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Calculating Per Event Pricing Structures

Discussion in 'Bidding & Estimating' started by merrimacmill, Sep 6, 2011.

  1. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    This is a bit long winded, but bear with me. I generally try to stay away from per event pricing structures since I've found they can be a killer on those long duration, but small accumulation storms. Despite that I routinely get asked to bid on them, or at least provide that as an option for pricing.

    My ranges for an event generally are 1-3" , 3.1"-6", 6.1"-9", 9.1"-12", 12.1"-15", and then a set price for every inch over 15". I then submit my invoices along with a certified snow fall total for the specific zip code which the property is located to prevent any disputes (which I have found can be common when the difference between .1 of an inch can mean several hundred dollars for the customer).

    For example, historically when I calculate this pricing structure, I look at a 1-3 inch storm and say I could either service the property 1 or 2 times (2 inch trigger), depending on the event, timing, and type. So I will take the per push price, multiply it by 1.5, to split the difference, assuming that the law of averages will work it out in the end. I'll do this same thing for each increment thereafter.

    As I've worked to develop a more standardized bidding process for my company, I've really found the need to determine a way of pricing "per event" contracts that I can be more confident with, and add into my spreadsheet bidding system I've developed. With that said, I would like to know how others are pricing per event lots and why they are doing it that way?

    I've heard of people using overall plowing efficiency factors while determining this pricing structure, maybe removing 25% efficiency factor for each additional increment of snow or something similar. I've also heard of people using historical weather data while determining this pricing structure. For example say my area gets an average of (7) 1-3 inch storms per year, and (4) 3-6 inch storms, etc... I'm just not sure how it is being calculated using these last two methods.
     
  2. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Collin my pricing structure is similar to yours....1-2.9, 3-5.9- 6-8.9, ect..... For those long low acc storms I simply have "a event is defined as the total snowfall over a 24 hour period". After that 24 hour period its considered another event and my per push accounts get billed again. Its been working for me.
     
  3. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    I will do the same, but its not always an option. Especially if we are bidding it for a large property management company, and even national maintenance companies that have they're own bid forms/contracts. Or if they will simply not allow it during negotiations.

    On a local scale though, I always put in the 24 hour clause.
     
    Last edited: Sep 6, 2011
  4. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    This is something my company doesn't need to worry about.......Thumbs Up
     
  5. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    Haha, yes I know. But I think thats another whole discussion :rolleyes:
     
  6. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    I'm surprised that more people don't have any input on this... Do you not want to share, or just don't have a formalized process for per event bids?
     
  7. Glenn Lawn Care

    Glenn Lawn Care Senior Member
    Messages: 551

    I don't have anything like your structures.... I go out after 2" of snow has accumulated and everything gets billed per push or per hour, and every time I'm there during that same storm it gets billed per push or per hour. :salute:
     
  8. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    I have accounts that I bill the same way, but I have several different pricing structures as do most contractors. Seasonal, Per Push, Per "Event", and Hourly.
     
  9. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    Almost everything we do is per event or seasonal.
    To be honest per push was not a thought untill I found this site.
    I dont know if its local or not but the many people I know that plow it has always been per event, per hr, or seasonal.
    Having said that I have done my best to switch to per push alot more now.
    To answer your question mine is like yours 1-3 3.1-6 6.1-9 and so on to 12 then its additional per inch. Per event is always a 24hr period. So if it keeps going its a new event. In a big 15 inch or so 2 or 3 day snow fall its common to bill 2 6-9's and 1 1-3 or 3-6.

    While on this topic having not done much per push there are lots I feel it works great for and others not as much. Small lots that are busy places it seems good gas stations, restuarants, retail ect..
    On the other hand bigger lots say 1.5 acres or more not as much. To keep up during larger storms each push tends to blend more together and not so definite in how many pushes what was done and so on if that makes sense?

    If I came to you with a 3.5 acres grocery store and said I need snow bids what would you try to sell me?
     
  10. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822


    I completely agree with what you say about the events blending together. My largest "per push" account is about 2.5 acres. To much larger than that and I begin to opt for seasonal first and then per event second.

    For a per event account that has equipment onsite, working just on that one account, I generally go seasonal, but will also do per event with a "retainer cost". That retainer cost is equal to the annual equipment ownership cost for the piece that will be on site. Then when I go to figure my pricing, I remove the annual ownership cost of the equipment I will be using on that site from the per event prices since it is being paid for by the "retainer". This is a much harder sell to the customer, but is my preferred way to do a per event or push with dedicated seasonal equipment.


    If you came to me with a 3.5 acre grocery store, I would want to go seasonal. It is my preferred method for larger accounts since I keep equipment on them and it helps me budget. I cover my annual overhead with my seasonal contracts, once that is done I start chasing the per service/event accounts.

    But what I'm asking is HOW do you calculate your per event pricing? Above I have gone over a couple ways that I do it, but I'm interested to see what others are doing since I have a few different methods for it and am trying to pin down the best solution as I work to create a more standardized bidding process for my company.

    For example, if you have one price for a 3-6 inch event, its impossible to say exactly how many times you will plow that parking lot during that 3-6 inch event. Between a difference of 3 inches, variable timing, and conditions it could mean plowing the lot 1 time or up to 3-4 times. I have always split the difference and let the law of averages figure the rest out. When I do this, I figure maybe we will get an event with 3.5 inches from 7pm-11pm and I will only plow the lot once and bill for 3-6 inches. Or we could have 6 inches starting at 6am and going until 6pm at night, which will require us to come back once the lot is empty and clear it again once the cars have left which means 4 service visits, all for the same 3-6 inch billing rate. What I'm getting at is I feel there must be a more accurate way of doing this.
     
    Last edited: Sep 8, 2011
  11. jerrywane

    jerrywane Senior Member
    Messages: 134

    Nice site dude

    Looks very well done and WOW factor is there also....kudos,good luck.....very nice website!
     
  12. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Collin,
    It seems as though your trying to apply an exact science to mother nature... Its not going to work no matter which way you try it........some storms you come out on top and others you won't.... like you said just use the law of averages and you'll be fine .... I know its not what you want to hear but I think for your situation its the only outcome you can realistically calculate (the law of averages part)

    Jerry, thanks for the website compliment!
     
  13. jerrywane

    jerrywane Senior Member
    Messages: 134

    Shhhhhhhhhhh

    May copy some of that website.....imitation is the sincerest form of flattery.I am starting out on my own in a locale that has about 5-8 plow ables a year + tight azzes all around till it hits the ground...this site is priceless,and most of the people are good hardworking,Made in the U.S.A type.........(even the Canadians)ussmileyflagtymusic
     
  14. MidcoastMainiac

    MidcoastMainiac Member
    Messages: 95

    I do not see how you guys that use the inch scale to bill do it. In my town alone the depths could vary 6-8"s within 2 miles. There have been times where I would only need to plow 6 or 7 of my 30plus residentials because they had 6-8"s in their drive while 2 miles down the road we only got 1-2"s. Plus what about the 4" storm that comes off rain at the end and settles it to 1-2"? How do you figure all this and keep it straight?
     
  15. Stowe

    Stowe Member
    Messages: 40

    Seasonal Price Divide by inches

    I work up a seasonal price and divide it by the average number of inches per season. Then for say 2-4" I would use three inches. I then try to figure out based on histrory how many 1-2" 2-4 ect and work back to my seasonal price. I also and some fluff in case it a low winter.
     
  16. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    Midcoast - You use a weather service report. Find a recording place near you and use there report. if it says 5.1 thats what it is. one drive may be wind blown and have 2 inches or on the other have 8. Just make it clear in your contract billing is based on the weather service report.

    Collin - I agree with everything you stated before and we are very similair in everything talked about.
    To answer your question about a formula to price per event. I dont have one. so many variables. I come up with a base price 1-3" and from there no real good way.
    If you have a small lot with little traffic you may only plow it once up to 5" or so but on the same storm on a 1 acre lot with high traffic you may be there 3 times.
    On a daytime storm with a lot you may just go do drivelanes and not much else would you bill that as a push equal to the push price when you do the final at the end of the day? Yes or no doesnt matter. In my opinion every lot is differnt in there needs and expectations so its impossible to come up with a formula to be accurate. As with most snow bidding I think its at best a well educated guess.
     
  17. jerrywane

    jerrywane Senior Member
    Messages: 134

    100% correct sir

    Educated or experience and time learns all.....gotta make some mistakes to learn,and its always been that way ALWAYS!
     
  18. alsam116

    alsam116 Senior Member
    Messages: 217

    to the OP, what if it is a daytime storm and you dont do the entire lot but keep up with the lanes and prorate the Push price based on % plowed(lanes) and then do a clean up after the store is closed and you can do another full push? i hope this is what your asking, but you also have a TON more experience than me so if this doesnt apply to you then just disrgaurd. HOPE IT HELPS
     
  19. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    collin- question for you or anyone else. when doing per push pricing how od you factor in shoveling? Again I really dont use per push and neither does anyone I know. Today I was doing a bid for a restaurant and its around 55,000 sq ft. OK no problem there. Walks are around 3000 sq ft of pavers. Ok got a price there but when doing per push how do you price the walks? Is it priced per shovel and per push? I went with seasonal instead and just skipped it.
     
  20. CGM Inc.

    CGM Inc. PlowSite Veteran
    from Ontario
    Messages: 3,590

    all our work is seasonal with either salt extra or inclusive. Don't want it any other way.