Reading Bid Proposals Between the Lines
Have you ever received cleaning service proposals with vastly different prices? It’s common to see a wide range of costs when reviewing multiple janitorial service bids. But why does this happen?
The main reason for these differences usually lies in each company's estimate of the staff hours needed to complete the cleaning tasks. However, other factors also play a role in shaping a cleaning proposal. Here are six key elements that should be included in every cleaning proposal you receive:
Direct Staff Wages
Direct staff wages form the largest part of your cleaning service cost—typically about 76-80% of the total price. When creating their proposals, cleaning companies should carefully consider two main questions:
- How long will it take to clean this facility (in staff hours)?
- What is the market hourly wage for cleaners in this area?
Providing detailed information about your facility helps vendors accurately determine the necessary staff hours.
Tip: Vendors who ask detailed questions and take measurements usually provide more accurate estimates. Also, regional providers often have a better understanding of local wage rates compared to national companies.
Direct Staff Taxes & Benefits
Beyond wages, other direct staff costs should be included in the proposal. These can include payroll taxes, benefits like insurance and 401(k) plans, background checks, drug screenings, and uniforms. These costs can vary based on the benefits offered by the vendor and the specific state and local taxes.
Tip: Vendors who offer good benefits tend to have happier employees and lower turnover rates.
Supplies
Supplies are another significant cost factor, divided into two categories: cleaning supplies (like chemicals and rags) and consumable items (such as toilet paper and hand soap). Most proposals include the cost of cleaning supplies in the base price.
Tip: Ask vendors to provide unit pricing for consumables. Regional vendors often get great wholesale prices on these items, which they can pass on to you, and they might also manage the inventory for you.
Equipment
The necessary equipment is another cost consideration. The type and amount of equipment needed will depend on the scope and complexity of the work. Vendors should factor in equipment depreciation in their pricing.
Tip: Expect vendors to use new or well-maintained equipment. Quality equipment not only improves efficiency but also leads to more satisfied employees.
Indirect Costs (Overhead)
Indirect costs cover a range of expenses, such as accounts payable/receivable, human resources, insurance, and management. Unlike direct costs, indirect costs should not vary much between customers. Vendors usually apply a consistent overhead percentage across their client base.
Tip: Savvy cleaning companies keep a close eye on their overhead costs. Regional companies often have lower overhead costs compared to national firms.
Profit
Finally, vendors need to earn a reasonable profit to sustain their business. Companies with a healthy profit margin are more likely to provide better service and remain in business longer.
Tip: Beware of companies that offer unrealistically low prices. These “here today, gone tomorrow” vendors often don’t account for all necessary costs, leading to unsustainable operations. Look for companies with a solid track record and strong references.
If a cleaning proposal you receive doesn’t include these components, be sure to ask about them. Otherwise, you might end up regretting signing a low-ball offer that doesn't deliver the quality and consistency you need.
