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 go to differ as industrial cleaning, office cleaning 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 purpose of cleaning.

Types of cleaning services:

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

1) Routine Cleaning

This is daily cleaning service. It consists of various activities like thorough cleaning of kitchens and bathrooms, vacuuming throughout the house, mopping and dusting all surfaces.

2) Specialized cleaning

These are also sometimes called deep cleaning. It is good for clients moving in to the house, preparing for holidays or planning an event. This is costly with respect to 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, the pests become increasingly worrisome for the inhabitant of house, office or even factory. Then the pest controls are necessary for the peaceful mind.
  3. Industrial cleaning: These are niche segments where cleaning through chemical 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 enter into discussing cost components as well. Cost of goods sold is the carrying value of goods sold during a particular period.

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 service are as follows:

A. Supplies to assist 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 cleaning supplies, common cleaning supplies and marketing and office supplies. The right cleaning supplies are essential for success of good cleaning company. All the above costs are also considered as cost of supplies or cost of direct materials for cleaning business.

B. Cost of labor

This is major component of cleaning service. This is what the cleaner would provide on the basis of professional expertise. Cost of labor is computed by charging hourly rates for actual hours worked. The first step in cleaning business is to make formal visit to client premises.

The company shall estimate the size of the premises to be cleaned. The amount of time and the number of workers needed to clean the premises also need to be estimated. The number of hours will vary on the type of 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 has to also consider industry practices along with regulations applicable to them.

What should the cost of service include?

The company can alter or modify services that are 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 decision to add certain costs would be taken by the senior management of the company.

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