you to sell them what you think they need; they want you to listen and explain how you can best solve their pain.
For Commercial clients, you may need to customize your services for them dependent upon the type of building, how often they need cleaning, and what kind of service they want. After you have received that information, you will then be able to come up with a bid keeping those things in mind.
1.Calculate man hours, how many man hours it’s going to take per month to clean. Remember to not talk about dollars per hour when selling, never have those types of conversations with external customers.
- Determine average hourly pay for employees and add the other cost associated with having employees (social security, workman’s comp, etc.)
- Once you have the total cost, divide that by the cost of goods sold that you want.
The ONLY thing that matters is the cost of goods sold, that is how much it is going to cost you to do the job. What another person charges does not matter, and what they claim they are paying their current cleaner is also irrelevant. There must be a reason they are shopping around for someone else. Do not communicate dollars per hour or dollars per square feet to the customer; you are solving a pain for them for a monthly fee not dollars per hour. You always want to reiterate that you are there to solve pain for a monthly fee. Make sure to get a budget before you give the bid, in having their budget you can give a dual bid in the instance that the services they need will cost over their budget. You will then be able to provide a list of what services will fit within that budget and the second bid can include everything that needs to be done but with a higher bid.
How much should your cost of goods sold be?
This cost depends a lot on your customer, the more hours they are going to buy typically the cheaper they are. The cost of goods sold is going to lower on accounts that have less work and higher with jobs that have more hours.
How to calculate for a commercial bid:
For example, you have a job that is going to take two guys two hours to clean twice a week, which is four man hours per clean and eight hours total per week. You are going to multiply that number by 4.333 because there are 4.3 weeks in a month which is going to equal 35 hours per month. Once you figure out how many hours per month it is going to take to clean a building, you need to know your hourly rate along with the cost associated with having employees, the gross cost per hour. Take your gross rate which for this example we are saying we pay employees ten dollars per hour with an added two dollars for the twenty percent added for the cost of having the employees and that comes to a total of twelve dollars. Take that twelve dollars and multiply it by the hours per month the job is going to take, for the example we are saying is 35 and you will get 420 per month, that is going to be your cost of goods sold. After you have that number, you can figure out how much you want to charge depending on what you want your cost of goods sold to be. Generally, on the residential side you can do 45%, and on the commercial side, you can go anywhere from 45%-65% depending on the size of the job. If the cost of your job is $420 and you wanted a 60% cost of goods sold you would divide 420 by .6, and this will give you a cost of $700. To break it down that is $420 for the cost of goods sold and a $280 profit! As your cost of goods sold goes down the cost for you to provide the service goes up, a higher cost of goods sold means the cost of services is at a lower price.
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