Cleaning & janitorial
Commercial Cleaning Margin Calculator
Work out the margin a contract returns once every delivery cost is counted.
Result
Markup is measured against your cost, margin against the price you charge. A 50% markup is a 33.3% margin, not a 50% one. Pricing off the wrong one is the most common way a job that looked profitable turns out not to have been. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditWhat moves the number
- Actual hours delivered against hours costed.
- Absence cover and overtime actually incurred.
- Consumable usage against the allowance.
Where this one goes wrong
Measuring margin at bid rather than at delivery. Contracts drift: extra requests get absorbed, hours creep, consumption exceeds the allowance. The margin that matters is the one measured after a few months of running.
Questions
About this calculator
Why do contract margins erode?
Scope creep mostly. Small additional requests get absorbed one at a time and never make it into a variation, and after a year the contract is delivering considerably more than it was priced for.
How do I stop that?
Record every additional request against the specification. Not to refuse them, but so the variation conversation happens with evidence rather than with impressions.
When should margin be reviewed?
A few months into a new contract, and annually after that. The first review is where a mispriced bid becomes visible while there is still time to renegotiate.
The formula
margin = (price - cost) / price; markup = (price - cost) / cost
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How to use this calculator
- Price charged ($). Enter your own figure; the page starts at $195.
- Direct cost ($). Enter your own figure; the page starts at $108.
The result updates as you type, so you can try a figure, see what it does to gross margin, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Price charged | $195 |
| Direct cost | $108 |
What comes out
| Result | Value |
|---|---|
| Gross margin main result | 44.6% |
| Gross profit | $87 |
| Same thing as a markup | 80.6% |
That job earns $87 of gross profit, a 44.6% margin. The same job described as a markup is 80.6%.
How sensitive the answer is
Holding everything else steady and changing only price charged, this is what happens to gross margin. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Price charged ($) | Gross margin |
|---|---|
| $98 | -10.2% |
| $146 | 26.0% |
| $195 example above | 44.6% |
| $293 | 63.1% |
| $390 | 72.3% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Price charged ($)
- A money amount, starting at $195.
- Direct cost ($)
- A money amount, starting at $108.
What the results tell you
| Result | What it is |
|---|---|
| Gross margin | The headline result. A percentage. |
| Gross profit | A money figure. |
| Same thing as a markup | A percentage. |
Time is the variable that bites
Pricing that works out on paper fails when the job takes longer than quoted. First cleans, heavily soiled sites and access problems all run over, so it is worth pricing the first visit separately from the recurring one.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.