The Most Important Metric | The Janitorial Margin Playbook
Part 1 of the Janitorial Margin Playbook Series, co-developed with Elite BSC to provide operators with industry benchmarks and profitability strategies.
Margins in janitorial are notoriously thin. Labor consumes the majority of revenue, clients demand more for less, and even small inefficiencies can erase profitability. Despite their importance however, margins aren’t always thoroughly understood. Many owners know top-line revenue and payroll costs, but lack clarity on how their performance compares to peers, or where hidden leaks are cutting into profit.
Margins are notoriously thin in janitorial — even small inefficiencies can erase profitability.
Common Pitfalls in Margin Management
Owners often fall into one of two traps when it comes to how closely they track their margins:
Flying Blind
Margins are reviewed sporadically, if at all. Without clear tracking however, there’s no chance to catch problems before payroll is finalized.
Over-Correcting
Others chase margin too aggressively and service slips. Hours are cut, clients notice shortcuts, and retention suffers. Short-term savings are wiped out by lost contracts.
The right balance requires protecting margin while delivering reliable service.
Benchmarking Profitability in Janitorial
Margins in janitorial aren’t like those in other industries where double-digit net profit is common.
These janitorial profitability benchmarks serve as a baseline for evaluating your cleaning company’s KPIs and long-term business margins. While these numbers provide a valuable reference point, one size doesn’t fit all. Margins are influenced by a variety of factors: competition, market size, and ownership structure all shape performance. Benchmarks should be viewed as guideposts, not absolutes.
Net Margin by Company Size
Factors That Influence Margin
Market Size
Margins are heavily influenced by labor cost, which varies significantly by geography. Direct labor as a percentage of revenue correlates with market size, rising in larger, higher-cost metros:
Direct Labor as % of Revenue
Competition
Benchmarks also shift according to the intensity of the competitive environment:
Impact of Competition on Net Margin
Companies operating in niche markets, like luxury apartment cleaning or more isolated regions like Puerto Rico, often enjoy stronger margins due to limited competition or high switching costs.
Ownership Type
While not the biggest driver, ownership structure influences profit margins as well:
Impact of Ownership Status on Net Margin
Multi-generation firms often benefit from stability and institutional knowledge, while acquired companies may struggle with integration challenges that weigh on profitability.
Profit Strategies by Company Stage
The priorities of a new company look very different from those of an established operator. Each stage brings new risks, tradeoffs, and focus areas for owners.
The Early-Stage Mindset: Growth at Any Cost
At this stage, survival means landing accounts. Margins often appear higher because founders are multitasking—handling sales, supervision, and admin.
The Expansion Stage: Margin Matters
Once a company reaches $5M or more in revenue, retention becomes critical. At that point, there is significant revenue at risk if accounts are lost.
It’s Time for Your Check-Up
Understanding your margin is like checking your weight during a doctor’s visit. It’s an important number, but getting a full picture of your health requires a more thorough review of the underlying factors. That’s why we recommend taking a closer look at these metrics:
- Measure Net Margin Monthly. Compare against benchmarks by size and market.
- Break Down Labor. Cleaner wages, supervisors, overtime, and PTO should be separate line items.
- Audit Overtime. Flag employees approaching 30 hours midweek.
- Watch Edited Punches. This is one of the best ways to detect time theft in the janitorial industry.
- Review Budget vs Actual consistently. Regular janitorial budget vs actual tracking helps you spot labor cost overages before they erode profit.
- Carefully Monitor G&A. General & Administrative costs tend to grow as a company expands, but larger firms should have more—not less—control over these expenses.
Many operators now use janitorial profitability software to gain this real-time visibility into labor costs and margins, making it easier to track these metrics consistently and take action when issues appear.
The Takeaway
Margins in janitorial are thin, but they don't have to be fragile.
The companies that win aren’t those chasing every RFP or cutting corners for short-term gains. They’re the ones using data and benchmarks to make informed tradeoffs, protect profitability, and build sustainable growth.
Want the full set of benchmarks and KPIs? Download the Janitorial Margin Playbook to see where your company stands and what to do next.
