A cleaning bid that wins and sustains a business is built on cost, not on what you think the market will bear. The pricing discipline that separates long-term profitable contractors from those who perpetually underbid and either cut corners or exit the account early is straightforward: know your cost, layer in overhead, then apply a margin that reflects the risk and service complexity of the account.

The formula

Every line in the bid has a corresponding cost driver. Labor hours come directly from the building's size, area mix, and the APPA quality level you're bidding. For a 100,000 sqft office building at APPA Level 2 with a standard area mix and nightly 5x service, expect approximately 35–40 labor hours per night, 18,000–21,000 annual hours, and 9–10 FTE. That translates to an annual labor cost of $430,000–$500,000 at a $24/hr all-in burden rate — before a single supply, overhead, or margin dollar is added.

The supply cost line is often underestimated. For a standard commercial building, $0.08/sqft/year is the industry median. A 100,000 sqft building at that rate generates $8,000/year in supply cost — not significant in the context of a $700,000 bid, but it is real money and it grows in proportion to scope intensity. Medical facilities running EPA List N disinfectants in every exam room will run $0.15–$0.25/sqft/year or more.

Equipment depreciation is frequently ignored in the initial bid and then absorbed silently as margin erosion. The correct approach is to allocate each piece of dedicated equipment at 20% of replacement cost per year. A floor scrubber at $5,000 replacement cost contributes $1,000/year. Vacuums at $600 each, replacing one per year per two FTE, add another $300–$600. Small numbers individually — they add up across a portfolio.

Overhead should cover the full cost of supporting the account from the back office: general liability insurance (which at $1M/$2M for a commercial operation runs $4,000–$10,000 per year for a small contractor), workers compensation insurance (3–8% of wages depending on state and claim history), commercial auto, and the fractional cost of your management and admin time. Twelve percent applied to direct cost is a reasonable median starting point. If you carry significant WC risk or have above-average management overhead, run 15–18%.

Gross margin of 38% on a cleaning bid means your bid price is your total cost divided by (1 minus 0.38), or equivalently, cost multiplied by 1.613. It does not mean you are adding 38 cents to every dollar of cost. The distinction matters because a lot of first-time bidders confuse markup with margin and systematically underprice.

Why $/sqft is the wrong anchor without scope context

When a prospective customer asks "what do you charge per square foot," the correct answer is: it depends entirely on what's inside those square feet. A 50,000 sqft distribution warehouse at APPA Level 4 with one restroom and concrete floors will price at $0.60–$0.85/sqft/year. A 50,000 sqft medical office building at APPA Level 2 with twelve exam rooms, daily terminal cleaning protocols, and EPA-registered disinfectant requirements will run $2.80–$4.50/sqft/year. These buildings have the same footprint and 4–5x different cleaning costs. Using $/sqft as an anchor without defining scope is how contractors lose money.

This tool uses the same $/sqft benchmarks published in the BOMA Experience Exchange Report and the BSCAI Benchmarking Survey as a sanity check, not as a pricing target. The sanity check tells you whether your inputs and cost structure produce a bid that is in the observable market range for your facility type. If you are far outside that range in either direction, review your inputs before submitting.

Regional cost-of-labor variance

The single largest driver of bid price variability between markets is the labor burden rate. A janitor earning $14.50/hour in Birmingham, Alabama has an all-in burden cost of approximately $19–$21/hour. The same role in San Francisco or Seattle runs $28–$38/hour all-in. That difference, applied to 18,000 annual hours, is a $162,000–$306,000 range in annual labor cost on the same building. Regional median multipliers in this tool are derived from BLS Metropolitan Area OES wage data (SOC 37-2011, May 2023) and should be treated as directional indicators, not precise local market rates. For any bid you intend to submit, verify the prevailing wage in that specific labor market before finalizing your labor burden input.

The 38% margin rule of thumb — and when to deviate

Thirty-eight percent gross margin is a widely cited target in BSC operations. It is not a law. The right margin for any specific bid depends on account risk, competitive intensity, relationship context, and your own cost structure. Accounts with high turnover risk (month-to-month terms, high change-order frequency, or a history of underpaying incumbent contractors) warrant higher margin. Accounts with long terms, stable scopes, and cooperative customer relationships may support a tighter margin in exchange for volume or anchor-account status. Pricing to win at 25% margin on a complex medical account with terminal cleaning protocols is a path to losing money at 18 months when labor costs rise or a change order dispute arises. Pricing at 45% on a commodity office account will lose you the bid to a capable competitor.

Know your floor. The floor is the margin below which the account does not generate enough cash to pay your overhead and keep you solvent during a bad month. For most small BSC operators, that floor is around 28–30%. Above the floor, the margin decision is commercial. Below it, the bid should be priced higher or not submitted.

Escalation clauses

Every multi-year cleaning contract should include an escalation clause. The standard approach is an annual adjustment capped at the lower of the regional CPI-U change or a fixed percentage (commonly 3–5%), with a 60-day written notice requirement prior to each renewal anniversary. Without an escalation clause, you absorb every increase in labor rates, insurance premiums, and supply costs from your margin. Over a 36-month contract in a market where labor costs are rising 4–6% per year, the absence of an escalation provision can reduce your effective margin by 8–15 percentage points by year three.

Why most bids lose on scope precision, not price

The most common reason a commercially reasonable bid loses — even to a higher-priced competitor — is scope ambiguity. A bidding contractor who can tell a facilities manager exactly how many labor hours will be spent in each area, which APPA standard governs each space, how restroom fixtures are counted, and what the escalation formula is over the life of the contract projects professionalism and reduces the customer's perceived risk. Facilities managers who have been burned by low-bid contractors who delivered inconsistent results are often willing to pay 10–15% more for a contractor who shows their work. This tool generates the numbers. The scope-of-work generator produces the written service specification. The combination — a detailed scope plus a cost-explained bid — is how you differentiate on precision rather than competing on price alone.

Assumptions and limits: This tool uses the APPA Level 2 production rate as the baseline for all area types and adjusts proportionally for Levels 1–5. It does not account for site-specific factors such as elevator travel time, multi-building campus logistics, seasonal variation in cleaning intensity, specialty area requirements (server rooms, cleanrooms, food service areas with deep cleaning protocols), or union/prevailing-wage differentials beyond the regional median adjustment. For complex or atypical accounts, treat the output as a floor estimate and add a site-specific contingency before submitting a final bid. Last reviewed: June 2026.