discrediting The price per square foot fallacy


What is Econometrics?

Econometrics is simply economics coupled with mathematics and statistics. These functions help practitioners forecast and apply statistical methods. The objective of econometrics, in short, is to convert qualitative statements (such as “the relationship between two or more variables is positive”) into quantitative statements (such as "for every one dollar decrease in wages per hour, day porter services increase by 10%)."

Econometrics and Labor Economics

Real world applications of econometrics include the study of the income effect, defined as the change in demand for a product or service resulting from a change in income.

Janitorial services' largest internal cost is labor and should be the single largest driver of clients' fees. However, without (i) understanding and studying labor economics, (ii) the regional disparities of wages, and (iii) the relationship between labor costs and demand, a company would rely entirely on antiquated bidding models focused on price per square foot. This can increase client's cost by 100%.   

Why? Because you get economies of scale. After covering your fixed costs (at some inflection point), each incremental square foot's cost decreases significantly as the only remaining expenses are variable.  

Why Do We Employ Econometrics with Janitorial Services?

A-One Janitorial partners with sophisticated companies who trust us to maintain their facilities. Many of these buildings are either operational 24/7/365 or possess hundreds of thousands of square feet. In some cases, they maintain national security. In most cases, we have multiple shifts throughout the day. In contrast to simply using price per square foot, A-One uses the above data to optimize programs. 

Why is this Important to you?

By using large data sets of regional wages, services offered, daily foot traffic, and operational hours, A-One Janitorial is able to optimize a client’s program  - thus reducing your costs.