Need help with a price

[sherri7]

Hi,
I just moved to Albuquerque, New Mexico from West Michigan.
In Michigan I only had one 2000 sq.ft. home I cleaned for $120.00 bi-weekly. Since I've moved, I have no idea what the going rate is here. I have a potential customer who is desperate for someone to clean her home once a month. Apparently, she can't find anyone willing to drive that far. I haven't seen it yet, but was told that it's approximately 3000 sq.ft. and its just an older couple who live there.

I was thinking of charging them $250.00 for the initial clean and .07 a sq.ft. since it would be monthly. I would be the only one cleaning, and I'd rather have a bi-weekly job.....a monthly would be a challenge to keep up. What are your thoughts?

Thanks!
Sherri

[Kevin]

Sounds fair. If you do not have any customers in the New Mexico area you might want to take it at a fair reduced rate to build up references.

[logan5127]

admin said:

Sounds fair. If you do not have any customers in the New Mexico area you might want to take it at a fair reduced rate to build up references.

Can you please go into more detail as to what is " a fair reduced rate." I use to think this was a good idea. I now think that maybe it is better to go into business with a more positive outlook. Perhaps by learning the trade first and then following up with a winning start. So many small companies start up and charge low thinking they really need a job. So many companies go belly up fast. What if we believe in ourselves a little more and know that what we offer is a great service. Why charge less? Why not make a statement of , "I know what I am doing" rather than " I think I can do a good job at a low price if you give me a chance." I know it is hard, but it seems like we need to start by charging what we are worth which if we start up right we should be a fair market price or more. I know how I feel when I see new companies come in with low prices. I know how they feel once they are in and how hard it is to raise a price once you have set a low price. I know it is nice to have references, but wouldn't it be even nicer to give a reference to a company that pays you well for a service well done. Wouldn't that make you stand apart from all the other start up companies more so then a reference that may say you do a good job and you are really cheap. I just feel that maybe it is better to try to start on a level field in pay then having to climb a mountain that we may have built in front of us. I think that a lot of companies just want a contract and they are willing to do them for about what they would get paid working at a fast food restaurant. I think we as a whole should start preparing people to start at their highest level possible. Through education, encouragement,desire, and the will to succeed at a pace that they can handle with out digging a grave from the very first contract.

If you are knowledgeable about what you do. If you are professional at what you do. If you offer the best service you possibly can. If you plan on succeeding. If you use your time to research and study the trade. Why should your price be any less than anyone else? On the other hand if you know very little about the industry, you are not willing to give any time to learn, and you are more eager to have a contract then a successful business then maybe you should charge low and get it out of your system so you can move on to something else.

All this is my opinion as I always say. It is a good topic for discussion. I know a lot will not agree with me and thats OK. I know some will and thats OK. This forum is for us all to learn from and to hopefully help each of us to succeed in our quest. Please post your thoughts. Dan

[Grizzly]

I am humbled and bow before the wisdom of Dan. LOL,LOL . Seriously, some good advice. The more people that act professional in this business, the better. Does any other business person start up a new venture without a business plan/, without looking into some market research , ? the answer is no. Even if you are just going to take on a few homes for extra cash, take pride in it, present yourself professioanlly and do market research.

Bill

[Kevin]

I would say I agree with you Dan & Bill but in this case. Many cases. It does not happen. I try my best to analyze the information and give an appropriate answer.

"Fair reduced price" you are making a profit and building clientele at the same time. The clientele is worth more than your profit in return business along with positive references and referrals if you have a plan in place.

Now to Sherri. She had one account in Michigan, now she moved to New Mexico. Stats tell me the customer is first concerned with insurance, bonding and references. I will assume she has the insurance and bonding. She is now lacking in references. Now if she came to New Mexico with some positive references, lets say a handful or more. She could incorporate a program of " Sherri`s Service with positive references and experience from Michigan now serving New Mexico"

She does not have an adequate amount of clients or experience. Sherri possibly might be the best home cleaner in the world. I have no idea. If Sherri had a positive attitude was very impressionable, along with proper marketing materials and methods she might be able to go into any home or business and demand any price she wants without anyone wondering if she has done any cleaning before.

She might be able to slide one past the older couple she mentioned. They simply might just like her, are desperate as she said, and so happy to finally find someone to clean for them.

What works for the goose, does not always work for the gander. The next couple or businesses she runs across will not be so easy. Most people pay for positive results.

Now: Sherri wants to be a service provider in this area for along time. I would say anyone opening a business there goal is to do business and make a profit. The more business you do the smarter you get, and the more business you receive the higher the profits.

Taking your first amount of accounts at a reduced fair profit to start, builds experience and training. It is the same concept as the major franchises with commercial other than she does not have a major name and multi-million dollars of marketing and advertising behind her. The concept is quick business start-up.

Go into a commercial area. Take account #1 through #5 at reduced fair profit contract. Set up your headquarters in one of the accounts. Do a good job. Move street by street, mile by mile using references from corporate and local names of happy customers. Each quarter mile increase your rates. Sell extra services to initial customers to make a greater profit. When you get to #25 account, renegotiate contracts #1 through #5 if they are not paying a good amount for extra services cancel them and move on.

Now the problem with the process is most franchise owners get discouraged paying so much back to the franchise and stop doing a good job never continuing past account #5.

Most single service business owners are overwhelmed at account #5 they stop and clean everything themselves, do not hire, and continue working for low profits at low profit accounts till they are canceled and have no will to find new accounts.

Regardless of the above, Sherri with positive local references will do better than without any references. The faster she gets references increases her chance of continuing her dream of owning a business. Will she last for the long run? That is up to Sherri to decide.

[logan5127]

I think the references are great but even more so is the word of mouth from a satisfied customer. If the customer is well satisfied they will tell their friends/or co workers. The customer may also tell them what they are paying. In this fact is one thing a company should consider when pricing so that the customer they refer does not expect you to be cheap. The best word of mouth would be , " they are great, professional and worth every penny they charge.".
I met a girl last week that started a residential cleaning business. She come out and gave me a price to clean my house. Three hours for $30 total. I hired her. She already has 4 residents and her goal is to have 11. She done fabulous work. Her desire, speed and professionalism was worth a lot more than she thinks. I told her she was to cheap but she said she is happy with what she charges. I figure her cost to do the job was perhaps $2.00 hour for vehicle expense and gas. That leaves $8 hr. Take away 20% for taxes and that leaves $6.40 hour. That is if the customer pays for all supplies and equip needed and no insurance,phone cost, advertising cost, and so on. Just doesn't make any since to me.

[tailoredmaid]

If you start too low, you have a problem later raising the rates. Never underestimate or low-ball yourself from the get-go. You are worth what you set your price to be! Your WORK is what will get you referrals, references, and word-of-mouth advertising. It's really not good to diminish yourself with lower rates to "buy" clients. It creates havoc later.

Word of caution: Price yourself as though you have employees even though you don't. When you do add on employees, you are already in the correct price bracket.

Offer incentives for word-of-mouth advertising. Give a referral bonus to those who give SOLID referrals. For a current client that gives a referral to a new client, and the new client has the home cleaned twice, give $25 off the next cleaning for the current client. Never off the initial cleaning, either!

You will end up going out of business before you ever get started if you discount from the start.

Just my take....and experience.

Torrey