Thread by @SullyBusiness

How to pull a profit on every job as a recurring service business (think lawn care, maid service, pool cleaning, etc.)

1. Determine the hourly wage you are going to pay in your market. For example, let's say the going rate for labor in your industry is $15/hour.

2. Multiply the wage by 1.2x, an increase of 20% to cover Social Security, Employment Taxes, etc.

This brings us to $18/hour for labor.

3. Determine the hours that will be spent at the facility each week. Let's say 2 employees, 2/hrs, 1/week.

That's 4 hours/week. Easy.

4. Every month has 4.33 weeks.

So at 4 hrs/week * 4.33 weeks = 34.64 hrs/month.

5. That labor charge of $18/hour * 34.64hrs/month brings us to $623.52.

Now we need to factor in overhead.

6. I have found overhead of around 50% to be accurate when factoring in chemicals, milage, software, and other basics.

623.52 * 1.5x = $935.28 for labor and overhead.

7. EVERYONE forgets this part. Factor in PROFIT. Take your labor and overhead and add profits between 10-25%.

At 935.28 for labor and overhead * 20% profit = $187.06

8. Add your Labor + Overhead + Profit.

935.28 + 197.06

This brings us to a monthly price of $1,122.34.

9. Last but not least....you have room to negotiate!

However, you can't do it below a point that is profitable.

In this case...I would only negotiate down to where I'm pulling at least $100/month.

That means the lowest I'm willing to go is $1,035.28

10. IF you use this method you will ALWAYS be profitable.

You will stop bidding jobs where you are actually LOSING money.

Figure this out and you will be way ahead of your competition...and you'll be able to quote way faster too.

Cheers!

Been brought to my attention that I've got a math error here. Thanks @galfoalloveritt. This is actually for 2x/week service.