As a cleaning business owner, your #1 biggest asset is your staff. They’re the ones showing up to houses, interacting with clients, and doing the work that pays you. This is why it's so important to pay your cleaning employees the right amount – without breaking the bank.
And while they’re your best asset, they’re also your biggest headache. Employees can make or break a company. So how do you keep good employees around and incentivize efficient and good quality cleaning?
If you get this right – you WILL succeed as a cleaning business.
The most successful cleaning companies have their pay structure dialed in. They pay their employees JUST the right amount to make sure they’re wowing the client on every clean, and they’re employees are not milking the clock.
This article will show you exactly how to find the right amount to pay your employees.
Manage your clients and employees all in one system
There are three things you need to know to get your pay structure right:
If you know these things – you will be able to attract the best employees and make the most profits.
Don’t know where to start?
Make sure you look locally, because $15 an hour might look attractive to someone in Kenosha, Wisconsin, but in Seattle that’s minimum wage.
Come up with some sort of average wage. It can be a range. Just remember that is not your starting wage.
You want to be better than average. You need to attract the BEST employees.
Doing some homework on job posting websites will also help you figure out what to pay new office staff hires.
What should an office manager with five years of experience in the cleaning industry be making? What if they have ten years of experience?
Market research will help you answer those questions and come to interviews prepared. It also helps you know when you can afford to hire someone else in the office.
One last thought on researching average wages…
The average is the average for a reason. If you’re paying your employees too much, you may price yourself out of your market.
That’s why it’s crucial that you understand and get your pricing right.
Which brings us to point #2.
Before you can fix pricing, you need to know what you need to be charging per hour for your cleaning services.
The best way to think about pricing is selling time. How long does it take you to clean a house? What are you charging per hour to clean?
The key number is your man hour rate.
Here’s the formula:
(number of workers) X (hours on the job)
(price of the job)
Let’s say two cleaners spend three hours on the job and you’re charging $200 for the clean.
(2) X (3)
Your man hour rate is $33.
This gets harder when you’re not using a system to track time. Make sure you have a software solution that lets you track actual job times.
Now, that gives you an idea of what you can pay your cleaners. It MUST leave room to cover your overhead costs (like office space rental, marketing costs, etc.) and make you a profit.
If you charge your clients an hourly rate rather than a flat rate, then the margin is a little easier to calculate.
You may start looking at your numbers and realize that you aren’t charging enough.
Tackle that problem first.
Luckily, there are great resources to help you figure out what you should be charging.
The bottom line is, your pricing needs to cover your costs AND make you a profit.
Maybe your pricing is spot on, and you’re paying your staff more than other companies in your service area.
Maybe that’s enough to attract and retain employees for the long haul. But maybe not.
Research suggests that YES wages are important, but employees want other benefits too, like vacation days and health care.
Maybe you’re not in a financial position to offer the laundry list of benefits that larger companies do.
But could you offer some benefits that make your company an attractive place to work?
Consider your workload as well. Make sure you have enough new jobs coming in to pay new cleaners. If the well is running dry and you need more recurring clients – try some new marketing strategies.
There’s also always an extra cost associated with hiring and training new employees.
You might spend two weeks training someone, only to find out they’re not cut out for the job.
Yep, we’ve all been there.
You need to have the capital and cash flow to eat those costs.
It all starts with getting your pricing right and being profitable.
Before you can determine exactly how much, you’ll need to consider how you pay employees.
The most common methods are hourly, per job, or some combination of the two.
Each method has pros and cons.
Hourly wages are simple. Many successful cleaning companies pay hourly.
Employees understand hourly wages, and it’s easy to see how your pay compares to other cleaners.
It’s also much easier to calculate overtime and give incremental raises.
Only downside with hourly pay is poor performing workers can take longer on jobs and lose you money.
You MUST have a way to make sure your employees are being efficient. Hold your cleaners accountable for getting jobs done within budgeted time.
Otherwise, sooner or later, your hourly pay employees will milk the clock.
Paying per job offers a solution to this problem.
Some companies pay their cleaners a flat percentage of each job, while some do different percentages based on the type of work.
For example, you may give your employees 40% of each job’s revenue.
So, for a $100 job, that’s $40 for the employee. The other $60 goes back to the company.
The great thing here is that your company’s share of the revenue is always the same.
While this method makes it easier to ensure that YOU make a profit, you need to be careful to abide by labor laws.
Let me explain.
Let’s say the job you charge $100 dollars for, takes the employee six hours to complete. So, you pay the employee $40.
Their per hour rate for that job is $6.67 – less than minimum wage!
Now, most companies don’t have this problem, because under this method, employees often work faster.
Sounds good on paper – in reality, this can lead to sloppy work.
A great way to ensure quality under this system is to email surveys to your clients after every job.
Even better if you can automate this process with something like Service Autopilot’s Automations feature.
The other downside to paying per job, is that it’s hard to pitch to prospective employees: they may not understand it. Make sure to show potential employees what per job pay would look like for them on an hourly, daily, or weekly basis.
That brings us to the final method – a hybrid of hourly and per job.
Some of the best companies in the cleaning industry do a combination hourly and per job. They pay their cleaners an hourly wage AND some commission percentage on each job.
This method hits the sweet spot for getting quality work at an efficient pace.
But you REALLY need to know your numbers to pull it off.
Here’s what the hybrid method might look like.
Example: you pay your cleaners $12 an hour base rate, plus 10% commission on each job.
You charge $100 to clean a house and you budget three hours for the job.
If the cleaner does the job in exactly three hours, then they make $36 base and $10 commission. The employee’s per hour earnings come out to $15 an hour.
Let’s say it takes the employee a half hour longer. They make $42 base and $10 commission. Their per hour earnings are $14.80.
Let’s say the employee does the work in a half hour less. They make $30 base and $10 commission. The employee earns $16 per hour.
Your cleaners have an incentive to work quickly, BUT they are not overly punished if the job takes them a little longer.
This gives them the flexibility to spend more time on that client you really want to impress.
At the same time, in their mind…
More work = More commission
Again, this requires that you understand exactly how long your jobs should take and you price them accordingly.
You can get creative with this method too.
For example, maybe instead of a flat percentage on each job, you give bonuses based on performance. You can use customer feedback surveys to determine how your cleaners are doing.
At the end of the day – there’s no clear-cut choice for which method is the best.
You need to decide what’s best for your business and your market.
The key is to choose a method that keeps your cleaning staff happy, your profit margins solid, and your clients smiling.
Let’s face it…
Choosing how much to pay your employees is a BIG decision.
Pay too little – you can’t attract or retain good employees. You might even have competitors constantly swiping your staff.
Pay too much – you can’t give your employees raises or your services become unprofitable.
Get it just right – you will be the company that hardworking and loyal employees will love to work for.
Luckily, if you consider all the factors in this article – you’ll be on your way to getting it perfect.
You’ll have the tools to pay your employees a wage that keeps them happy and keeps your cleaning business growing and profitable.
Tags: Business Operation