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Determining margins on snow operations

Discussion in 'Business Fundamentals' started by Lawn Lad, Dec 6, 2002.

  1. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    I'm trying to job cost each storm. It's not that bad. I set up a spread sheet with all of our customers and their per occurence pricing (or if they're seasonal). After each storm I complete this billing summary for the storm which we then use to invoice our customers. On this I also log in the hours spent by the drivers and the de-icer costs.

    This gives me a rough idea of how profitable we were for the storm. However, this does not take into account the seasonal contracts. For residential they have a set fee and have unlimited plows for the season. For commercials we limit the number of plows to 25 after which time they are billed per occurence.

    What I'm wondering is how can I more accurately determine our margins after each storm and still consider the impact of the seasonal contracts? We should recognize the revenue when we earn it. But how do you know how much is earned when you don't know how many snow falls you will have? Right now my gross margins are lower than they truly are since they only account for per occurence pricing and I'd like to know if we're making the margins that I budgeted for... but know them now, not in April of next year at the end of the season.

    On the commercials I could take their contract amount and divide by 25 (limit of plows) and then use this number until the end of the season when the final count is completed and then reconcile. As for our flat rate seasonal contracts for residential, for accounting purposes we take 1/5 of the total contract revenue for November through March no matter how much we plow in the various months, but this doesn't apply to the job costing each storm.

    How do you guys job cost? How do you handle seasonal revenue?

    Thanks,
    Doug
     
    Last edited: Dec 6, 2002
  2. OBRYANMAINT

    OBRYANMAINT PlowSite.com Veteran
    from ohio
    Messages: 534

    WE USE THE AVERAGE LIKE YOU DO WITH THE RESIDENTIALS and then for the commercials like you said average with the limit and then add in later it is the only way until the time frame is up(season, month) that you can have a "running" job cost
     
  3. cutntrim

    cutntrim PlowSite.com - Veteran
    Messages: 248

    Lad,

    You're ahead of 90% of your competition by running over your numbers like you do as it is. Stick with the averages for your seasonals and adjust at the end of the season for next year. It's not as if you can make many changes during the season anyhow.

    I go over every detail/dollar ad nauseum prior to the first snowflake hitting the ground then try to just go with the flow once the snow season is underway. Once the snow is all gone for the year then I'll go over the numbers again, but during the winter there isn't much I can do except try and relax and do the best job I can out there.