Inflation and Janitorial Pricing
Janico Building Services, LLC
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Rising fuel costs and record-high inflation spurred by supply chain bottlenecks drive up the costs for everything including janitorial equipment, supplies, consumables, etc. In the state of California, legislation has increased the minimum wage from $10.00 in 2016 to $10.50 in 2017, $11.00 in 2018, $12.00 in 2019, $13.00 in 2020, $14.00 in 2021 and now $15.00 which went into effect January of 2022. The minimum wage for 2023 is projected to increase yet again to $15.50. And it’s not just low-wage workers who will receive pay raises. Wage differentials necessitate increases among front line and middle managers as well. The cleaning industry is labor-intensive, and pricing is severely impacted by wage rates.
While it is preferable for building service contractors (BSCs) to limit the impact to their customers, passing along rising operational costs in the form of price increases is inevitable. At the same time, property managers are under constant pressure to keep their janitorial budgets under control. Let's look at a few examples of how commercial cleaning companies are responding to higher labor costs while minimizing the impact on your cleaning budget without sacrificing the level of service. For many of the most experienced BSCs, it is a combination of some of the?industry's best practices.
Smart Cleaning Controls Cost While Maintaining Quality
Implementing Smart Cleaning in your facility can help keep costs down while living with the rising cost of labor. Suboptimal janitorial budgets can be managed by strategically choosing which services are most beneficial to the cleanliness and function of the facility. Services can then be ranked and delivered at a frequency within the budget and makes sure facilities are still well-maintained from the perspective of building occupants and visitors. This means meeting with your janitorial cleaning company and discussing what your priorities are and what things can be given less attention. It also involves a thorough understanding of your pain points, a complete review of services and how they can be condensed and scheduled to retain service levels. Simply asking your service provider to absorb rising costs at the same pricing will ultimately lead to a failed cleaning operation. Smart Cleaning is not about providing less cleaning but is a strategic transition to the most critical services that have the largest impact on the functioning of your facility. When applied by an experienced company, cleaning hours and cost can be reduced without drastically lowering the quality of your cleaning.
Consider Team and Day Cleaning
When dividing up the cleaning and maintenance duties required in a facility, the old method was to use zone cleaning. With?zone cleaning, the building is divided into separate areas that become the responsibility of assigned cleaners who are responsible for every cleaning task in their zone, often an entire floor. That means every cleaner needs to vacuum,?clean restrooms, empty trash, dust and more. This has some real disadvantages. With multiple responsibilities, it is easier to miss tasks leading to a less than optimal clean. Also, each cleaner needs their own set of tools, equipment and supplies. ?
With team cleaning, janitors perform a few specific tasks throughout your facility. Typically, cleaning tasks are divided among light duty specialist, vacuum specialist, restroom specialist and utility or general specialist whose duties may vary. Think of the team like an assembly line with each team member responsible for a very specific set of duties.?Team Cleaning?creates job mastery, a clear understanding of the work and a heightened level of accountability. Specialists are far more likely to clean the right way, every time. In this way, team cleaning is typically more responsive and more consistent. And team cleaning also has a flexible structure that can be custom tailored to adapt to the unique needs of your facility. Finally, team cleaning requires less equipment purchases.
Team cleaning can help you manage?reduced cleaning budgets?without jeopardizing the overall appearance of your building.?Specialization most often means less equipment and fewer labor hours.?Labor and equipment are the two largest costs for most building maintenance companies and thus, when your?janitorial services company?has reduced costs, you have reduced costs.
Energy saving consultants rave about the benefits of a day cleaning program.?The practice seeks to utilize daylight hours for cleaning services, thus avoiding the energy and electricity costs you would expect when a crew is operating in the evening after normal business hours. Some customers report as much as a 15% – 20% savings on electricity. Not only is it more cost effective, but it is also an environmentally conscious program which is a win for everyone.?It is important to note that a day cleaning program is not just evening cleaning done during the day. Any transition from the way things have historically been done can create some challenges so before making this change, you should have a thoughtful discussion with your janitorial provider.
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Review Cost of Consumables
The partnership with your janitorial provider is critical to service delivery. Experienced BSCs continuously add value by keeping consumable prices at or below the rate of inflation. Connecting with your janitorial partner, especially during periods of very high inflation, is critical. Some cost-savings ideas include purchasing hard roll paper towels instead of multifold towels. The cost per foot is much less expensive and because of the way they are dispensed, people generally take many more multifold towels. Also consider switching from regular toilet paper rolls to large jumbo rolls. The size of the roll reduces the cost per foot. Purchasing consumables from your cleaning partner who may have access to wholesalers may also yield better pricing due to volume purchasing.
Counterbalance Inflation with Technology
The commercial cleaning industry has gone through several?technological advances?in the past few years. As a result, janitorial work has become increasingly more effective and more cost efficient. As an example, autonomous vacuum cleaners, through case studies, has been shown to reduce labor costs by 50%. While investing in this technology has a high associated cost, the efficiency it offers and reduction in hours can help keep janitorial and commercial cleaning prices down despite a rising minimum wage. Another technology that drastically changed the industry is HEPA filtration backpack vacuums, which allow cleaning staff to cover more than twice the area in a facility in the same amount of time as before. Additionally, the HEPA backpack vacuums also helped reduce repetitive motion injuries as well as improve indoor air quality compared to traditional vacuums. Not only does innovation in the commercial cleaning industry reduce labor hours, it also improves the health of your building by implementing greener, more sustainable technologies.
Employee Retention Equals Savings
Any service businesses’ single greatest resource is their people, which is why rising labor costs have a big impact on California cleaning companies. Employees are key to delivering quality service, but the commercial cleaning industry can experience employee turnover upwards of 100-200%. However, property managers and building owners should hire?a janitorial company?with a healthy company culture that offers its employees incentive programs resulting in employee retention that exceeds industry norms. How does this benefit you? The cost of recruiting, screening, hiring, and training new employees with any degree of frequency is a very large expense. Newer employees are more inefficient as they are learning and mastering their responsibilities. This is of course unavoidable, but if your cleaning company is a revolving door of new hires, they are always in training mode reducing the quality and value of the cleaning services you are receiving. The higher the turnover rate is, the higher the cost is going to be to you, not to mention that the quality of your cleaning will be reduced by the constant changing of the staff that is cleaning your facility.
Full Disclosure Pricing
Full Disclosure Pricing means a janitorial company provides the breakdown of costs and profit with their proposal. The benefit of this type of transparency is that you can see exactly what it is you’re paying for and exactly what the hard costs are for your janitorial company. What you should be expecting to see when it comes to hard costs is the following:
In terms of expenditures, the highest expense will always go to staffing, and with the increase in minimum wage, this number will only go up. The best companies in the industry will look to position their business model in such a way to avoid passing on the cost to you by utilizing techniques like Smart Cleaning and by investing in efficient equipment. However, if you need fixed hours, the cost is going to go up. Taking advantage of industry innovation and best practices can help keep prices reasonable with the understanding of how rising wages impact the price of your janitorial service.
Inevitably, inflation and California’s rising minimum wage will have an impact on costs in numerous industries and the janitorial industry is no exception. Still, there are things to be done with both you and your janitorial company pivoting to keep costs as level as possible while keeping your facility well maintained.?