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Change from season price to trigger or number of times

Discussion in 'Business Fundamentals' started by stone74, Jan 25, 2014.

  1. stone74

    stone74 Member
    Messages: 52

    So I have been doing snow clearing for 8 seasons or so now and here in Winnipeg all companies charge a seasonal price or a monthly fee for unlimited snow clearing.
    This model has worked up until the last three seasons........

    I guess the question I am asking is has anyone been successful changing from monthly or seasonal to a system of example $500.00 gets you x amount of snow clearings, anything over that is a charge.
    Right now I go out when we get 2 cm or more snow.
    I have 85 properties all residential and one church, just this monthly price is slowly killing me example this December I lost money when all was said and done on track to loose money in January as well. I use two trucks, one plow, snowblowers, shovels average snowfall use 3-4 staff and takes anywhere from 6-12 hours depending on amounts etc.

    Appreciate any input from anyone that has made the change over and whether it worked or not. No need for responses regarding commercial as won't help me out.
     
  2. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    If your selling 30 pushes for $x then you are selling your service by the push and not seasonal.
    seasonal or monthly is for the season/month from this date to this date for $x regardless of how many pushes.

    It's time to figure out your business model.

    If you took a hit your not charging enough or your not watching your overhead/ employees.
    Even on a high snow year you should make out just fine with seasonal.

    If you have been selling seasonal for a while you should have experienced a low snow year or two where you made more $$$

    You have to AVG it out over a few years.
     
    Last edited: Jan 25, 2014
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Get another plow first ,your taking to long it seems like.
    you losing money on the labor side.
     
  4. stone74

    stone74 Member
    Messages: 52

    Does not address the question I asked.
     
  5. stone74

    stone74 Member
    Messages: 52

    Some valid points, but does not address the question I asked.
     
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Guess you need a to do a 180. Only charge per time you go out.
     
  7. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 621

    So I have been doing snow clearing for 8 seasons or so now and here in Winnipeg all companies charge a seasonal price or a monthly fee for unlimited snow clearing.


    You leave us to assume this is how you charge as well.


    This model has worked up until the last three seasons........


    So why is it not working now? Change equipment? More accounts?


    I guess the question I am asking is has anyone been successful changing from monthly or seasonal to a system of example $500.00 gets you x amount of snow clearings, anything over that is a charge.
    Right now I go out when we get 2 cm or more snow.


    So? You have a trigger. Many do.

    I have 85 properties all residential and one church, just this monthly price is slowly killing me example this December I lost money when all was said and done on track to loose money in January as well. I use two trucks, one plow, snowblowers, shovels average snowfall use 3-4 staff and takes anywhere from 6-12 hours depending on amounts etc.


    Monthly price? Is that just another way to say seasonal?

    Appreciate any input from anyone that has made the change over and whether it worked or not. No need for responses regarding commercial as won't help me out.


    Change over from what to what?
    You have a seasonal price where people pay it all up front. Pay half up front, pay balance up mid season. Do it in thirds?. Or monthly? No matter how you slice it you are working seasonal.

    Are you charging per event and billing monthly?

    As Grandview said, your equipment does not match up to the work. 85 driveways and only 1 plow.

    Though I will also say that your prices are too low. You need to at least break even when you are having a year with heavier then average snow fall.

    How many snow blowers are you running and how many shovelers do you have working each storm?

    What are the average size of the driveways you are doing?
     
  8. rcn971

    rcn971 Senior Member
    Messages: 213

    .........so what I take in from this is that put simply he wants to know if anyone performs the work at a seasonal/monthly price(same thing) but with a cap on the number of visits. While they do sometimes have that in the seasonal contracts around here, there is also a "give back" to the customer if there is less than average visits as well. At the end of the day the (2)trucks vs (1)truck on the road will only hurt him unless he is paying his guys overtime, cause otherwise it is always less expensive to run one truck when you factor in insurance and driver costs.

    Plus, aren't seasonal contracts based on the laws of averages and contracts would be for a three year period?
     
  9. stone74

    stone74 Member
    Messages: 52

    4-6 car drives 160-200 feet long by 8-12 wide walks, steps, paths to sheds etc....
     
  10. stone74

    stone74 Member
    Messages: 52

    All of my service contracts are year round. They renew each year.
     
  11. rcn971

    rcn971 Senior Member
    Messages: 213

    The problem with a yearly renewal when dealing with "seasonal pricing" and snow plowing is that it is based on averages. Rather than get into caps and give backs with your clients.....I am going to go out on a limb and assume you are a landscaper....just take the plow pricing out of your contract and price it separately. Explain to them that you are going to charge by the event so as to keep it fair to everyone. And then just bill it at the end of the month accordingly.
     
  12. stone74

    stone74 Member
    Messages: 52


    Yes landscaper, property maintenance etc...
    I will have to consider trying to back it out and have it separate, the winter. Maybe try it with a few clients and see how they respond to it. Thanks for the input.
     
  13. Neige

    Neige Sponsor
    Messages: 2,198

    Stone sounds like you have your grass cutting model down. You can base that down to so many cuts a year and it can be off by as much as 3 either way, no big deal. Snow is a much different game, yes you can average it out, but the swing in events can be huge. You have been doing snow for 8 years now, and it sounds like the last 3 years have been above the average snow fall totals. So in year 6 you experience an above average winter, and write it off as it happens once in a while, the last 5 were good. You have an opportunity to raise your price somewhat or leave it be. Then last year you experience another above average winter, if you had not raised your price the season before now its time to do so. Now this year it is happening again, 3 years in a row where its been an above average winter. It will be time to renegotiate your contracts after this season. You can increase the price that reflects a new 5 year average which may increase your price by 50%, upsetting the majority of your clients. Or you can now offer them a choice, sign a seasonal price at 50% more, or sign with a 5% increase, and a cap. You are giving them a choice, budget for the season with no extras, or take a chance and sign on older averages and pay more if it goes over. How do you plan on charging the extra? Will it be per event? Will be based on inches above the average? Will you charge per push? The most important thing for you now is to know your own costs. Know your winter numbers and come up with with pricing that works for you. We have charged seasonally for over 52 years now, and it has always been based on seasonal snow fall averages, which have been declining over the last 15 years. Our average is 100 inches in 20 events. We always looked at the average inches that fell, because we used to get decent size storms and it worked out. What would not be good for us is getting 50 two inch events. A two inch event costs the same as a 6 inch event for us. A 12 inch event costs around 20% more then a 2 inch event. So what I am suggesting to you, is that you may want to put a cap on the number of events, instead of the number of inches.
    Most importantly take your time to explain what the differences in the contracts will be for you clients. Good luck.
     
  14. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,046

    A 2cm trigger is very low. How about you change it to 5 cm and that should really cut down on the amount of visits you make which really should add to your bottom line.
     
  15. stone74

    stone74 Member
    Messages: 52

    Fantastic information thank you.
     
  16. stone74

    stone74 Member
    Messages: 52

    Most companies here go with a 2cm trigger so hands are kinda tied.
     
  17. Herm Witte

    Herm Witte Senior Member
    Messages: 555

    Stone, we offer year around contracts to some of our clients as well. The contracts spcify amounts for mowing maitenance and another line item or two for the snow portion. We track all our time and know our winter numbers as well. Your model can be succesful but there needs to be an understanding that you may be ammortizing either winter or summer work depending on the site. Knowing your numbets is most important.