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Asking for Pros advice on my pricing scheme.

Discussion in 'Introduce Yourself to the Community' started by SixStar, Nov 1, 2006.

  1. SixStar

    SixStar Junior Member
    from Boston
    Messages: 14

    We are a multiservice company based 20 minutes north of Boston. Last year was our first year plowing and we plowed for the city and a couple of last minute call commercial clients. In one instance we had a locked in price and we were called when the city wanted us. Pretty easy stuff. In the other instance, we could pretty much ask for what we wanted within reason so there was not a lot of competitive thinking going into rates and contract terms. We had and still have 1 truck. Chevy Silverado 1500HD, V8 with a 7.5' 2005 Boss tripedge. Not ideal but we had the truck for other uses and it fits for 2-3 seasons if we are careful. We do not have a commercial spreader just yet but I would like advice on what would be good for this truck.

    This year we are expanding into residential and regular commercial contracts. Here is what I want to propose to my potential clients. Please let me know what you think of the pricing and plowing schemes. Thanks.

    <______________________________Residential______________________________>

    ----------NON-CONTRACT Residential -----------
    Covers straight, flat drives up to 50' and walks up to 20'.
    Anything approx greater than above specs are priced greater but not sure how pricing will be set.
    After first call is recieved, drive is plowed every 2", for duration of a storm.
    10" and above billed at $45 per push.
    Billed immediately following storms.

    $15 per push - Call as needed. CONTRACTED CLIENT PREFERENCE GIVEN serviced on a scheduled route. No shoveling, no salt/sand or de-ice is included.
    $10 per spread of 50/50 salt/sand mix on drive up to 50'
    $10 per shovel upon request when
    $5 per spread of 50/50 salt/sand mix on walks up to 20'

    ----------CONTRACT Residential----------
    Contract covers 16 weeks from Dec 1 - March 10.
    All events outside of those dates are on a straight 'non-contract' price.
    Covers straight, flat drives up to 50' and walks up to 20'.
    Anything approx greater than above specs are priced greater but not sure how pricing will be set.
    After first call is recieved, drive is plowed every 2", for duration of a storm.
    Billed for cummulative $25 weekly 'maint fee' at the beginning of each month ($100 per month and $400 total for the season)
    10" and above billed at $25 per push.
    Billed for work immediately following storms.

    $30 per push - Call as needed. No preference, serviced when plow is available. No shoveling, no salt/sand or de-ice is included.
    Spread of 50/50 salt/sand mix on drive up to 50' is included
    Free shovel upon request when driver is onsite and requested by client. $10 charge for separate visit.
    Free spread of 50/50 salt/sand mix on walks up to 20' when shovel service is performed


    <______________________________Commercial______________________________>


    ----------NON-CONTRACT Commercial -----------
    Based on production rate of 50,000 sq ft per hour with 1 truck, 8' plow and spreader.

    -Cost for the year covers 16 weeks December through Mid March. Averaged on 15 plow events per season covers approx 40 - 45 inches of snow and 15 events below 6 4 inches.
    -Salt/sand or Magic Salt application begins at 1" up to 2 inches. Re-applied every 4 inches. Non-negotiable.
    -Dispatch to site occurs when trucks are available and after contract clients have been serviced.
    -Plowing begins at snowfall of 2 inches.

    Minimum dispatch cost per vehicle is $100 per vehicle (1 hour) No partial hour billing.
    Plowing - $100 per hour, per vehicle up to 10.0".
    Plowing - $150 per hour. per vehicle beginning at 10.0".
    Sand/salt - $125 per hour per application up to 10.0" inches.
    Sand/salt - $175 per hour per application beginning at 10.0" inches.
    Snow blower w/oper. $100.00 per hour .
    Shoveling $40.00 per person per hour up to 10.0”.
    Shoveling $60.00 per person per hour beginning at 10.0’.
    Carting of snow to be negotiated based on market factors and availablility.

    ----------CONTRACT Commercial -----------
    -Production rate of 50,000 sq ft per hour with 1 truck, 8' plow and spreader.
    -Cost for the year covers 16 weeks December through Mid March. Averaged on 15 plow events per season covers approx 40 - 45 inches of snow and 15 events below 6 4 inches.
    -Salt/sand or Magic Salt application begins at 1" up to 2 inches. Re-applied every 4 inches. Non-negotiable.
    -Plowing begins at snowfall of 2 inches.
    -Dispatch occurs once 1 inch has been confirmed by 2 sources. State, and regional forcast.
    -Business hours response: Onsite within 30 minutes from first report of 1" snowfall
    -After hours Response: Onsite after snowfall is complete and no later than 5:30am

    Billed for cummulative $100 per week 'maint fee' at the beginning of each month ($400 per month and $1600 total for the season)
    Billed for work immediately following storms.


    Minimum dispatch cost per vehicle is $80 per vehicle (1 hour) no matter if we plow/sand or not. No partial hour billing.
    Plowing - $80 per hour, per vehicle up to 10.0".
    Plowing - $125 per hour per vehicle beginning at 10.0".
    Sand/salt - $100 per hour per application up to 10.0" inches.
    Sand/salt - $125 per hour per application beginning at 10.0" inches.
    Snow blower w/oper. $80.00 per hour .
    Shoveling $30.00 per person per hour up to 10.0”.
    Shoveling $50.00 per person per hour beginning at 10.0’.


    I am trying to make this a straight forward pricing scheme that will encourage both commercial and residential clients to sign a contract with us. This way we give them a superior price and guarantee income during the weeks when we don’t get snow.

    We have people calling regularly because we come up first in search engines and some local adverts. We also have subs lined up with their own equip or ready to buy their own equip if we give them the biz. I want to sub residential out at $40 per hour and commercial out at $60 per hour. I figure we should be able to do 4-7 average residential driveways per hour for a $60-$105 gross, plus $25 per week maint fee.

    Thoughts and comments are very welcome. Thank you.
     
  2. SixStar

    SixStar Junior Member
    from Boston
    Messages: 14

    Clarification on Residential Rates above

    Non Contract is
    $30 per push.

    Contract rate is
    $15 per push.


    thanks
     
  3. nekos

    nekos Senior Member
    Messages: 586

    with out starting a fight like my last post on this subject ...
    your prices are to low.

    also residential customers wont want sand or salt on their driveway. < at least in my area they wouldn't > i do put salt down when i get an ice patch on the drive or the walk ways start getting slick. i do not charge extra for it on my residential account's.
    the amount of salt needed for a residential account is minimal. just my opinion ...it's better to include the cost of salt in your price from the start and never mention if you did or didn't salt... just do it when it's needed to keep your customers happy.
     
  4. Rampart Ranger

    Rampart Ranger Senior Member
    Messages: 165

    AGREED!

    If that is all the market will bear at your location, then go ahead.

    I cannot plow for less than $125 hr, if I cannot get it - then someone else will have to do the job. Best of luck to them on making a profit.
     
  5. SixStar

    SixStar Junior Member
    from Boston
    Messages: 14

    Nekos,

    thanks for the comments. I need to read your other posts to get a better sense of what you think is appropriate. Any other comments on the pricnig scheme besides price? What about how all the numbers work together and how about my idea of a base weekly fee and a cheaper, per event price? Thanks for your inpu.

    -SixStar

     
  6. LLM Ann Arbor

    LLM Ann Arbor Senior Member
    Messages: 876

    Give away some free advils when you pass those out. I have a headache just trying to read it.

    Ugh

    :dizzy:
     
  7. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,993

    Confusing and cheap. We where getting 25 bucks a pop in the 80's. Won't look at a driveway for less then 50.00 with a contract. 75 for will calls.
    $10 to shovel walks?:dizzy:

    At those rates you can do all my contracts. It would be less expensive to pay you then do it myself. I'll stay home and count the money you're making me.:rolleyes:
     
    Last edited: Nov 2, 2006
  8. nekos

    nekos Senior Member
    Messages: 586

    lol i kinda agree with that.

    i don't know what to charge in your area but i do know $15 is to low.
    do a search or ask around on this site . some one should help you.

    anyway for your price scheme. i don't understand it completely.
    some may disagree with me on this but i like to keep thing's simple.
    if you are going to charge $25 per push , $10 for salt , $10 to come back for clean up and $10 for shoveling the walkway.
    you might as well just charge $55 for doing it all .

    remeber the KISS saying ??? Keep It Simple Stupid.
    i run my business by that saying and it seems to work well for me :)

    <edit>
    im the wrong person to ask about comercial account's. i still sub contract for snow systems and i only do residential accounts on my own.
    anyway,
    i don't understand how you are chargeing your comercial accounts . is it by time or size or both ?
    if you are chargeing by the size of the lot you have to remember that a 50,000sq ft lot that is wide open will take less time then a 50,000sq ft lot that has islands, parking blocks < i hate those things BTW > and cars zooming around it 24/7.
     
    Last edited: Nov 2, 2006
  9. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I'm glad to see someone else thought so, too. I tried reading it three times and haven't gotten through it yet. Way too confusing with all the conditions of contracted or not, straight roads etc. Why tell someone they're not as important as another customer? Your idea of straight and flat may be different than the customer's. Why charge different PER HOUR for different depths. The amount of time will will take care of that. You're going to guarantee that you'll plow every two inches? I wouldn't want that, anyway.

    "Anything approx greater than above specs are priced greater but not sure how pricing will be set". You're not sure how pricing will be set???

    I could go on and on, but I think you better tear this one up and start over.

    Just one more - How can you charge for sanding/salting at different depths? There should be less than an inch when you do this. You'
    re going to salt on top of 10" of snow?
     
    Last edited: Nov 2, 2006
  10. SixStar

    SixStar Junior Member
    from Boston
    Messages: 14

    Got it wrong. But the numbers work

    I get the clear picture that my offer for $15 is percieved to be too low but they way I look at it is if I am able to average $80-$110 per hour in productivity rate then isn't that a good margin? They way I have figured it, the average driveways plowed per hour is somewhere between 4-7. That should pull in a gross of at least $60-105. I am also charging $25 per week maintenance fee even during the weeks that we don't typically see any snow around here. December is usually 1 snowfall at best and it's a single push event (with last year being the exception) So for the month of December I will be pulling in $100.00 per account for only sitting around doing nothing other than acknowledging to my customers that they are valued clients. Plus we do it for the last two weeks of the season in March when we again don't typically get a lot of snow.

    The way I see it, we are offering our clients a hedge against being stuck during Dec and March but also bringing in money for my biz. This way the customer gets the peace of mind knowing they have plowing services at the ready and for a great price and I get dependable cash flow.

    So look at it this way. Based on the snow averages per month, I should be able to get an average of $65 (two events) to $115 (one event) per push during December, for each one of my clients. This number icludes the per push price and the maint fee.

    Snow storm averages for Boston:
    Dec 1-2 snow events - (1-2 pushes per event)
    Jan 6-8 snow events - (3-5 pushes per event)
    Feb 6-8 snow events - (3-5 pushes per event)
    Mar 2-3 snow events - (2-3 puches per event)

    The numbers are not as favorable during Jan and Feb but with a cushion of Dec and March on either side, the dollar value of these accounts average out pretty well.

    I don't mind upping my per push rate a little. I can see offering an introductory, single event, single push price of $15 and then a regular contract rate of $20-$25. But I still will be making a hundred bucks a month on top of that for each account.

    As for the different rates for larger depths, the idea was pulled from numerous posts to this site. The rate is for area forcasted accumulation, not what I would have allowed to pile up on the clients property. Once the regional forcasts have confirmed that we have hit an area accumulation of 10" or greater, the rates go up on all service. I have not read anywhere on this site before that people didn't think this was a good idea. Thanks.

    -SixStar



     
  11. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,993

    So you're charging for each time you plow, plus your putting a depth surcharge in, and a monthly maintenance fee?

    It would cost a customer 400+ @ push rate adjusted for depth?

    you're sure not lowballing, if I understand this, using your lowest number of projected pushes with-out depth surcharges, you'd bill another 150 (15x9), for a low end total of 550 @ per customer for the winter.

    4-7 drives @ hour, come so me how it's done. Maybe with all the drives side by side, 2 push L shaped drives with good snow storage, no back dragging or tight maneuvering.

    Hard to get subs at less then 50@hr.

    And all based on a 1500 truck with a 7.5 blade as your main piece of equipment?

    Good Luck
     
  12. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    This does not apply to sanding or salting, though.

    As for the pricing strategy, if you can get customers to go for it sounds like a good deal. It's just way too complicated for me. If I was a potential customer, I'd read the first line or so and say "Thanks, but I think I'll go with someone who makes things a little easier". But, like I said, if someone will pay a "maintenance fee", also a "per push" fee and sanding based on depth of snow that was there, go for it.
     
  13. jcesar

    jcesar Senior Member
    from Mi
    Messages: 492

    :dizzy: Think I will put my .02 worth in, on this. Ann Arbor, no fighting! LOL
    Just pickin man. Anyways, I think your post is confusing, but if you understand it than i guess it is ok. First, I have to agree with both Ann Arbor, And Mick, that the contract, vs no contract, vs commercial, vs.......... is to say the least, very unprofessional. Please dont take that the wrong way. What I mean is, I think your customers will say that , basd on the fact that there is really nothing set. It is going to keep them wondering what they are paying, and for what services. If you can get them to agree with your thinking, great. I wish you all the luck in the world.But if I look at it from a customer standpoint, I would be lost. Not trying to bash you or anything like that. Just saying i did not understand what you were charging, for what services. Just my .02:dizzy:
     
  14. Rampart Ranger

    Rampart Ranger Senior Member
    Messages: 165

    NO!

    You have $$$ invested in equip, you have to insure, you have to pay labor, AND taxes.

    Charge by the hour, $125 to $150, for 1 truck and 1 man, Min # hrs is up to you. Do EXCELLENT work.

    If they don't like your price, they can get someone else. Or they can shovel!

    I make exceptions only for charity cases (and those are also up to your discretion). NO EXCEPTION EVER for businesses!!!

    .GOV pays over $300 hr for heavy equip during emergencies. Are you only worth 1/3th of that - if so find another vocation.
     
  15. Rcgm

    Rcgm Senior Member
    Messages: 613

    :dizzy: :confused:
    You need to just charge per hour.Not to be rude but if that flyer came to my house in the trash it would go I get a big enough headache from my wife.


    RCGM
    Brad
     
  16. SixStar

    SixStar Junior Member
    from Boston
    Messages: 14

    Great input. Thanks.

    LOL. Guys, this is really good input and I thank you a lot for it. I am going to come up with something more simple and also find a better way of explaining it myself. If guys in the industry are getting a headache over this, potential clients will too. I will give this another go.
     
  17. RHarrah

    RHarrah Member
    Messages: 40

    When you say charge by the hour, are you saying not to worry about the depth just the time spent?
     
  18. Rampart Ranger

    Rampart Ranger Senior Member
    Messages: 165

    EXACTLY!

    There should be an agreed upon trigger depth. From that point on charge is by the hour for actual time on job including second, third, or how ever many pushes - till event & cleanup is over.

    In reality I believe this is the only scheme that is fair to both the customer and the service provider. This does require good communication throughout the event - the customer may decide to back you off till the snow stops falling if 24 hr access is not required. This may result in much tougher plowing (and more hours) at the end of the event.

    The advantage is that the customer gets to decide when plowing is required, and the provider recieves compensation based on actual cost + profit if he prices correctly.