January 27, 2022 by Agata Kaczmarek
According to the information posted by IBIS, there are an estimated 35,393 number of carpet cleaning business nationwide. Almost 64,000 individuals are employed in an industry that has a market size of an estimated $5 billion. Though 2020 saw a decline of 3.2% industry-wide due to the worldwide pandemic, 2021 promised a comeback of 4.8% as businesses begin to work onsite once more.
Steps to start a carpet cleaning business
This article will work to outline the steps and other information necessary to start a profitable carpet cleaning business. Some of the common steps to get started are:
- Begin with a business plan
- Training and certification as necessary
- Form the business by filing the appropriate paperwork and choosing the name
- Select the location of your business; whether you’ll rent office space or work out of the home
- Apply for business licenses and permits
- Ensure there is adequate financing
- Obtain the required insurance
- Gather necessary tools to run the business
- Set up accounting
- Hire trained staff (as needed)
- Market the business to further your revenue goals
Startup costs for a carpet cleaning business
Answering this question will depend on the type of business you are looking to open. Are you leaning more toward commercial carpet cleaning, residential, or a hybrid of both? To help answer this question, if you are unsure of the answer, we’ve done the research to help with the decision and created a cleaning business revenue and expenses spreadsheet. You can also watch this video where we create a complete set of financial projections for an example new carpet cleaning business:
Commercial Carpet Cleaning Business Startup Costs
Minimum startup costs = $20,000
Maximum startup costs = $180,000
Average startup costs = $80,000
Residential Carpet Cleaning Business Startup Costs
The three sources that we’ve found (Upflip, Hourly, and Truic) let us know you can expect these startup costs for a residential carpet cleaning business which is certainly more affordable than commercial carpet cleaning.
Minimum startup costs = $5,000
Maximum startup costs = $80,000
Average startup costs = $30,000
These startup costs fall into several overarching categories:
- Cleaning agents
- Carpet cleaning unit(s)
- Van or truck
- Rental Space
- Other capital
How much can a carpet cleaning business make in sales?
The revenue potential of a new carpet cleaning business will depend upon many factors such as the equipment at your disposal and the number of customers. Carpet cleaning isn’t just a seasonal business, but there’s also the need to figure out how many times a customer needs cleaning work completed.
How to set a price for carpet cleaning services?
Setting the right price for your carpet cleaning services is crucial to running a profitable carpet cleaning business.
1. Market Based Pricing
Pricing services using market-based pricing is one of the most common ways to set prices for your business. A simple approach, it takes the prices that are most common on the market within the area and sets them accordingly.
A quick Google search will provide plenty of information to use. There are two ways to set prices for a carpet cleaning business: per room or per square foot.
A quick search reveals that competitors charge on average between $20 and $70 a room, with $50 being the national average. A per room price is self-explanatory, though some large rooms may be charged as two, as determined by the company. In that, you’ll have full control over the amount you believe is best based on product used, time spent, and technicians required.
Per square foot:
The average price per square foot is $0.25. Total amount for the entire service will be determined on the square footage of carpet. On average, an 1,800 square foot home will run around $450.
Carpet cleaning is about more than just removing dirt from the floor. Companies also perform extra services such as maintenance. Some of these services are:
- Steaming or hot water extraction at $.20 to $1 a square foot
- Dry carpet cleaning which could be charged up to $.50 a square foot
- Patching and repairing sections of carpet up to $225 with extra for every other hole
- Re-stretching a carpet is also charged by room with the first being higher at an average of $80 and the rest charged less at around $50 a room
- Water extraction due to a flood can run as high as $300 a room
There are many other services a company could offer, but your company’s portfolio will depend solely on you and the services you are willing to provide.
2. Target a gross profit margin
Another way to find the right price for your carpet cleaning business is to determine the profit margin goal. According to Value Investing, the average gross profit margin for a carpet cleaning business is 53% to 63%. To get to this number, there are a couple of questions that need answering.
- How many customers can be handled in a day?
- How much will be spent on employees?
- How much fuel will be used to get to the jobs?
Let’s assume some of these amounts for the sake of the example. It might take 1 hour to complete an average sized job, with a cost of employees at around $15 an hour. We can estimate that around $5 will be used in fuel, and an additional $10 will be used on equipment and product. This brings out total cost to $30. To get to a 60% profit margin, you would need to charge $75 in an hour, however that is split: either around $0.50 a square foot or depending on the size per room, at least $30 a room.
1. Carpet Cleaning Price by Method
Another way to price out carpet cleaning is using the method as a basis for the price. There are a couple of most common ways to clean carpet such as these below.
- Steam Cleaning
- Dry Cleaning
- Carbonation Process
All of these methods achieve a clean carpet in a different way, but all have a wide range of prices. For example, steam cleaning could range anywhere between $80 and $400 depending on the size of the carpet. Carbonation could reach as high as $600. These might require a further examination of the price of equipment, cleaning products, and labor involved.
How many repeat customers there are in a year?
Especially for commercial carpet cleaning businesses, repeat customers are where the money lurks. Though new customers are not something to sneer at, it takes less funds and work to sign a repeat client rather than a new one.
Carpet cleaning is a service which is provided year-round, though Midwest customers might use the services more in the winter. In areas that are prone to colder and wet winters, it can be expected that more clients might show up than in the summer.
Carpet cleaning business revenue potential
With all the research complete, estimating potential revenue becomes an easy process. Start by taking the expected number of customers and multiply it by the price of the service.
An expected revenue amount for a one-person carpet cleaning company is around $108,000 based on the following assumptions.
5 carpet cleanings per day
6 days a week
$75 an hour service charge
4 weeks in a month
12 month cleaning season
According to Miracle Steam, it’s possible for one person to clean small bedrooms in 20 minutes, and larger spaces in 30. The assumption above takes into consideration travel from location to location, bringing down an average number of carpets cleaned a day to 5.
Of course, revenue can either increase or decrease depending on the number of available employees and number of carpets cleaned in day. Some days more carpets can be expected, especially if the locations are close, and some less.
Let’s take a look at some of the averages in the industry.
Carpet Cleaning Business Annual Revenue
Minimum annual revenue = $50,000
Maximum annual revenue = $200,000
Average annual revenue = $75,000
What are the common expenses for a carpet cleaning business?
Businesses of all types run across operating expenses which are split into two categories: variable and fixed expenses. Variable expenses will increase or decrease throughout the year, sometimes from month to month. Fixed expenses remain the same and are very predictable when projecting potential revenue.
Variable Expenses for a Carpet Cleaning Business
- Hourly Labor
- Credit card fees
- Maintenance on equipment or vehicle, especially if repair is needed
- Carpet Cleaning Supplies and Cleaners
Fixed Expenses for a Carpet Cleaning Business
- Price of any rented equipment
- Building rental for office space
- Salaries employees
- Taxes and licenses
How much profit can a carpet cleaning business generate?
Carpet cleaning business prove that they are profitable, even right out of the gate. How profitable, will be dependent completely upon you, the size of your business, the hours you’d like to put in, and the prices you set. To give a visual of the potential, the industry profit margins are listed below.
Carpet Cleaning Business Profit Margin
Minimum profit margin = 25%
Maximum profit margin = 60%
Average profit margin = 40%
Since you’re now equipped with all the information you’ll need after such thorough research, you can make the next step to filling out the cleaning business spreadsheet template with all the startup information. The tool will walk you through projecting revenue and expenses for the next couple of years so you too can start a profitable carpet cleaning business.
Lastly, you can compare your potential profits in carpet cleaning to other cleaning businesses by checking out How to Start a Profitable Pool Cleaning Business.