Identifying areas for cost reduction in commercial cleaning

Commercial cleaning cost control is a crucial aspect of maintaining profitability in the industry. By effectively managing and reducing costs, cleaning companies can increase their bottom line and remain competitive. One way to control costs is by implementing efficient cleaning processes and using cost-effective cleaning products and equipment. This can minimize labor and material expenses, resulting in higher profitability for the business.

So many factors in the cleaning industry affect how business owners handle costs and drive profitability. Despite the constant challenges, it remains paramount to provide consistency in your pricing and expenses to sustain business growth in this industry. Knowing how to strategize for cost control and pricing separates the industry's top growers from the rest. 

So, let’s start with pricing.

Manage pricing pressures

The market is constantly shifting, from new competitors trying to break into the market with leaner prices to growing competition trying to increase pricing so they can expand their business. 

The competitive market dictates what counts as fairly priced vs overpriced services–and in the crowded cleaning environment, there’s always a competitor trying to undercut you. The last thing you want is a business that’s too reactive. A competitor may be undercutting you but you can’t just drop your prices below a healthy margin to beat them out. You need a flexible pricing model that helps you survive the drops in the market or unsustainable competitor prices.

In the end, it’s the companies with the leanest pricing model and the most flexible margins that survive in a fluctuating environment like commercial cleaning.

Create room between the margins

Your ability to pivot within your profit margins will impact your ability to control expenses and increase or decrease prices as needed. 

When it comes to flexible profit margins, three areas of your business practice will provide you with maximized pricing flexibility:

• Estimating: Accurate estimates keep costs down.

• Job costing: Accurate job costing helps you manage expenses.

• Invoicing: Up-to-date invoicing keeps revenue flowing and forecasts efficient.

Let’s dive into how to manage these factors with your business strategies. 

Estimating

Inaccuracies in estimates are the most significant cause of projects going over budget.

If you can enable your on-site crews with correct logistics and detailed insights, they can measure every aspect of a job's costs more accurately. This means mobile access to your data, historical insights informing your costs, and the ability to communicate any unique challenges with clients and management teams. The more accurate and responsive your estimates become, the more you can forecast expenses of each service type or property type, enabling adaptive pricing.  

Job costing

Job costing is building the historical data necessary to get your estimates down. 

Live job costing enables your business to be responsive to projects as they progress, allowing decision-makers to make changes as needed to keep projects from going over. If you don’t have real-time job costing, you’ll have to price your services to provide an extra cushion in case your projects exceed budget. With live insights, you can see the need for increased pricing as it arrives. That way, you can remain competitive with leaner prices until you need to adjust to the rising expenses.

Invoicing

Tracking invoicing and optimizing your payment processes ensures your business doesn’t fall behind on its cash flow. 

Client portals and automated notifications help your managers stay tapped into late or missed payments. You don’t want to wait until end-of-quarter reports to discover you’re missing payments or losing cash flow. Your business needs a platform that allows for digital communication between you and your clients, or else you leave your business vulnerable to being taken advantage of. Every dollar makes a difference in this market, and missing even one payment can disrupt your business’s momentum. 

Which direction should you go with your pricing strategy?

The decision to increase or decrease your pricing is a big one to make. It’s also the hardest. Both directions can boost your business's success or drop it. Unfortunately, there’s no clear indication on which approach provides the best chance of succession. Cheaper pricing is a real selling point to new customers, but higher prices give your business more of a financial safety net.

The decision is best determined when evaluating your current growth stage. Focus on leaner prices to stand out and undercut your competitors in your earlier growth stages. But  just know, if you price too lean then it’ll be hard to increase your prices later without damaging customer relations. 

If your business is at a new growth stature and tapping into unexplored markets or regions, you can start pushing higher prices since you have the experience and quality to prove the value of your work. The more data you have and the greater your ability to control costs, the easier it’ll be to push the right financial decisions. 

Analyze costs with comprehensive management software 

The best way to manage your costs is to have clear insights. Your business needs software that uses live analytical tools to keep you tapped into financial data. Aspire provides functionality focused on data analysis, live expensing, and invoicing to help you refine your profit goals. Features such as estimating, job costing, and more allow you to proactively approach cost analysis and profitability. 

From maintaining costs to projecting revenue streams, Aspire’s platform is here to help you scale how you manage finances. To get a personalized peek at how Aspire can impact your cost control, book a demo here and begin exploring the functionality for yourself.