Episode 243 – What to do When You Underbid a Cleaning Job
What to do when you have underbid a contract and it has become non-profitable for your business
Today we are speaking with Edwin Ruiz from SoCal thorough cleaning services. SoCal thorough cleaning services are currently providing the LA and San Fernando Valley area with excellent commercial cleaning services for the past year. Before getting into the cleaning business, Edwin was working in manufacturing in the aviation industry. After losing interest in the aviation field, Edwin began looking for a part-time, side job to make extra income. At that time Edwin began hearing more and more about the wonderful world of the cleaning industry and how it could fit his schedule as a part-time job. Edwin then started contacting a few of the local cleaning companies in his area, and before he knew it he had obtained a few subcontracts as a cleaner. A few years into working as a subcontractor for other cleaning contractors Edwin decided to take the final jump into owning his very own cleaning business as running and owning his very own business was something he had always dreamed of doing.
RESOURCE ALERT: Resolve the underbid https://oldsite.growmycleaningcompany.combid-on-cleaning-jobs/
Decide whether the contract is Red Yellow or Green
Red – You are making no money and paying the business for the privilege to clean there
Yellow – Making some money and is profitable but does not hit your minimums
Green – Exactly the way you wish the contract to be
If your contract with the company is not a large part of how you are currently making your money and considered to be in the yellow or red category, it would be best for your business if you go to the personnel and state that you will be raising your prices. When raising prices, it is not a negotiation. Never ask for a price increase, you say that your prices are going up and provide the new cost with an effective date. It is your business, and you decide how you are going to run it, the company can either pay the new price or discontinue your services and go elsewhere to a different cleaning service provider!
RESOURCE ALERT: How not to lose a contract but resolve the underbid contract https://www.youtube.com/watch?v=sf61LnHI-Pk
If the client represents a significant portion of income for your business, you do have to proceed differently in how you will raise your prices. Decide whether each job within the contract is red yellow or green. After doing so, take the entire contract as a whole, including all of the jobs that you currently service and decide then whether the entire contract is red yellow or green. You have to determine whether or not the contract is worth losing if you were to raise your prices and they did not agree nor were willing to understand why you are going to increase costs. When you come to the owner you have to be prepared to walk away, you do not want to get into a negotiation battle, and your price raises are non-negotiable because you are trying to provide the customer with the best possible service. It should not be hard to have these types of conversations with the owner or whoever may be handling your business deal. Always state how you are appreciative of their business, how much you enjoy working with them, and how motivated you are to provide the best service possible. At that point, you should then be able to lead the conversation into what your dilemma is, and that if you do not increase your prices, your business will not have the resources available to provide the best services possible. After you state your problems that should open the conversation for honesty and you should then be able to come to a resolution with whoever you are speaking with on whether they are going to accept your price increases or that you have to walk away from the job and they then have to find a new commercial cleaning service provider.
Best advice you’ve received either personally or professionally?
What’s the biggest mistake you’ve made in the cleaning business we can all learn from?
Underbidding, not going out with enough experience with the thought that if you underbid you will obtain more contracts.