Commercial Kitchen Exhaust System Cleaning Pricing Guidelines
First, determine your hourly rate. This is based on direct labor cost (hourly wages for the crew), plus indirect labor costs if you offer benefits (called “labor burden”, it can be as much as 20 to 30 %), multiplied by the correct factor for your profit margin level (usually X 2 or X 2.5). Most hourly rates are somewhere between $50 per hour to $125 per hour, depending upon how many men comprise the crew. Based on your hourly rate, you should be able to get into the “ballpark” using the following guide.
For a “straight-up” job, average hood, one-story, fan on roof above, the time on the job should approximate the following: 5 ft. hood or less 2 hours 5 ft. to 8 ft. 2.5 hours 8 ft. to 12 ft. 3 hours 12 ft. to 16 ft. 3.5 hours 16 ft. to 20 ft. 4 hours 20 ft. to 24 ft. 4.5 hours Over 24 ft. 5 hours
- Hood lengths overlap to allow for higher pricing if the system is dirty.
- Additional exhaust fans—add $50 to $75 each
- Cleaning filters—add $5 each.
- Charge extra for first time or “forced” cleaning (citation from the Health Department)—it will be dirty.
- Charge extra for long or complicated duct runs.
- Charge extra if the job requires scraping out the system rather than washing.
- Charge extra for access panels (if Required.) approximately: $150.00 each
- Discount for day work, or volume (multiple locations)
$10.00 to $20.00 per hood linear foot plus $40.00 to $60.00 per fan. Minimum charge: $100.00 to $250.00. Access panels: $55.00 to $75.00 each Give a discount for scheduling during the day as most work is done at night. Or a discount for scheduling during your off hours as most work is done from 10:00 pm until 4:00 am. Charge extra for the first time cleaning. Charge extra if they are being forced to clean (citation from the Health Department) as it is probably very bad. Comment by: Ralph DeRose Jenny Fire Prevention The concepts described in Method 1 of the pricing guidelines can apply to all markets because it uses the tried and true method of time and material plus your profit margin. Typically, charging $100.00 to $125.00 per hour will cover your costs plus a good profit margin. Method 2 is also accurate; however, Jenny does not use these pricing formulas. The real art in pricing strategies is to accurately control and access your corporations cost structure. Prices will always converge to what the market will support based on the quality/price tradeoff. However, costs are more company specific and can be manipulated and fine tuned to increase profit margins. This is where a company can gain a competitive advantage over the competition. Keep in mind the quality of work is assumed to be adequate.
BIDDING MULTI STORY DUCT
(Contributed by Matt Bryan of Bryan Exhaust Service) Anybody that lives in a major city is going to run in to multi story grease ducts at one point or another. In order to give the customer a fair price for the job, you are going to need a formula that will cover all of your costs and insure that you make a profit, no matter how long the run is. You are also going to need to be able to keep the price competitive if you have several companies in your area that can do the same quality of work. The best formula that I have seen for this type of job is the per linear foot method, which can be modified for the width of the duct and type of grease being removed. Obviously a larger diameter of duct is going to require more chemical and more duct spinner runs than a smaller diameter duct. Wok and wood burning char broilers are going to require many more runs as well. In some occasions the reverse is actually true. The ducts are so big and so long that only a light layer of grease is formed on the duct, which will be very easy to take off. You can modify the formula if this is the case as well. It can be as simple as charging a standard amount per linear foot of duct and going up and down based on size of duct and type of grease, here are some guidelines: Standard sized duct (say 2’x2’) - $5 per linear foot System with wok cooking - add $2 per linear foot System with char broiler cooking - add $1 per linear foot Larger duct - add $1 per every extra 1 foot of width Here is an example using this formula: 10-story (100’ long) 3’ wide duct with wok cooking; Start with the standard $5 per linear foot and add $1 for the larger duct and $2 for the wok cooking.
You now have $8 per linear foot x 100’ = $800 for a 10 story 3’ wide duct with wok cooking. This can be modified for the pricing in your area by adding or subtracting from your standard duct price. You can also modify this very easily if you plan to give a discount for multiple ducts or multiple locations. This formula is easy to use on an entire system as well. Let’s say you have an 8’ plenum, 10’ vertical duct with one fan. If it was a standard system and you were charging $5 per linear foot you would have 18’ of ductwork x $5 = $90 + $75 for the fan = $165. This is a pretty standard price to pressure wash a one-story location in Los Angos eles but in your area you may be able to go up to $8 per linear foot which would turn the same job in to $220. You can also work the formula backwards and come up with a standard per foot price for your area. Lets say the industry standard for a one-system single story pressure wash in your city is $255. If you start with the $255 and subtract the fan ($75) you are left with $180 for the rest of the system. $180/18’ = $10 per linear foot of ductwork. You can expand this to include the hoods or add on for lateral ducts and your price will still stay within the industry standards for your city. Here is an example of a bid for a system with a lateral duct on a wood burning char broiler using $10 per foot: $10 per linear foot + $1 for the wood burning char broiler = $11 per linear foot. A 12’ plenum in to a 1’ vertical riser with 10’ of lateral duct and 10’ of vertical duct in to 1 fan would be a total of 33’ of ductwork. 33x $11 = $330 for the ductwork. Add $75 for the fan and the total for the job would be $405. You could charge the $11 per foot on the first service to clean the system up and go to $7 per foot on the regular service, which would bring the price down to about $300 on the regular service. The great thing about this formula is that it is very flexible for all types of systems and customers. It is also very easy to explain to the customer how his system is being priced, and you are given quite a bit of leeway if the customer wants to haggle. Here is a form that you can use to try this formula out: Price per linear foot of duct $____ Additional price for wok cooking $____ Additional price for wood cooking $____ Additional price for larger ducts $____ Total price per linear foot $____ Length of hoods _____ft Length of plenums _____ft Length of lateral ducts _____ft Length of vertical ducts _____ft Total ductwork _____ft Price per fan $_____ x Number of fans _____ Total price for fans $_____ Total price per linear foot $_____X Total ductwork _____ ft = $_______(Total price for ductwork) Total price for ductwork $_____ + Total price for fans $______ = Total price for job $_______
The art of Pricing
Pricing is more of an art than it is a science. Salesmanship plays a major role in the amount you can get for a particular job. Some Contract Cleaners can get 10% to 100% more for the same job than their competitors. Pricing becomes even more confusing because people are entering the business with consumer quality pressure washers without insurance, workmen's compensation, office, or overhead expenses because they are operating from their homes on a part time basis. They do not have normal business expenses. But the customer liability (risk) is greater because a lack of insurance and workmen's compensation. And often deliver poorer quality work because of a lack of training. This price guide should be used as a reference point. It is not a recipe that will guarantee that you will get every bid. It will have to be modified to fit the economic conditions of competition in your area. You will have to decide if you are going to bid on quality or price, or somewhere in between. The economic realities are that you cannot deliver a Cadillac for a Volkswagen Price. Companies that do cannot pay their bills on time or end up in bankruptcy. Every time you lose a bid ask the customer who they went with, what was the price, and why they did not buy from you. This will give you the information to start modifying this price guide to fit your market area. Often the customer will not give you this information but most people will give you some information. This is the start of your market survey so that you can adjust this price guide for you in your market area. If you are getting 100% of your bids you are too low. You need to be rejected about 15 to 20% of the time to assure that you are getting for most for your time and effort (what your market will bare). After a competitor has completed a job go by and see what kind of work he did and if possible the price he charged for it. Try to determine if your competitor has insurance, or workmen's compensation. You should include insurance and workmen's compensation certificates with your bids and explain the liability that people have if they choose a contractor that does not have this coverage. When a prospect calls you need to determine how he got your phone number. Was it from: a referral, telephone yellow pages, saw your truck working, newspaper advertising, recommendation from a present customer, etc. Yellow pages leads tend to be price shoppers and they call every one in the yellow pages. This needs to be taken into consideration when you bid. The best lead is a recommendation from a present customer. Track where business is coming from and direct future advertising based on this information. Keep track of all lost bids and their Kitchen Exhaust System Information Sheets. A new Chef will want to bring in his own vendors. Now you will be able to bid the cleaning without another site visit but you will also know approximately what he was paying. This database can be an extremely valuable competitive edge! It is being done by almost all of the larger contractors.
Many small companies bite the cash flow bullet on bids for large corporations and the government. They do not have a clear understanding of how they are going to be paid. They are overwhelmed by the name of a Blue Chip Company and are embarrassed about discussing when they will be paid. The problem is that a lot of these customers regularly pay in 60, 90, and 120 days as a regular business practice and sometimes longer unless you ask for payment sooner. You need to start your collections before you start the job. Find out who is responsible for authorization of your invoice and who will actually process or write your check (it may be from another corporate office in another state). Ask when they normally pay their vendors. Be honest and tell them you are not a large contractor and cannot afford to wait 60 to 90 days for your payment. Find out what their procedures are. Sometime a 2% discount in 10 days will assure payment in a timely manner.
For large corporations and the government find out who the Accounts Payable Clerk or Manager is. This information should be collected before you start the job and not after the payments are 90 to 120 days late. If you expect payment when the job is finished this should be stated along with the price. Do not assume that you will automatically receive payment when the job is finished! On larger jobs that last over 30 days it is normal to receive draws against the total bid based on the percentage of the work completed. Sometime you can get a deposit before you start the job. On medium size jobs 25% down, 50% upon completion, and 25% net 30 days is common. In the construction industry is normal for the General Contractor to hold back a 10% retainer from all subcontractors until the entire job is completed. That means that you may not get the final 10% job payment until several months after you have finished your portion of the project.
Most contractors do not charge extra for travel within a 30-minute to a 1-hour drive of their shop. However, they have a minimum charge of $65.00 to $250.00 to make small unprofitable jobs profitable. This covers of the fixed costs required in dispatching a crew and wash rig. Some contractors charge a small fee of $25.00 to $40.00 for the time it takes to get a wash crew ready for travel and include it in the bid price. Some travel rates are: A. 50% to 100% of your normal hourly rate. B. 50 cents to $1.00 per mile. C. 30 cents per mile plus $35.00 per hour. D. No charge on regular service jobs.
Most Commercial Customers do not question the use of their water, but Residential Customer often complain about you using their water. This is often because they perceive 500 to 1,000 gallons of water being very expensive. You need to check the water rates for your area. In most areas of the U.S. water cost is about 50 cents to $3.00 per thousand gallons. As you can see this is a minor expense. However, if you have to haul water to the job site water can become a significant expense. Most contractors charge the regularly hourly rate to go get water and haul it to the job site. Some contractors doing residential work will add $45.00 for water if they do not use the customer's water. I would suggest that you explain to the customer the water is a job cost and the less you have to pay for water the cheaper you can do the job. If he increases the cost of water than the price will have to go up.
Most companies will have a minimum charge to cover the cost of showing up at a job location. It is not profitable to spend 30 minutes driving to $25.00 job.
Method 1: $50.00 to $250.00
Method 2: $75.00 to $150.00 for the first hour then your regular hourly rate.
Method 3: Minimum of charge of one or two hours at your regular hourly rate.
In today’s turbulent insurance market it is often necessary to obtain several insurance bids. Most states do not have an insurance code for Commercial Kitchen Exhaust Cleaning. Therefore the insurance companies that do insure Commercial Kitchen Exhaust Cleaning have to estimate their risk without the benefit of market risk history. (i.e., they have to guess at it). Because of this market climate it is often necessary to request 3 to 10 insurance bids. Tell the insurance agents exactly what you will be doing when requesting bids and compare quotes closely.
Hourly Rate: Commercial Contractors with Insurance and Workmen's Compensation: $50.00/hr to $125.00/hr, Average-$65.00 to $75.00/hr- non-environmental $65.00/hr to $150.00/hr, average $75.00 to $85.00/hr- environmental Part Timers without Insurance and Workmen's Compensation: $35.00/hr to $65.00/hr, Average-$45.00 to $55.00/hr- non-environmental $45.00/hr to $95.00/hr, average $50.00 to $70.00/hr- environmental You should never be making less than $50.00/hr for a one man rig. $50.00 per hour is about break even for a one man rig and you are losing money if it is a two man rig. Some contractors will reduce the above hourly rates $5.00 to $10.00 per hour if heat is not required and for cold water washers. Most Contract Cleaners will charge less when starting out until they gain experience. Once experience is acquired and reputation is established pricing goes up. Normally after you have been in business for over a year there will be jobs that you no longer consider profitable and will not except. But when you first started out you would have dearly loved to have had the job. When you are bidding a work you are not familiar with you can always fall back on bidding by the hour with a "not to exceed" amount. Also you will find that when bidding by the hour the customer is not nearly as picky as when you are doing the job at a fixed price. Sometimes it is difficult to decided whether to bid by the job or by the hour. Normally if you bid by the hour then your customer is taking the risk on how long the job will take. If you bid by the job then you are taking the risk for how long the job will take. Therefore, most contract cleaners will expect a higher hourly rate for bid jobs than for jobs by the hour to cover their risk for jobs they miss bid. In a perfect world there would not be a price difference between bid jobs and an hourly jobs.
Note: Kitchen Grease Exhaust Cleaning in normally bid by the job. When estimating jobs it is best to figure the price several different ways. For example if you were bidding a parking lot figure the price based on a cost per square foot. Then figure the price based on a time estimate times your hourly rate. Again in perfect world these two figures would the same. If there is a large price difference then you had better study the situation some more. Often contractors post their jobs on Powerwash.com's or IKECA’s BBS asking other contractors for their input or what they would bid. If you are bidding by the job you should be aware of what hourly rate you are earning and adjust future pricing (bids) accordingly. Also during a job if your earnings are too low you should start adjusting your work accordingly and start looking for ways to speed the job up. This sounds too simple but come contractors will ask the customer what they are willing to pay for a job. And if the price is one you can live with you have the job! Be aware of the "perceived value" of Power Washing. Normally it is between $50.00 to $150.00 per hour. When doing bid jobs and your earnings substantially exceeded these figures expect problems from getting paid to the customer accepting the quality of your work. I had one instance where a trucking company was extremely satisfied with the quality of the work from a High School Student Mobile Power Wash Contractor Cleaner washing their trucks for over a year. The trucks were washed on the weekends and he employed other students to help with the work. They thought he was a shinning example of what all young men should be. The Student was abruptly fired when the Terminal Manager checked the time sheets from the Guard Shack and discovered that the Student was earning over $300.00 per hour! The quality of his work no longer mattered. His "perceived value" of a High School Student doing Truck Washing was not $300.00 per hour. Lots of Contract Cleaners have learned this lesson the hard way!
Quality of Work
One of the first things you will have to decide is what the quality of your work is going to be versus the price. When people first enter the Mobile Power Wash Business the are quite often very "idealistic" about providing a superior product for cheap or inexpensive price. Again you cannot deliver a Cadillac for a Volkswagen Price. The problem is, not every customer wants to pay for a Cadillac but every customer wants a Cadillac for a Volkswagen Price. What makes this even more confusing is that there is no exact standard for what clean is. Is clean a swept parking lot or a power washed parking lot? Or is clean just cleaning the hood of a Kitchen Grease Exhaust System. One of the best examples of this problem is one I encountered several years ago. I had two customers that were in the Truck Washing business. They were fierce competitors. One contractor typically charged about $5.00 for a Road Tractor wash while the other one typically charged about $15.00 per Tractor wash. Both Contract Cleaners were successful and both grossed about $90.00 to $125.00 per hour! (Notice that the hourly rate was about the same!) What the difference was the quality of the service each provided. The customers of each contractor were very satisfied with their service and the quality of their work. The trick here is determining what price and quality that the customer really wants. If you are not careful you will be defining Cadillac quality for a Volkswagen price for the customer. Generally if the customer is happy with your service you should be too even if you are not completely happy with the job. Do not point out your deficiencies.
Should you give notices of price increases?
If you are doing regular work on a weekly, monthly, or quarterly basis should you give notice of price increases? With a room full Kitchen Exhaust Contract Cleaners there is no agreement on this item. It is done both ways. Some will give notice and some will not. If you give notice it will draw the attention of your customers and may cause all of your work to be reviewed! On the other hand if you do not give notice the following will happen. A. The Customer will not notice. B. The Customer will notice but will not complain. C. The Customer will notice and call. You have three options:
- Tell them it was a clerical error.
- Exclaim: You only got the price increase now!!!!!
- Explain how your cost has gone up and a price increase was necessary.
- Fire some customers if they are too hard to deal with.