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Deft

Chargeable Rate Vs. Employee Salary (Cleaners)

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What do you think the relative chargeable rate vs. employee salary roughly is? If you run a small cleaning business - pay employee NI (pension?), VAT, mileage, own cleaning products, sick pay and have salaried employees - what is the real cost likely to be? For people on say £7.50 - £8.50 an hour, i.e. pretty much minimum wage - what would their hourly rate chargeable to the customer roughly be? Obviously there is travel between jobs and all that shenanigans eating into it too - but the important point being the staff are real FTEs not just zero hours. Numbers coming in around £22 / hour which felt a little on the high side but after pondering it a bit doesn't seem too bad given the likely realities of running a real business (in the south east).

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I used to cost home helps where the council paid for direct contact but not travel so we had to scale up and allow for sickness, recruitment, administrator, manager and deliberately minimised overheads.

The lowest we could operate on was about £17 ph income, £20 was comfortable and we wouldn't have got £22 so didn't ask.

Yours sounds similar so if you say £2 for cleaning products then £22 is on the money for allowing you to run at a small profit.

The one variable I don't know about is the cost of the mandatory workplace pensions; if this is already in your £22 then it sounds totally fair. You won't be able to compete with a sole trader who walks to their customers so don't try.

I would make a point to the customers about not charging them travel costs or time but only for when the cleaner is actually there.

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The standard way is to start with the number of chargeable hours/year/person and multiply that by a factor for sickness rate. Take all of your business overheads/year (including salary/travel/NI etc. based on your calculated number of hours) and divide it by your calculated number of hours. Add a standard 20% ROS and you should be pretty close.

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The ballpark guideline in IT is that contractor rates are 50-100% above permie rates. But if you get your contractors from an outsourcing co where they're regular employees (perhaps for less than you'd pay), it's a whole lot more.

That's a situation of minimal overheads. Add that travel and own materials, and the ratios you have sound comparatively cheap.

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The ballpark guideline in IT is that contractor rates are 50-100% above permie rates. But if you get your contractors from an outsourcing co where they're regular employees (perhaps for less than you'd pay), it's a whole lot more.

That's a situation of minimal overheads. Add that travel and own materials, and the ratios you have sound comparatively cheap.

That's a different situation though. When you employ contractors in that scenario you have no holiday pay, sickness, travel etc. etc. and most importantly you're not adding fixed cost to the business so paying double for a contractor is about right.

Once you factor in all the above I would hazard a guess that that the total cost of permanent staff is about 70% of a contractor, but without the fixed cost and long term liability. In your outsourced scenario the service user will have to pay the FOC + ROS of the outsourcing company, which is why they're more expensive than going directly to the contractor.

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What do you think the relative chargeable rate vs. employee salary roughly is? For people on say £7.50 - £8.50 an hour,... Numbers coming in around £22 / hour which felt a little on the high side but after pondering it a bit doesn't seem too bad given the likely realities of running a real business (in the south east).

In a completely different industry I take home a whopping 2,300 euros / month (which I then have to pay income tax at the end of the year) as a senior software developer. I'm charged to the client at 15,500 euros / month. Now that's a nice little earner for someone. The client was ranting about how people from my firm cost the same as "9 Indians" and he showed me the charge rate to prove it.

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In a completely different industry I take home a whopping 2,300 euros / month (which I then have to pay income tax at the end of the year) as a senior software developer. I'm charged to the client at 15,500 euros / month. Now that's a nice little earner for someone. The client was ranting about how people from my firm cost the same as "9 Indians" and he showed me the charge rate to prove it.

Unless you're project based I suggest you go for a beer with him and discuss it. IIRC there is usually a six month moratorium to avoid paying the agency a fee so you can have a nice holiday first.

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Thanks Frank, good to hear the numbers aren't crazy. On reflection I should probably expect capitalism to work in a general sense to keep simple costs practical.

It was actually relating to a quote the wife got for house cleaning. My initial reaction was it felt a bit steep, so we queried how much the staff actually got. They were pretty honest and transparent about the wages but I wondered whether there was too much management overhead. I had some idea of contract type rates in my own industry but as others have mentioned it's quite a different proposition.

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In a completely different industry I take home a whopping 2,300 euros / month (which I then have to pay income tax at the end of the year) as a senior software developer. I'm charged to the client at 15,500 euros / month. Now that's a nice little earner for someone. The client was ranting about how people from my firm cost the same as "9 Indians" and he showed me the charge rate to prove it.

Yep, been there, done that, had the conversation with the Client where it turns out the employer has lied to both of us.

Is that with the Client also supplying your office space and any materials and support you might need? That is, computers, stationery, networking, secretarial services, etc? If yes then I think you've just trumped my experience with that ratio not far short of 7:1.

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For a home cleaner? Seems very steep to me, a neighbour recently got a quote of £11/hr, minimum of 3 hours. This was via an agency too.

I suspect it's highly dependent on local market conditions though.

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For a home cleaner? Seems very steep to me, a neighbour recently got a quote of £11/hr, minimum of 3 hours. This was via an agency too.

I suspect it's highly dependent on local market conditions though.

That'll be a basic self-employed cleaner, where the agency's only role is to put you in touch.

I pay my gardener £14/hour. No agency involved.

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Yep, been there, done that, had the conversation with the Client where it turns out the employer has lied to both of us.

Is that with the Client also supplying your office space and any materials and support you might need? That is, computers, stationery, networking, secretarial services, etc? If yes then I think you've just trumped my experience with that ratio not far short of 7:1.

No, my co provides a PC and office space etc. Stationery? I've not seen a pen or notepad in years, I buy them myself.

I sometimes work on the client site. There are 4 building each built to house 1000 employees. Each building has 3 floors, so that's about 350 employees per floor. There are probably no more than a couple of dozen people left on my floor, everyone else has been outsourced to Injah or Romania.

I'm only planning on staying to the New Year, will then consider working back in CH.

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