Pricing Paper, Plastic and Soap in Commercial Accounts
Intro
Pricing the cost of paper, plastic and hand soap can be challenging and financially risky if you don’t have a formula or historical basis for accurately estimating past or future use. The safest approaches are to let the customer order and pay for these products or to provide these products as extras or pass through cost with a slight markup cost (2% – 5%) for handling, purchasing and stocking.
If the customer is requiring these items to be included in the cost, bid or square foot price, ask them to provide or allow access to use and costing data from the current suppliers. If they are not forthcoming with this information, you will need to add an error factor (8% – 10 %) into your price to assure that you don’t lose money on providing these products.
As a last resort, your distributor or paper sales person should be able to assist you figuring out which products may fit current dispensers and in calculating pricing and use information. If you can’t use exiting dispensers there will costs associated with swapping out dispensers. An emerging trend in new, remodeled and public and heavy use restroom, is to eliminate paper towels and replace them with electric hand dryers.
Common variables that impact useage and cost are:
- product and dispenser type
- primary building use and occupancy
- security of stored product
- public or private building
- product cost and contract length
- quantity purchased
Actual use rates in a facility can vary over time as building use and occupancy rates change.
Other variables include: ply and thickness, sheets per roll, number of rolls per case, core size, tightness of the roll, square feet or sheets per case, and uses per case.
Here are some rough numbers that can be used as a guideline when no truly accurate numbers exist.
Method 1. Cost per person per year.
Building occupancy: Figure $27.00 to $35.00 per person per year for toilet paper and towels in most office buildings.
Method 2. Cost per sq. ft.
Square footage cost: A safe number to use would be 6 to 8 cents per square foot per year for paper products.
Averages:
Each person is expected to use approximately two – four paper towels per restroom visit and most people will visit the restroom three times per day or up to twelve towels per person per day. If you know how many people occupy or visit a building per day, you can come up with some fairly accurate numbers.
If you don’t know how many people are in a building, but you know the square footage of the building, you can figure that on average, each person in an office building has about 225 sq. ft. of office space, which can give you a projected occupancy number. Health care facilities, food service areas and public restroom get more visits, so the numbers for these types of locations can be 20% or 30% higher.
One aspect or cost of paper products that most people overlook is the frequency and time it takes to service a restroom. One major cleaning contractor told me that 1/3 to ½ of the time they allow to clean a restroom is servicing the dispensers. The average multi stall restroom in building takes 20 to 30 minutes to service each night. That’s 7 to 10 minutes that could be saved in every restroom, if a paper system was used that reduced the frequency of service and/or the time it takes. There is a lot of money to be saved if you can reduce the labor cost, yet most people are more concerned about the cost of the product that they overlook the cost of labor. Changing to a different towel system (roll vs sheets) can cut service time in half the time, changing to electric dryers eliminates product, service and disposal times.
Toilet Tissue
Coed and Women
Number of users______ X 3 visits per day =_______ X the number of days open per week X 4.3 weeks per month =_______ total number of visits per month X 10 ft. per visit =__________ total footage used per month, divided by 1,125 ft. (roll length) = ____total number of rolls needed per month.
Men only
Number of users______ X 1 visit per day = ________ X the number of day open per week X 4.3 weeks per month = ________ total number of visits per month X 10 ft. per visit = __________ total footage used per month, divided by 1,125 ft. (roll length) = ______ total number of rolls needed per month.
Paper Hand Towels, Regular restroom
Number of users ________ X 3 visits per day, X ______ the number of days open per week X 4.3 weeks per month X 75% = _______ total use per month, divided by 275 uses per roll (550 sheet roll with 13 inch perf) = ______ total number of rolls needed per month.
Paper Hand Towels, Industrial or Health Care restroom
Number of users ________ X 5 visits per day, X _____ the number of days open per week X 4.3 weeks per month = ________ total uses per month, divided by 275 uses per roll = _______ total number of rolls needed per month.
Liquid Hand Soap
Number of users ______ X 3 visits per day, X _______ the number of days open per week X 4.3 weeks per month = _______ total uses per month divided by ____ uses per cartridge or box = _______ number of boxes or cartridges per month X cost per box or cartridge = ________ cost per month.
Note: for industrial or health care applications substitute 5 – 8 visits per day into the formula instead of 3.
Don’t overlook pilferage or shrinkage of toilet paper which can be as high as 25% to 30% in a public building if supplies aren’t adequately secured in dispensers and storage areas.
Here’s a formula plastic liner use in office areas, per service day per wk., for every 350 to 400 sq. ft. cleaned. As for amount of trash generated, it depends on the type of facility, where there is a recycle program in place, one average number I’ve seen used is that each worker or user generates 1.5 to 2 pounds of trash per day.
There you have it. Best of luck when it comes to calculation expendable supply useage.
