With rising inflation and interest rates, many home cleaning business owners are torn between raising prices enough to cover their costs and holding onto clients facing the same pressures.Hispanolistic/iStockPhoto / Getty Images
The products Alicia Ogoc uses to clean homes have more than doubled in price in the past two years. Gas prices have also increased so Ms. Ogoc is spending more money driving around Calgary, and sometimes beyond its boundaries, to get to the houses she cleans.
All the driving means she goes through tires faster than the average driver, sometimes a set every year. She said her most recent set cost $1,000, a $200 jump from the last time, and that she chose not to get winter tires because they were too expensive.
“Everything is going up,” said Ms. Ogoc, 60, who works alongside her sister cleaning about 20 homes every two weeks or so, and another 20 less frequently. “My car is old, from 2004. I cannot afford a new car.”
Despite the rising costs, Ms. Ogoc hasn’t raised her cleaning rate for long-time clients, which starts at $100 a visit for both sisters for two hours. She recently started charging new clients $150, after seeing ads for cleaning services with higher rates, but she worries that boosting prices for her regular customers will make the service unaffordable. Instead, she leaves it to them to suggest a raise.
“Some of them voluntarily give me an additional income,” she said. “I have clients who are generous, and clients that aren’t as generous. … You can see the way they are living. You can tell if they have money.”
Ms. Ogoc’s small business wasn’t the only one whose sales drastically fell during the first two years of the COVID-19 pandemic. Now, with inflation skyrocketing and rising interest rates contributing to higher debt payments and a potential recession, many business owners are torn between raising prices enough to cover their costs and holding onto clients facing the same pressures.
Janea Dieno, a certified financial planner in Saskatoon, said she hasn’t seen household service expenses go up yet among her clients – and her own cleaner hasn’t raised their rates – but she believes it’s just a matter of time.
“When we hit high inflation periods, first we feel it on the food and fuel, and everything else kind of takes six months to catch up,” she said. “As food and fuel comes up, rents come up, and business’ costs come up and they start to push that to their clients.”
Ms. Dieno said she’s hearing more often about stagnant wages or wage freezes, and is preparing for more discussions with clients about which discretionary spending they can cut. She said lifestyle spending, which typically takes up about 30 per cent of a client’s overall budget, includes services such as cleaning, as well as food, entertainment, travel and gifts. As food takes an increasing chunk of that money, people will be prompted to scale back on other things, she said.
For some clients, including those of relatively modest income, cleaning is one of the last services they’re willing to cut because of the time savings and peace-of-mind it provides, she said. “I probably will never get rid of my cleaner.”
In the worst case, she said, if her own budget becomes tight and the price goes up, “Maybe we’ll cut it back. Rather than once a week we’ll do it every two weeks.”
Economist Wayne Lewchuk said many home service workers are part of the “shadow economy” of people who work for cash, so it’s hard to get a true understanding of what cleaners get paid or whether their numbers are rising or falling. Job website Indeed lists the average income for a cleaner in Canada as $19.25 an hour, but Dr. Lewchuk notes those working individually or running their own business must also account for expenses, and have to spend non-billable hours on tasks such as marketing and invoicing.
Dr. Lewchuk, professor emeritus of labour studies at Hamilton’s McMaster University, said when there are more jobs than people to fill them, many people leave gig work or self-employment for more stable working conditions. Those who remain tend to be people who can’t work permanent jobs, for reasons including citizenship status or caregiving responsibilities, he said.
He added that people in that position often feel like they don’t have leverage in their working relationships, so sometimes rely on the wider market to improve working conditions rather than pushing for them individually.
However, enough people leaving the field at a time of the increased costs that come with inflation is likely enough to drive rates up, Dr. Lewchuk said.
“If the formal labour market is sucking up as many workers as it wants to, that means there will be fewer people chasing jobs in this informal sector,” he said. “If households want to get these workers, they will have to pay accordingly.”
Toni Akinwumi, who lives in a two-floor loft in Vancouver, pays $25 an hour in cash to her cleaner, who has been cleaning her place for about a year and hasn’t raised her prices.
“I would be totally okay with it,” said Ms. Akinwumi, 29, who works in marketing at a technology company. “A $10 increase is totally reasonable for the work that’s being done. … I like to tip extra because I know that’s not supersustainable.”
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