We are increasingly finding competitors charging ridiculously low prices to win business. Does it work? Yes sure it does, they win the business on price and everyone is happy. But are they? As a customer, what can you really expect in commercial cleaning for £8 per hour?
Let’s start with the basics – UK minimum wage is £5.93 per hour.
As an employer, there is a requirement to pay employees for holidays – as most cleaners do not work whole days, holiday entitlement is best worked out as a percentage of the hours worked. Assuming the cleaners get 20 days plus UK bank holidays then this percentage works out at 12.08% of the average hours worked for the previous 12 weeks. This takes the cost per employee up to £6.65 per hour.
In addition, employers have to Employers National Insurance for each employee which again is calculated as a percentage. The current rate is 12.8% of earnings so the cost per hour is now £7.50 per employee per hour.
On top of the employee costs there are then additional costs such as cleaning products – in the cleaning industry there is a generally accepted figure of around 7-10% of the wage cost will be the cleaning products cost. Assuming the lower end, the cost per employee per hour is now £8.02.
We haven’t even factored in to the figure other costs such as capital purchases like vacuum cleaners, training, supervisor visits, uniforms, personal protection equipment plus then the general everday costs associated with running a business. Oh and, of course, not forgetting profit!
Now ask yourself, how can anyone charge £8.00 per hour and offer a reliable, quality service?
This is something we come up against every day in business. Put simply, it is impossible for any professional commercial cleaning company to offer a reliable, safe and quality cleaning service for those sorts of prices.
So how and why do companies do it?
Well put simply they are using the up front price as a loss leader – it is a little bit like your local supermarket offering you two cans of beans for the price of one. They lose money on the cans of beans but they hope that when you are there they will be able to sell you other things. When the cleaning company get their foot in the door they will then try and upsell you to buy your consumables through them or maybe they will offer to start doing your window cleaning or grounds maintenance. Often, however, there is nothing they can upsell you as you don’t need any of their additional services so what do they do?
In our experience they start to reduce the number of hours spent over a period of time. You start out with 20 hours a week which is costing you £160 per week. Shortly afterwards the cleaner starts to leave 15 minutes earlier each day. You are now getting 18 hours 45 minutes per week but are still paying £160 per week. A few weeks later they again start to leave a little earlier – before you know it you are not getting 20 hours per week but you are now only getting 12 hours per week but you are still paying the same price. Your price per hour is now at over £13 and, most likely, the service will be detoriorating rapidly as the job really did need those 20 hours and 12 just doesn’t cut it.
We went to see a customer a few months back who had exactly this experience – they initially had two cleaners on site for 13 hours each per week so 26 hours per week.For the first few weeks they were really happy with the service but then they noticed some little things not being done as they should be. Few weeks later and staff started to complain that that some of the bins were not being emptied. Another few weeks passed and other staff started to complain about the toilets not being cleaned properly.
The customer called us in as they were unhappy with the service they were now getting – we went along and had a look and for the size of the site and the services required we estimated that 26 hours was pretty accurate and close to what we would have said to provide a quality service. We went off and sent in a proposal to the customer. We got a call back from the customer the same day expressing shock at the price – they were paying £10,000 per year for 26 hours per week – or just £7.39 per hour per cleaner!
We explained to the customer that there was no way anyone could provide them with 26 hours per week for £10,000 per year and we explained it in similar terms to the above. Suddenly it made sense to them. When they were initially getting quotes they had chosen the cheapest and it was cheapest by quite a long way – the customer decided to check their alarm logs to see if the cleaners were doing the full 26 hours per week. They were stunned to find that most weeks they were barely getting 15 hours but were still paying the same price.
The result of the above situation is the customer has now moved their cleaning services across to us -the current cleaning staff have come across to us under TUPE. On speaking to the cleaning staff during the transfer process they confirmed they were pressurised by their former employers to do the minimum every day and to work as quickly as possible and actually at the end they were cleaning two customers in the time window they should have been cleaning just this one and, you guessed it, the other customer was also getting less hours and a lesser service than they believed they were getting.
By all means, especially in the current economic climate, businesses should shop around for a competitive price but that price needs to be realistic and it needs to be relative to the quality of service they want and need to receive. If one cleaning company is charging considerably less than the others, work out how much you are paying per hour and then ask yourself can they really afford to charge that price? Like most things in life, if something seems too good to be true then it probably is…
Tags: capital purchases, cleaning, commercial cleaning company, cost, customer, holiday entitlement, hour, percentage, personal protection equipment, vacuum cleaners
