Filthy Rich Cleaners Podcast E28: How Much Does a 7-Figure Business Owner Take Home? + More Juicy Q&A’s

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Introduction

Coming up next on the Filthy Rich Cleaners podcast: “A lot of times they just need that nudging. I would say, if you’re asking over text or over email, and you’ve already done it multiple times, think that doing it in the field is going to be more advantageous.”

From your first dollar to your first million, welcome to the Filthy Rich Cleaners podcast presented by ZenMaid. Join your host, Stephanie Pipkin, founder of Serene Clean, as she shares proven tips, tricks, and hard-earned lessons. Whether you’re just starting out or ready to scale, get ready to discover how to build your own cleaning empire. Let’s roll up our sleeves and dive in.

Q&A Session Introduction

Stephanie: Hello everyone, and welcome or welcome back to the Filthy Rich Cleaners podcast. I am your host, Stephanie Pipkin from Serene Clean, and today’s video is a nice, juicy Q&A from all of the amazing questions you guys have been leaving on the YouTube videos. So thank you for leaving your questions.

We are going to be talking about all things pricing and insurance, problems we’ve had, and even how much I personally made from Serene Clean over the six years. That’s right, I am going to tell you the number. I went and calculated it to the exact dollar. So if you are interested in knowing how much money I’ve made, keep watching.

Insurance Experiences

Let’s get cracking. Stephanie Entrepreneur Vlog asked about insurance: “Can you share things that have happened where you said ‘this is why I’m very happy that we had insurance’?”

Most incidents have been workers’ comp related. We have had many workers’ comp claims where if we were not properly insured, it would have been quite a nightmare because of medical costs related to the cleaning technicians who got hurt.

I had an employee very early on roll a vehicle, and she had extensive medical expenses. Additionally, her vehicle insurance and my insurance battled it out over who was going to cover the vehicle loss claim and things like that. So having insurance was really great.

Other than that, I’ve had several accidental needle pricks from diabetic needles at the really big military job that we did a few years ago. All of the refugees at this military base did not have proper sharps disposal containers in the barracks they were staying at. That meant needles were just getting thrown into the garbage, which my cleaning staff were emptying. I think I had three total accidental needle pricks, which meant they had to immediately get blood pathogen testing. I was just so mad—I could have lit a fire. I was so angry because it was a problem that kept happening, and they wouldn’t do anything about it. Super duper frustrating. They did not care about our cleaners, that’s for sure. They were all okay, but they did end up getting testing.

I also had a cleaner slice her hand open on a razor blade that was in a drain at the same job, and we had to do a worker’s comp claim on that. I’ve had cleaners fall, so lots of injury-related stuff for workers’ comp claims. I’m very grateful that we had proper insurance for that.

Actually, we have only done one insurance claim in six years because of us breaking things. We’ve broken a lot more than one thing; however, typically it’s not worth it unless it’s a really big thing that you break. In our instance, we were at a very luxury home, and the cleaner was dusting something behind their glass stovetop—a decorative stone. It fell onto the glass stovetop and shattered it. That was a very expensive glass stovetop to replace, so we did end up doing an insurance claim because our deductible was around $500.

Usually when we break things, we just pay for them outright because it doesn’t make sense to have an insurance claim which could potentially increase your premiums. Insurance is the most boring thing ever, but so important. We’ve spent hundreds of thousands of dollars on insurance at Serene Clean, mostly because of workers’ comp, but also General Liability. If your cleaners were to use the wrong thing on hardwood floors or dump something on carpet, and you have to replace things, or replace appliances or appliance panels, that’s where things get really expensive. So we want to be properly insured.

Pricing Your Cleaning Service

Shonda asked: “Newbie here, do you have information on how to price your service?”

If you are a business—meaning you’re licensed, registered, and insured—the going rate countrywide at a minimum is $40-$45 per man-hour. I would suggest $45 per man-hour, and anywhere from $45 to $65 on the high end is not unusual, regardless of whether you’re charging flat rate or hourly.

We are currently at $55 per man-hour. When I started six years ago, I was at $30 per man-hour. I should have started higher because I’ve had to do tons of price increases over the years, which is very painful.

Actually, we just did a price increase going into effect tomorrow. All of our clients who were at $45 per man-hour that have been grandfathered in, some of these clients we’ve had for years, are now going to be at $55 per man-hour. I don’t think we lost anybody. We had some people drop frequency, meaning if they were every two weeks, they might have gone to monthly, but that’s fantastic!

Shonda, I would suggest at a minimum, if you plan to have staff members, $40-$45 per man-hour so that you can cover your expenses. I honestly think you should do some practice cleans first and charge first-timers on an hourly rate until you understand your production rates, otherwise you’re going to lose your ass. I can’t tell you how many people I talk to who completely under-price on first-time cleans, and they’re just sitting there kicking themselves, cleaning themselves ragged because they did not price correctly.

First-time cleans take forever. You’re going to be real slow because these places are dirty, they haven’t been cleaned, and you’re probably kind of slow too. I’m a slow cleaner—I’m not fast—but that’s because we really sell on quality and very detail-oriented cleaning.

I would say do your first-times hourly, and then maintenance cleans hourly again until you can see how fast you clean. Start calculating that data, tracking, write down: How big was the space? Did you clean all of it? How long did it take you in man-hours? That’s your production rate. Start collecting data based on different types of houses, how many pets they have, how many kids they have, how clean they were, how cluttered it is. All of these things make a difference.

Until you know this, flat rate is probably going to be a struggle, especially in the first six months. This is experiment time for pricing. Let’s try to figure out how fast you clean and all of that good stuff.

Getting Google Reviews from Clients

Anastasia, our future podcast guest, said: “I’ve been asking my longtime clients to do a Google review for us for the past month, and I have been shocked that only half of them have bothered to do it. I’ve sent them a reminder every week. It’s been so frustrating. Any tips on how to get them to actually do it?”

Yeah, some people just don’t want to leave Google reviews. If it’s coming from you in the office, Anastasia—I don’t know if you are doing the cleanings completely or if you have staff members—get yourself a little card printed that says the cleaner is going to get a bonus if the client mentions them by name in a review. Have a QR code on the actual card that you leave behind with your checklist or on the kitchen table.

If the client is there, we literally will say to them, “Hey, can you leave that review right now? I know you mentioned you were going to do that. Do you need help?” And we will run through how to do it on Google My Business with them right there on their phone. We literally walk them through it on their phone. A lot of times they just need that nudging.

If you’re asking over text or over email, and you’ve already done it multiple times, it’s probably not going to work out. I would think that doing it in the field is going to be more advantageous. It also is on our checklist. In our newsletter every month, we have it linked at the bottom, and we get a review or two every single month from longtime clients who read the newsletter and are prompted there.

If you incentivize your cleaners, that can really help. Clients want to leave reviews because they feel like they’re helping their cleaners, and your cleaners are much more likely to ask for them when you give them money for it. We pay our cleaners $5 per Google or Facebook review that mentions them by name in a positive way. So give that a try.

Some people just don’t want to do it. You move on. You keep asking. Ask for video reviews—everything that you can do will hopefully help you.

Pricing For Different Types of Cleanings

Marissa asks: “Thank you so much for your insightful information you share. It’s really helping me keep my head on while I rebuild my business and structure things. I wanted to ask, you mentioned you charge $55 per man-hour. Is that across the board? Do deep cleans and recurring cleans have that same rate, or do you charge different based on the types of cleanings?”

We charge across the board, $55 per man-hour for deep cleanings, for maintenance cleans, everything. Other companies I’ve seen do charge a higher rate for first-times. I actually brought this up to my management team about a month ago to see what we thought about that. For us, we thought it might be useful for move-out cleans because of the additional supplies needed. It’s just not something we’ve implemented yet.

You certainly can do that—I don’t think it’s a bad idea at all. For us, it’s more about simplification to not have a bunch of different rates that we’re charging. Honestly, we’re kind of at the top of our range in our area. I personally feel that asking even more would be pushing it.

If you’re on the lower range of pricing, you can certainly implement different rates, especially for first-time cleans. Then you can either pay your cleaners more for those jobs or keep the difference. That’s where it gets messy for us, because not all cleaners have access to doing first-time cleans, so we don’t want to be seen as unfair. It just feels like it gets a little complicated, but maybe someday in the future, we’ll try it. It’s not a bad idea if you want to give it a go.

Finding Commercial Cleaning Clients

Jay Morgan asked: “I’m only 20 minutes in, but how do you put a bid in or ask if they’re looking for a cleaning service if they haven’t advertised looking for one?”

Most people aren’t asking for bids publicly. We are seeking them out. This is where I talked about the Dream 100 process from the book “The Ultimate Sales Machine” by Chet Holmes. Go read that because you are proactively reaching out to potential clients so that when they are ready to make a change, you are top of mind.

This happens through cold calling, cold emailing, and doing drop-offs. You can also do direct mail, but I would suggest being very selective and not just doing blanket direct mail.

I would make your Dream 100 list, which is the 100 prospective clients for commercial that would really make a difference—your ideal accounts. Send them bulky mail, like interactive mail. For example, the little goo that you can clean your keyboards with, or a little spray bottle—anything cleaning related that they could play with. Send that with your sales sheet, as opposed to just a postcard.

We do drop-offs too, like buying donuts and dropping them off. We’re staying top of mind. Most people are not ready to make a change when you stop by. Commercial is a much longer sales process. The point is that when they are ready to make a change and they’re unhappy with their current provider, or they’re finally ready to hire out, they think of you. They think, “Oh, who is that friendly red-headed lady with donuts? Maybe I should give her a call. Where’s that sales sheet?”

This has literally happened for us. I got a lot of our commercial by doing this during COVID, especially cold calling and cold emailing. When COVID was done, drop-offs were very useful.

At this point, we don’t really have to do that anymore. Commercial clients come to us because of our extensive online branding, marketing, and Google reviews. They’re just Googling just like anybody else. But if you don’t have that ability yet, these are the types of things you need to be doing.

Calculating Man-Hours for Pricing

Chickswho asks: “Stephanie, if 150 square feet per man-hour is what it takes for a deep clean and you send out two cleaners for the job, would you then factor it in as 300 square feet per hour, and then calculate the timing and pricing that way?”

It’s the same exact thing. I personally like to use man-hours so that it’s universally understood. If I start using 300 square feet per hour, I might confuse myself in the future about what I’m referencing.

If we keep our true north of man-hours or labor hours, there’s no confusion as to what we’re talking about. So if I send one cleaner or two cleaners for an eight man-hour job, that’s either eight clock hours or four clock hours with two people—it makes no difference.

Don’t confuse yourself by using different units of measure. If you exclusively run teams, I suppose you could use square feet per team hour, but I just don’t want you to confuse yourself.

How to Raise Prices on Underpriced Clients

Susan asks: “I really appreciate all the real information you’re putting out for us. I do have a question. I was given eight residential houses to clean, but after listening to you and others, I realize the houses are not paying near the price they should. The person who gave me these houses charged the same amount for a 4000+ square foot home ($125 that takes me six hours) as a 2000 square foot home that takes me three to four hours. I work very hard. I’m very detailed. They all tell me I clean better than she did. I know I need to raise the price. How would I go about that?”

You do need to raise the price. What other cleaners charge is of no consequence, especially if they’re all giving you positive feedback that you do better work. They should assume that you’re going to be more expensive than her. She was clearly undercharging and had no pricing system if a 4000 square foot house is priced the same as a 2000 square foot house. She was pulling numbers out of thin air and had no idea what she was doing.

That’s so cheap—it’s not enough money. If it takes you six hours at $125, you’re making about $20 per hour. That is super low. I don’t know if you’re an individual cleaner or if you’re trying to go the company route, but at $20 an hour, you could never offboard that to anybody and actually make money, pay taxes, be insured, all of that stuff.

You know you need to raise prices. I know you need to raise prices. The client knows you need to raise prices—they’re just not going to say anything, of course.

How do you go about it? Just let them know: “In two months, the price is going to change.” We like to give them at least one to two months’ notice (especially for monthly clients) with a message like: “Hey, at your next cleaning the price is going to be this. Let me know if any changes need to be made. I know that you’ve been really pleased with my work.”

Short, simple, sweet. You would be shocked by how few people will drop. We’re talking about eight clients, right? Think about the opportunity cost—by spending all that time making too little money, you’re not making what you could be. You are costing yourself so much by not raising these prices.

If you’re scared, do two at a time. We’ve always done price increases in batches until this recent across-the-board increase, because we’ve been scared everybody would drop. So we’ve done it in batches of 10-20 clients at a time. For you, it could be two clients at a time. Stagger it so that if you do lose one or two, you could adjust and fill those spots.

You will be surprised—if you are doing great work, clients will recognize that and have no problem with the increase. When it comes to how drastic a price increase to make, we try to only do about $5 per hour at a time. That’s the biggest jump we’ve ever done, unless we’re really making way too little on a commercial account. Then we’ll do a big jump because either it doesn’t make any sense and they need to drop immediately, or they need to pay double if we’ve priced incorrectly.

I would do no more than $5 an hour increase. That’s what I’ve historically done, and people don’t complain. I’ve seen people do too big of increases on residential or do them all at the same time, and then they freak out because they may not have a marketing or sales system in place to bring in new clients.

Just because people are giving us clients doesn’t mean they’re necessarily ideal clients. These ones might be good clients, and you just don’t know because you haven’t asked for what you actually should be charging.

Using a Business Phone Number

DB6809 said: “I have digested so much material and made the decision to go more of the business route. I’m currently using my personal number as the business line, which was perhaps the wrong idea. The moment I hit Google, everything went south. Did you use an auto receptionist when you first started to help manage calls/screen out spam calls?”

Yes. We do not want our personal number out there for a lot of reasons: spam calls, your own sanity, and separating business from personal. It’s just a mess. Truly the biggest thing is safety—we don’t want everybody having your personal phone. What if you have a crazy client? What if you just have an annoying client? You don’t want them blowing up your phone giving you no peace.

From a professional standpoint, it’s so much more professional to have a business line and that separation. I used Google Voice in the beginning for probably the first year before I could afford a phone system. Was it the best? No, but it was free. Looking back, I wish I would have just paid for something else because Google Voice wasn’t the most professional, but it’s what I knew at the time.

There are many phone systems where you can get an app on your cell phone and make calls from your business line. We’ve used Clarity Voice for about five years now. I am looking at other options, but none seem fantastic honestly. If anybody has had a really good experience with a great phone system, let me know.

I know there’s Grasshopper and other services. We’re definitely in the market for something new, but it’s going to be a big change, and we’re slow to change software now because we’ve been burned. If you’re smaller and can handle quick changes, I would suggest experimenting. Read the reviews on sites like Capterra to see what user experiences are like, as well as what customer service is like.

The sales department is always going to be the best and most communicative department in any software company. If their sales team isn’t great, their customer service will be terrible when you need help. That’s why I switched from QuickBooks to Gusto for our payroll software. We still use QuickBooks for bookkeeping, but anytime something went wrong with payroll, I was talking to somebody who clearly didn’t know what they were doing. I was sick of it, so I switched to Gusto and have been happy with their customer service. I know not everyone likes Gusto, but I’ve had a 99% positive experience with them over the years.

How Much An Owner Makes

Stephanie Entrepreneur Vlog asks: “Can you share with us how much you personally made as the owner of the company?”

First and foremost, hit that subscribe for me being so honest with you guys! I think I deserve a like, wouldn’t you say? Hit that like, hit that subscribe, because most people won’t tell you this stuff.

We have been in business tomorrow—April 1st when I’m recording this—for six years. It’s our six-year anniversary. In six years, the total revenue of the business has been $6,000,435.88. This is why we bookkeep, so I can easily pull that number.

In those six years, from both ways that I pay myself (I pay myself a salary and also owner’s draws or profit draws), I paid myself in the early days as a cleaner—meaning whatever I would have paid a cleaner, I would pay myself when I was doing cleanings—as well as a percentage as the owner. I follow the Profit First model of money management, and that worked really well.

Everybody who thinks, “Oh, you don’t make any money in the beginning, you just have to clean and clean and not make any money”—well, how do you expect to be able to pay somebody else if you’re not paying yourself? So just pay yourself what you would pay a cleaner. We don’t need to spend a bunch of money. We can be creative. There are a lot of free things we can do to build our business. Stop not paying yourself!

I know some people will tell you that you need to sacrifice and not pay yourself. Maybe some of you have savings and can do that because you want a virtual assistant or administrative help, or you don’t want to do any cleanings. I was willing to do the cleanings, and I was charging what I needed to charge. Even at $30 an hour, I could pay $12 an hour to a cleaner or to myself—it doesn’t make a difference.

This got me in the habit of paying myself from day one, from the very first cleaning. Whether that was both as a cleaner and my little section of owner’s pay, or just the owner’s pay once I started getting cleaners. You can absolutely pay yourself!

Over the two ways that I have paid myself in six years, I have made $797,237—so just shy of $800,000. It’ll be $800,000 obviously this next month, and that is before taxes. Percentage-wise, I have paid myself 12% of total revenue over six years.

A couple other things I want to mention: the business pays for my health insurance premium, my cell phone, my gas while I was doing cleanings, and will be paying for my internet at home since I work from home (I just realized I could be doing that—my accountant said the business should pay for it).

We have a 401(k), so the business pays for my 401(k) match. There are many perks that are expenses but aren’t necessarily in the form of a paycheck—they’re benefits the business provides. The business also pays some of my taxes. I pay my own payroll taxes on my paycheck, but when it comes to self-employment tax on the owner’s draws, the business pays for that. So it’s really a lot more than just this big number.

I think that’s pretty good, right? I feel kind of vulnerable sharing this, but I want you guys to know: As a reminder, I had a really big job a few years ago—that military job I mentioned earlier—and that was about a million-dollar job. So 12% or 14% of a million is a lot of money.

Over time, following Profit First, you’re going to be paying yourself a percentage of revenue. It has gone as low as 6% of revenue and as high as 14% of revenue. I have chosen to have a lot of managers—I have four full-time managers in some capacity, and that is a lot of overhead. Katie, Crystal, April, and now Hannah, who’s our quality controller. You’re going to meet all of them; they’ve all agreed to do podcast episodes, which is exciting, so we can talk about their roles and journeys at Serene Clean over the past six years.

I have chosen to trade money for time freedom and being able to live remotely. I live a 20-hour drive from my business, so I have a lot of freedom. I could have paid myself more if I was willing to continue working full-time in the business. I traded that by having more overhead in the form of managers. That is my personal choice.

We all want different things from our business and different ratios of time versus money freedom. I would argue that I’m happy I have both now, and that’s a very rare thing. It’s not what I had in the beginning—I didn’t have much time, I was working my ass off. Now here we are, and it’s kind of crazy to think of that number, especially because I started this at 22 (going on 23) and I’m 28 years old now.

I don’t know if that’s a lot of money to other people, but it is to me. I remember graduating high school and thinking if I could make $40,000 a year, I would be set for life. I couldn’t possibly ever want anything more than that. It’s wild now to think about what the business has brought in for me. I feel very blessed, and I’ve worked very hard for it.

I’m like justifying myself because I know my cleaners are going to be listening to this and hearing that number. But at the end of the day, business owners are rewarded because they took risks that others were not willing to take. If others want the potential reward that we get as business owners, they must go and take those risks as well.

I’ve made bank. We’re here at Filthy Rich Cleaners, and we’re only six years into business, so that number is only going to grow over the years, which is awesome. I can do a lot of cool stuff because I make good money.

Closing

That’s what I’ve got for you guys today. Hopefully this Q&A was helpful and interesting. I’m going to keep doing these at least once a month, so keep dropping your questions down in the comments below, and I will keep pulling from them. I’m going to try to get to everything that I can find in the YouTube comments.

Hopefully this is helpful, guys, and I’ll see you in the next episode of Filthy Rich Cleaners. Hit that like, hit that subscribe, drop a comment below. See you next time, guys. Bye.

If you enjoyed this episode of The Filthy Rich Cleaners podcast, please be sure to leave us a five-star review so we can reach more cleaners like you. Until next time, keep your work clean and your business filthy rich.

Note: This transcript has been edited for clarity and readability.

Resources Mentioned in This Episode

• The Ultimate Sales Machine by Chet Holmes
• Profit First by Mike Michalowicz
• Google Voice
• Clarity Voice
• Grasshopper
• Gusto
• QuickBooks
• ZenMaid

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