I think best way-- give low price or offer more services in same price.

I've been running into a similar problem in the Buffalo, NY area. The main thing I notice about companies who under-bid me to the point where I don't know how they can be profitable is this; They simply don't deliver on their promises. They offer a really low price to get customers to sign a 1 year contract, then they simply don't so a good job. The customer is stuck paying them for a year, though, so they are no longer concerned with delivering quality. I have lost a few good customers to this scam, but I've actually gotten several back. I follow up with them after a month or two, to see if their new service is making them happy. If they're not, I offer to take back over, and bring the building back up to quality. This does work. The other thing is, know who these companies are that are under-bidding you. Several of my customers have had bad experiences with two companies in particular in my area, and are very willing to share their bad experiences with any of my customers who are considering leaving me for them. If you have a loyal customer who knows about these other guys, ask them to be a reference for you.

What is your #1 cost? Labor.

Are these competitors hiring qualified people, performing background checks, drug screens? Are they providing any kind of employee benefits, W/C insurance, bonding, etc.? Does the client know this?

Is this a large national franchise that gets cleaning chemicals/equipment at much lower cost than you?