Cost of Goods Sold for a Cleaning Company – Explained

What are the Cleaning Companies?

Cleaning companies offer cleaning services. The range of services would differ as they offer the services in the niche section.

The services would differ from industrial, office, and home cleaning services. There are routine clean vs specialized cleaning services too.

Regular cleaning is what routine cleaning is meant for. In the United States, these are also called janitorial services for residential and office purposes of cleaning.

Types of Cleaning Services:

The cleaning services based on the time taken by the janitor are of two kinds:

1) Routine cleaning

This is a daily cleaning service. It includes cleaning kitchens and bathrooms, vacuuming the house, and mopping and dusting all surfaces.

2) Specialized cleaning

These are also sometimes called deep cleaning. It is good for clients moving into the house, preparing for holidays, or planning an event.

This is costly concerning routine cleaning.

Various other types of commercial cleaning are as follows:

  1. Office cleaning: These are related to routine cleaning of all the office floors.
  2. Pest Control: Rarely, pests become increasingly worrisome for the inhabitants of houses, offices, or even factories. Then pest controls are necessary for a peaceful mind.
  3. Industrial cleaning: These are niche segments where cleaning through chemicals is done. These require meticulous skills and training along with equipment.  

Cost of Goods Sold for a Cleaning Company

Now that we have understood the basic model of cleaning companies, we now discuss cost components. The cost of goods sold is the carrying value of goods sold during a particular period.

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As the cleaning companies are based on service models, COGS also equates to the cost of services rendered. However, the service still requires some sort of supplies. The various expenses in providing cleaning services are as follows:

A. Supplies to Assist With Cleaning

These are the products that would be needed to perform cleaning services. This would include the following :

  • Cost of paper products and dispensers
  • Cost of bags and trash bags
  • Cost of mops, brooms, brushes, etc
  • Cost of disinfectant wipes
  • Cost of spray bottles to store homemade products and all-purpose cleaners you need to mix with water.
  • Cost of dishwashing liquid to clean plates, refrigerators, and more
  • Cost of carpet cleaner
  • Cost of stain remover
  • Cost of wood cleaner
  • Cost of furniture polish

All the above supplies can be effectively categorized into essential, common, and marketing and office supplies. The right cleaning supplies are essential for the success of a good cleaning company.

All the above costs are also considered as the cost of supplies or direct materials for the cleaning business.

B. Cost of Labor

This is a major component of cleaning service. This is what the cleaner would provide based on professional expertise.

The labor cost is computed by charging hourly rates for actual hours worked. The first step in the cleaning business is to visit the client’s premises formally.

The company shall estimate the size of the premises to be cleaned. The time and the number of workers needed to clean the premises must also be estimated.

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The number of hours will vary depending on the cleaning service the client has chosen.

The final step would be to establish hourly rates. This will depend again on the type of services required by the client.

To decide the cost of labor in providing services, the company must also consider industry practices and regulations applicable to them.

What Should the Cost of Service Include?

The company can alter or modify services prepared to provide for customers. This can be mentioned in the marketing brochure of the company.

Further, they can use this tactically for the checklist for training employees. The company’s senior management would decide to add certain costs.

Statement of Cost of Services Rendered / COGS

Vanguard Cleaning Systems

ParticularsAmount ($)Amount ($)
Beginning inventory of supplies $ 256,000
+ Purchases  
Cost of bags and trash bags570,000 
Cost of mops, brooms, brushes, etc230,000 
Cost of disinfectant wipes125,000 
Other purchases60,000985,000
– Purchases returns (In aggregate) (85,000)
+ Direct labor  
Janitorial salary150,000 
Cleaning staff salary300,000 
Wages to temporary workers150,000(600,000)
Cost of goods and services 300,000
Ending inventory (185,000)
Cost of services rendered/ COGS 115,000