1. Welcome to PlowSite. Notice a fresh look and new features? It’s now easier to share photos and videos, find popular topics fast, and enjoy expanded user profiles. If you have any questions, click HELP at the top or bottom of any page, or send an email to help@plowsite.com. We welcome your feedback.

    Dismiss Notice

Changing to seasonal contract?

Discussion in 'Business Fundamentals' started by jkkalbers, Jul 24, 2005.

  1. jkkalbers

    jkkalbers Senior Member
    Messages: 116

    I am thinking about changing my residential customers from a per time contract to a seasonal contract I was wondering if anyone has done this and if so were you successful or did you loose too many customers? Also, just out of curiosity what kid of formula did you use to calculate a seasonal and what kind of payment terms are there? Thanks
  2. tomssnow

    tomssnow Junior Member
    Messages: 4

    Don't do it. In chicago, I used to do a seasonal rate. My customers thought they owned me for the little amount they paid for the season. They had a problem telling the difference between 1" and 2". They would run me ragged. One guy thought he should have been plowed 12 times during the 2 foot blizzard of 1999. He went as far to get an attorney to try to get his seasonal rate back after the season was over.

    In my opinion the best way to do it is to charge a prepaid non refundable deposit for the first 7 plows. After 4 are used I send out another letter asking for an additional 4 plows to be submitted before the 7th plow has been performed. I refund any unused monies from the second deposit in the middle of May. Yes refunding is a pain in the ass, however, I've been doing this long enough to realize that if I don't have their money up front, I am not in a position of power. People here in Chicago are braindead and can't remember when you were there.
  3. zippoz

    zippoz Member
    Messages: 64

    thats an intersting idea, getting a certain amount of plow money up front. i could make it non-refundable and offer a discount on it...
  4. Killswitch

    Killswitch Senior Member
    Messages: 246

    Not to be rude but thats the craziest deal Ive ever heard Toms.

    Perhaps just billing everyone more frequently in season....like every two weeks?

    Im new to the business this year. Ive been in Lawncare forever but people dont like coughing up money for something they havent gotten and may never get is all I know.

    And with up front contracts all I see is you either getting burned, unless you have all kinds of clauses, or....making a lot of money for little work and leaving a bad taste in the clients mouth.

    Im more apt to a yearly fee for being on call 24 hours a day upfront. A nominal contribution. Then a good solid price per visit. T and M
    Last edited: Aug 8, 2005
  5. Mick

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

    Not crazy at all. Actually fairly common in many areas. Lawn care and snowplowing are very different. Seasonal contract typically consist of a preset amount which will cover up to some predetermined amount of snowfall. Say $1,000 for which I will provide snow removal of up to 50". I once took what could be considered a big gamble and charged one price for any amount of snow for the whole winter (although I wouldn't advice that for everyone). Wound up doing very well and the customer was happy, too. Generally, you will want a mix of seasonal and per push contracts for any winter.

    Think if a seasonal contract like insurance for the customer and yourself. In a big winter, the customer wins. In a winter with below average snowfall, you win. The other advantage to the customer is that they have somewhat predictable costs for snow. You also have a predictable income to cover costs in the below average winter.

    Usually (but not always), you will have a storm clause in your seasonal contract which will provide for any one storm over a certain amount or for an extreme winter.
  6. Killswitch

    Killswitch Senior Member
    Messages: 246

    Admittedly(sp?) Im new at the bidding/pricing angle. I appreciate the advice and tips.

    One thing I like about the contract deal is it just leaves you open to keeping the property in good shape without worry if you are visiting to often, or if theres 2 inches of snow etc.

    Im going to try a few different methods and see how people react... perhaps bidding it out as a contract for the smaller commercial jobs.

    Nobody seems to speak of it much and wish we would at least in approximations but what is a good hourly rate for a man, truck, plow.

    Im thinking in the hood of 125/hr

    If theres a decent thread here about pricing Id love to see it. Just getting started at the site and havent seen much yet.

    I have it pretty close. Id of course just like to compare my thoughts and prices.
  7. Mick

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

    You're $125/hr is a good starting point for a 1/2 truck, 7 1/2' plow and operator. This is something I made up for another thread, so just ignore comments that don't apply to you. Hope it helps some. You might also do a "search" using keyword "pricing" or similar, but wading through all those posts might take awhile.

    The reason you haven’t gotten a reply to your post so far is likely because pricing is so regional and can be very complicated although it seems simple and straightforward:

    There are three main strategies to pricing - Per Push, Per Inch and Seasonal. All those are based on the “fourth” stategy - Per Hour.

    Per Push - I will charge you $xx each time I clear the snow from a given area.

    Per Inch - I will charge you based on the total number of inches that gets cleared from a particular area.

    Per Season - I will charge you $xx for pushing any amount of snow that falls during a particular time period (ie: Nov 1st to Apr 1st).

    Hourly - I will charge you $xx per hour for the period of time I spend plowing snow from a particular area.

    The most common strategy is a combination of Per Push and Per Inch. In this you will have a “trigger” or depth at which you begin plowing. Say your customer wants a 3” trigger. He is saying he can drive on anything under 3”. So, you wake up and find 3.5” in your driveway. Do you plow? What if the customer disputes that there was over 3”? Now with this strategy, you will most likely structure price increments - ie” with a 3” trigger, you would charge, say

    $30 - for 3” to 6”
    $45 - over 6” to 9”
    $60 - over 9” to 12”

    To cover your behind and to account for those perhaps rare instances of more than 12” snowfall, you could do something like “over 12” - $60, plus $1 an inch over 12”.

    Per inch - This is generally only used for accounts requiring a very high degree is service, such as where absolutely no accumulation is tolerated and involve anti-icing by using chemicals to melt falling snow. An airport might be an example. Here, you would rely on a third-party weather service to determine snowfall.

    Seasonal - Here you indicate a price (say $1,000) to provide service for the season. With this, you will want to have a contract that is very specific and to what services, when they will commence and what will entail added charges. Example - you determine the average snowfall for your area to be 50” per season and with a 3” trigger, you expect to have seven “events” per year. What happens if it snows 80” one season and requires ten pushes? What if you get seven 2” snowfalls back-to-back? For a Seasonal account, the best strategy is have a three- (or more) year contract. This way, you take advantage of the “law of averages”.

    Hourly - You will charge so much per hour for each piece of equipment used and different amounts for different sized equipment. This may include plow, pusher, dump truck, sander, loader etc.

    How much to charge in each of the above situations is determined by local custom. It’s been tried here on Plow Site before and the variance between areas was pretty surprising.

    I mostly use a variation of the Per Push / Per Inch and offer a price for plowing anything up to 12”.

    I hope this helps a little.
  8. Killswitch

    Killswitch Senior Member
    Messages: 246

    I really appreciate the tips Mick. Awsome.

    What did you mean by 1/2 truck?

    What Im angling towards is a per push/per inch plan for most of my anticipated clients. I have several bids to get out now as a matter of fact but have a few other things to handle before I can get them out.

    What Id like to do is do work by the visit/push and use my own trigger for all clients of three inches. Meaning Im coming at 3 regardless of how much we expect. If we get one more after that....its another charge. Im going to have a maintanence/detailing fee for secondary visits for drifting/dustings, etc, and will charge this on a second visit if we only got an inch or less after my first visit to be fair to the client. Im thinking 50 to 70% of the standard visit price. But if we get over an inch after the first visit its full charge and after three it goes again. Salting is additional as always. Depending on what they want treated of course.

    Honestly I only want high maintanence clients who need it clean as a whistle, and want me there keeping it clean but not gouging.

    Hmmmmm. Thats kindof the per inch/per push combo like you said.



    Thanks Mick....
  9. Mick

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

    Oops - 1/2 truck, the word "ton" should have been in there. 1/2 ton (150 or 1500 etc) truck and 7.5' plow.

    If you can get those high maintenance accounts, good for you. Just make sure they understand what you intend doing and charging. I agree with having a 3" trigger (at least, some will want less). But what that generally means is that you will plow any storm of 3" or more, not that you will start plowing at 3". Think about it - if you have 20 customers that take an average of 15 minutes each - that's five hours of plowing, plus drive time. Now, it's snow at 1.5" per hour. So, if you started plowing at 3", there's going to be at least 10.5" of snow on the ground at the last house. Then there'll be at least 7.5" at the first house by the time you get back to it. Where's your high maintenance? And not many are going to pay you for plowing one inch. You might get some, but make sure they understand how you're charging.

    I'm not meaning to "beat" on you - really, what my intent is to get you to thinking. Do you really want to pursue this route and opt for the few who will go for it, or aim for the general population? If you opt for the few, keep the number of clients very small, think about all scenarios, have a SRP (snow response plan) developed, back up equipment and people and get ready for anything. Also, learn about deicers and anti-icers.
  10. Killswitch

    Killswitch Senior Member
    Messages: 246

    No....you arent beating on me at all and I appologize for making you beat this dead horse again. I appreciate it Mick.

    Like I said Ive been in Lawn and Tree care for 20 years but have never priced or sold snow removal so all your info is worthwhile and valuable to me and anyone else.

    Im sure ill learn lessons this season, and any issues I can avoid listening to you experienced guys is a bonus Im greatful for.

    I know people look at snow as costly and evil but I still want to keep this reasonably expensive for a manageable number of clients who want it done like they used to do it, and are willing to pay. I know this is wishful thinking but thats who Im targeting.

    If we get rapid heavy snowfalls people are just going to have to deal and Im sure they will but those are few and far between.

    Have things to do now but thank you again for the help, and any future help Mick.