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My lesson on Business 101

Discussion in 'Bidding & Estimating' started by TonawandaNY, Sep 16, 2009.

  1. TonawandaNY

    TonawandaNY Senior Member
    Messages: 160

    What is up with all of the "can you bid my job for me so I can make money instead of you questions?"

    There are 4 of them that are new today.

    Here is how I figure out how much to charge. Keep in mind I am the guy who is trying make a living(not get rich quick, just provide a modest lifestyle for my family) this winter because I am out of work from my actual profession. Maybe I am doing it wrong, but so far I have been pretty lucky.- Praise God!

    While I may not have 20yrs of experience in snow and ice management, I do understand a few things about general business, and here are a few things I have learned in the last few weeks I have been doing estimating.

    1) This is the most important aspect- YOU HAVE TO KNOW WHAT YOUR EXPENSES ARE
    2) You have to set a realistic goal of a total number of jobs that can be completed within a 24hr period-


    3) Take your total number of expenses per month and multiple that by the number of months that your area will see snow fall on average.- This is the amount you need to make to clear your bills.

    4) Create a realistic lifestyle you would like to live and calculate how much it will cost during the same period stated above-


    5) Take your profit margin and add it to your expenses.


    6) Take the number you calculated in step 5 and divide it by the number in step 2.


    7) Meet your prospective client face to face and survey the job. The purpose of the survey is to determine if this job is possible to complete on top of other jobs you have within your service level aggreement. It also should be the time you determine is this an below average/average/above average size job.

    8) Ask the client question like were they happy? Have a price in mind first, which should be based on whether this job is below/average/above average in size, and the ask how much was last years quote. I have found some will tell me and some wont. Either way nobody has kicked me off the property for asking yet, so i geuss it is ok.

    I use this question to see if my figure is to low/ to high or if last years guy is a to low/ to high. It becomes my gauge as to how much the local market place will and can support. It will take you several estimates to get a good gauge on how profitable any one market place is in any given region. I then try to find myself somewhere in the middle between the low baller and the over priced. Low balling yourself will put you out of business just as fast as over charging. If it snows 5 months out of your year and you only charged enough to sustain for 3 months, your going to be in trouble and clients are going to start dropping like flies sprayed with a can of raid!

    Most people like the person in the middle, because most people will understand the low baller may be cheap but he is going to run out of money before the snow stops falling and is going to stop performing the service they paid for. Most people dont like the most expensive guy because they feel they are being taken advantage of.

    If you dont want to go through all that work then go pay a market research company to do it for you.

    If you dont put fourth any effort you will not see any gain. I can tell you that residential service in Clarence Center NY pays alot more money to do the same size driveway/lot than it does in West Amherst NY. They are only about 6 miles apart from each other. However, the people in Clarence Center make alot more money than the folks in West Amherst and because of it are willing to pay alot more money. I would be willing to say the same goes for alot of other places in the country. 2 guys in the same town are not going to tell each other what they charge, because they are probably competing for the same bid, so asking 5 times a day is going to get the same answer 5 times a day.

    The answer is going to be get out of your office and out of your chair and go figure it out!
  2. plowtime1

    plowtime1 Senior Member
    Messages: 446

    Somebody's motivated!
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Good thoughts but, as you know with all that figuring your still only going to get 300-400 per driveway for a seasonal contract.
  4. Camden

    Camden PlowSite Fanatic
    Messages: 6,594

    I read your entire post and you make some good points. However, you missed the boat on the 24 hour thing. Unless you're plowing nothing but vacation homes you will need to figure out how many jobs you can complete in 6-8 hours. Even those times are on the high side.
    When my route started taking longer than 8 hours I knew it was time to put on more equipment.
  5. TonawandaNY

    TonawandaNY Senior Member
    Messages: 160

    I have 4 of the most motivating reasons to succeed!

    1.My 9yr old daughter,
    2 My 8yr old Daughter,
    3 My wife
    4 My Sanity

    Why wait somebody else to do it for you when you can do it yourself right now? I used to be a Network Engineer, now I am beating the streets to keep my kids fed!
  6. TonawandaNY

    TonawandaNY Senior Member
    Messages: 160

    Your right Grandview. I am in that range on most of my bids. I did quote a guy last week 450.00 for his driveway and sidewalks. It was a wealthy neighborhood in Snyder, he had to be out by 630am, and he had over 300ft of sidewalk to be cleared. It was the first time I bid on a driveway and sidewalks that big. Only time will tell if my geuss was on target. I geuss if the contract gets mailed back to me then I geussed right. If it doesn't come back no big worry, I still have over 1000 homes to solicit to just within a .5 mile radius of where I live. I have already handed out over 500 slingers and the calls are coming in in spurts.

    I figure 40 driveways within a .5mile radius and I am booked up for the season. I figure as long as I dont let the snow accumulate to 18inches or more, it should take me about 6hrs to complete.

    If I dont get back to my profession before the snow falls and I dont book my season full then I will offer to do some sub work.
  7. JohnnyRoyale

    JohnnyRoyale 2000 Club Member
    Messages: 2,935

    Uh oh...another "engineer" just bought a plow truck. I hope that reference to 18 inches was exaggerated or a typo.
    Last edited: Sep 16, 2009
  8. swtiih

    swtiih PlowSite.com Addict
    Messages: 1,179


    Sorry to here about your situation.
    Good for you being motivated, ambitious,and committed to earning a living. I will pray that you suceed and can provide for your family. Keep up the hard work.
  9. TonawandaNY

    TonawandaNY Senior Member
    Messages: 160

    I had the truck, I bought it 2 yrs ago to tow a boat that I never bought because after i bought the truck, gas sored to over 4.00/gal. It made no sense to buy a boat to let it sit at the dock.

    All I had to do was get a plow. Granted I have been lucky because I have a friend that I helped plow last year with his truck. It started with can you help me clear some sidewalks, my snowblower took a crap and you have a nice ariens and progressed to, "you want to drive".

    I was fortunate enough to ask him what a low ball price was on my driveway and what a high ball price was. That was the beginning of my market analysis. A couple bids later and I had a real good idea of how much I could charge without being a jerk by either low balling or ripping people off. Either way I know what I have to make to clear the bills.

    Yesterday, I was called by a prospective client and asked if I would meet the price the previous years snow plow driver gave them. I thanked them and asked what was the quote. They told me 225.00 for Nov-April for a double wide/double deep. I asked if they wre happy with the guy and she said no he never showed up all winter, and they had to constantly call the person. I told them I could not meet that price. I pick up the signed contract tomorrow. All I did was dumped the sidewalk service and lowered the price slightly
  10. Freedom Dave

    Freedom Dave Member
    Messages: 37

    I appreciate your motivation and your tips. I have been doing snow for myself for 8 years and worked on anothers guys truck for 2 before. I now have 5 trucks on the road and do 350 homes and 9 commercial buildings.

    with your last comment on the picking up the signed contract. congradulations but did you ever think that the guy was charging 225 and with that price he had to take more customers and bit off more than he can chew to meet his expenses. therefore not being enthoused to plow after the 10th visit because he wasn't making money and then had to take more customers to earn more.

    In this business its good to be greedy but everybody wants you there first and they get alot more pissed when you don't come for the driveway compared to when you don't come cut there lawn. you have limited time in a snow fall and have to make sure everything is running great.

    if you get a huge snow fall and have to make more than 1 visit than the guy that was first is also the last because by the time you get back to him again he wont even know you were there. better to make more and work less.

    general rule here is toronto ontatio is 20 - 25 snow plows per season and we charge any where between 300 and 400 on avg. (more for estates and less for single driveways) but remember 2 singles takes longer than 1 double, and its 2 people you will get calls from not 1

    Not trying to lecture but rather throw some experiance in the wind
    Last edited: Sep 17, 2009
  11. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,468

    It's "GUESS"
  12. Freedom Dave

    Freedom Dave Member
    Messages: 37

    I saw that "guess" thing too but thought I would leave the guy alone on that one
  13. bluerage94

    bluerage94 Senior Member
    Messages: 398

    Its great to be motivated and trying to hustle but do you have general liability insurance, workman's comp and disability insurance along with a business license?
  14. Mick

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

    Same thing every year. Bird's eye view or dimensional description of a lot, no idea of costs (and not wanting to go to the trouble of figuring them) and no real clue. No realization of area differences. Not wanting to hear anything else - just a dollar figure.

    I quit responding to those posts long ago.
  15. terrapro

    terrapro PlowSite Veteran
    from MI
    Messages: 3,868

    Estimating the jobs is one of my favorite things for some reason so I like to respond to some of them that draw my attention. Plus it helps keep my abilities sharp.
  16. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    Personal lifestyle choices have absolutely no impact on what you can charge for plowing. Why does it matter to the customer if you just bought a brand new diesel pickup, live in a really nice neighborhood, have a dozen "toys" in the yard, or how many kids you have. On the other side, if your a single guy in a modest home with a twenty year old truck, why should you work for less? Let me know how it goes when you tell the customer you need an extra 10 bucks a pass because you bought a new snowmobile.

    And your formula using your "bottom line" divided by number of accts you can handle to determine average cost is also silly. What if you don't get as many customers as you want (or need with your formula)? Do you go back and tell everyone you need more money? Or if you learn that you can handle more accounts, do you give rebates? What if it snows 10 times in December? Do you charge more money to offset increased fuel expenses? And if only snows once in January, are sending rebate checks?

    This is much closer to how the business actually works. You want, and should, charge as much as the local market will bear. Sounds like your in the ballpark with your pricing so far.

    At the end of the day, you have to figure out if the revenue you can generate, will cover your expenses, and put some money in the bank. And there are lots of expenses besides fuel. Insurance, extra tires, front end repairs, transmissions (unless you run a trip edge plow), accidents/damage to the truck and plow, etc.

    I agree with you on this!
  17. TonawandaNY

    TonawandaNY Senior Member
    Messages: 160

    Freedom Dave,

    After reading your post I can honestly say a couple of things

    1) You sound like you know what your doing and have alot of experience doing it. I would say that you sound like you know more than I do, and I have something to learn from the things you say and thank you and value your opinion.

    2) What I dont understand is with all your experience why are you asking for help on how to quote a job?


    Significantly underbidding a job is not the way to go about getting more business. It only makes the situation worse over the long run.

    Here is an anology, Lets say your yard is flooding in a rain storm(this your debt that you owe) so you start laying sandbags to hold back the flood(this is the new work you find to pay the debt). However, you only use small sandbags and water is rising faster than you can fill the sandbags. Continuing to fill small bags is not the way to stop the flood.

    If someone is only visiting their accounts twice during a significant snow fall then there is part of the reason some of these customers are mad in the first place. 225.00 for snow plowing may not be alot of money for the job but it is still alot of money for some folks. If you bid on a job and get the job, no matter how far into the whole it takes you have to finish it or eventually word will get out that your offer crappy service and your doors will close anyway.

    I am sorry for the type "O". Sometimes my fingers move faster than my mind. I really should get in the habit of using spell check before I hit submit.

    Blue Rage,

    I dont have any employees so I dont have workmens comp to pay. I do have insurance.


    Personal lifestyle absolutely has everything to do with business. Your not looking at it at high enough and simple level. I will explain- If you have 20,000.00 in business expenses and 20,000.00 in cost of living expenses for a total of 40,000.00 and your business only makes 30,000/per year then it is time to either get more work or find another line of business. That may also mean you need to tone down your lifestyle. You cant always have every toy in the store. In the same breathe you cant and should not be buying equipment you cant afford like 45,000 trucks.

    I am by no means an expert on any of this stuff. I learn something new everyday from some of you. I have learned in the short time that I have joined this forum that asking should I bid this job by the sq foot, the acre, the time it will take, or amount of snow that falls is a reasonable question that gets a reasonable response. I have also learned that asking someone how much is this worth in value is not an accurate question because what it is worth to you is going to be different to what it is worth to me and so on.
  18. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    If you say so. You clearly have much more experience than any of us.

    I'm not looking at it simply enough? That's almost comical.

    BTW, there's no "E" in my username.
  19. kolkie05

    kolkie05 Senior Member
    from Chicago
    Messages: 114


    Why is it when a new guy needs help 75% of you piss all over them? Did you forget that you used to be in the same boat? So new guy's have a place to go and get some questions answered and instead of helpping there are negative comments made. I agree you need to go out and do your homework, measure the site, and try to figure it out. And directly asking how much is this worth is not the way to go! But if you guy's with more experience can help us new guy's figure out how to price a job accordingly that would be great!

    Instead you think everyone here is for beer money! Do you feel a guy who' doing this for beer money would log onto his computer take the time to jump on this site and ask a question? Maybe the question is not asked in the right manner but it's no reason to piss all over the guy! Again you were hear once too!

    I'm not going to call out names but thanks to the guy's who seem to offer a good opinion instead of thinking they are too good to offer someone advice!
  20. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    What you "want" for a job, has absolutely NOTHING to do with what it's worth.

    What you paid for something, has absolutely NOTHING to do with what it's worth right now.

    Your costs allow you to set YOUR rates, they do NOT set your customer's rates. What a customer thinks a job is worth has absolutely NOTHING to do with what it's worth to you.

    The two probably need to agree more often than not, but just because you can do X and the customer wants Y doesn't mean a thing.

    For example.
    In my summer work we do rough cut mowing (bush hogging). My minimum charge is very high. It costs a lot to get me to mobilize out and many times that seems like a lot for a 1 acre job. (which BTW, will take me less than 10 minutes to do typically). I don't win a lot of little bitty jobs, it's not my niche. Some guy with some little 5 foot mower will do it in about 1.5 hours (plus another hour on each side to mobilize and travel, but he hasn't realized that yet) and charge probably 1/2 of what we do. Although I do win some small jobs and people are typically thrilled.

    But, I get a 30 acre job and my price is a 1/3 of that little guy's price because he can't handle that work. For him it's 3 days or more. For me it's about 4 hours. And I make money at it, but it's my niche, and I have a ton of equipment to do it with.

    But neither one has a dang thing to do with my lifestyle only with my cost structure which happens to meet with my customer's expected value in the larger properties. Some things are simply not valuable enough to anyone to actually make a living at it. (rough mowing 1 acre properties for example) Doesn't mean people don't want the work done, just that many are unwilling to pay for it.