How to Price Foreclosure Cleaning Jobs: Advice from a Successful Foreclosure Cleanup Business Owner

Aug. 12, 2009 - PRLog -- In most cases, when potential clients call you for a foreclosure cleaning job, they’re going to want you to give them a rate over the phone. You should patiently that you have to view the property before giving an estimate. Once you clear this hurdle, they’re still going to want you to give them a job rate immediately after viewing and assessing the job.  

“Don’t,” says Cassandra Black of Foreclosure Cleanup, LLC, in Atlanta, GA.

Following is why.

Foreclosure Cleaning Jobs: An Industry with Thin Profit Margins

Ms. Black says, “Most of the services offered by foreclosure cleaning companies have thin profit margins, eg, lawn maintenance. This means you can literally be out of business before you start if you don’t learn how price appropriately.”

She goes on to state that many new foreclosure cleaning business owners have no previous business experience. Hence, they’re not familiar with concepts like calculating direct and indirect costs. But, these are critical to pricing foreclosure cleaning jobs correctly.

Foreclosure Cleaning Pricing: Direct and Indirect Costs Defined

Direct costs are those expenses that can be defined in absolute terms for every job. These are things like how much you pay workers and the cost of supplies. You know what it costs you exactly, which makes it easy to factor into your pricing model.

Indirect costs can be a bit more tricky according to Ms. Black, because they are not accounted for in direct costs “for a particular job”. Some examples of indirect costs are workman’s compensation insurance, business phone, paper and toner for your printer, etc.

The inability to factor in indirect business costs accurately is a major reason so many new small business owners find it difficult to price jobs. Because they leave these out, they usually wind up undercharging. Hence, they’re in the red and out of business before they know it.

How to “Accurately” Calculate Indirect Costs for Your Foreclosure Cleaning Business

The word accurately is in quotation marks because, by their very nature, indirect costs are not concrete. But you can get pretty close calculating them using some concrete formulas and common sense.

Your largest indirect costs are pretty easy to calculate (eg, wages, business insurance).

The intangibles are what will give you headaches, eg, gas for running around giving estimates and calculating how much time it’s going to take to complete a job. The only way to figure these things out is to pull upon knowledge you already have.

For example – take gas. To get a good idea of how much you’re going to spend, calculate a certain number of miles per week. If you stay within a certain geographic area (say, 50 miles) then figure giving 1-2 estimates a week initially. At 100 miles per round trip, you can get an idea of how much gas you’ll be using.

Ms. Black concludes on a positive note, “Once you do a few estimates, you’ll get better at calculating costs – hence, raising your foreclosure cleanup business profits.”

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To learn everything you need to know about how to price foreclosure cleaning jobs, get the manual, "Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses: How to Price Jobs for Profit," at http://start-a-foreclosure-cleanup-business.com.