PRICING BASICS / WORKED EXAMPLE

A 30% markup leaves
less than a 30% margin.

They sound similar, but they use different denominators. That matters when you build a cleaning quote from your costs.

Start with a cost of 100

Markup is the remainder divided by cost. Margin is the remainder divided by price. The same remainder is a smaller share of the larger price number.

Include the whole visit

For a fictional solo cleaning visit, allow 3 hours on-site and 0.5 hours of paid travel at a labor cost of 25 per hour. Labor costs 87.50. Add 8 for supplies, 6 for vehicle expenses and 12 in allocated overhead. Total entered costs are 113.50.

At a 30% margin, the calculated price is 113.50 ÷ 0.70 = 162.142857. Round up to the nearest 5 and the quote becomes 165 before tax. The estimated remainder is 51.50, which is 31.2% of the price.

These are arithmetic examples, not recommended hourly rates, time estimates or margins. Use your own costs and decide whether the resulting price suits the job and market.

What if the customer offers 140?

Using the same 113.50 cost, the remainder drops to 26.50. The margin becomes 26.50 ÷ 140 = 18.9%. A small change in price can make a large change to what is left.

A quick check before sending

• Have you included your own working time?
• Have you counted paid travel and vehicle costs separately?
• Are supplies and allocated overhead included?
• Does the scope explain what is included and excluded?
• Is any applicable sales tax handled separately?