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Next year

Discussion in 'Commercial Snow Removal' started by RBRONKEMA GHTFD, Mar 18, 2007.

  1. RBRONKEMA GHTFD

    RBRONKEMA GHTFD 2000 Club Member
    Messages: 2,592

    Hey guys every year I am getting into more and more commercial snow plowing. I am wondering what is a good way to charge doing a commercial account. Right now I am doing a hourly wage and I am wondering what some of you guys are doing. The way I am doing it is When my truck starts I am on the clock for that job. I am not off the clock for that job until I leave the lot. And then when I leave the first lot I am on the clock for the next one. What do you think. I am thinking of changing the way I do things because a few guys I have talked to bill as seasonal accounts. Where they bill the account weather it snows or not, and no matter how many hours they work. To me I just can't charged someone when it doesn't snow and if you work more than say 10 hours that month then how do you bill them?. Does that make sense? Thanks guys

    Ryan
     
  2. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Well, you can charge an up-front retainer fee for say 10 events if it's an average number of plowings for you, with so much per plowing after that. I had always used a seasonal bid with 10 events because it about averaged out to that here in NH, but one year I found myself at Midas 16 different storms (granted, some were 2", but I was there!). Realize that commercial accounts will average out for you if you look at weather trends from previous years. Don't shoot low, and don't shoot too high (but be sure you'll cover your butt). I've never used the hourly route with charging, though I find myself generally in the 120-140/hr range in managing all my accounts through a storm. You'll hear lots of perspectives on this, and use the spring & summer to kick it all around & come up with your plan. Take care, and good luck

    ~Kevin
     
  3. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,853

    Ryan, lot's of info and ideas have been posted on this, but before we get into that, you state that you don't want a customer to pay you for not working, how does your equipment get paid for if you go without any snow or very little? Does the bank care if it does\doesn't snow? Or the insurance company?
     
  4. RBRONKEMA GHTFD

    RBRONKEMA GHTFD 2000 Club Member
    Messages: 2,592

    Hey Mark what I was getting at was, I have talked to a guy that has seasonal accounts and how he bills them is he gives them a price for the season and then every month he bills them a certian amount no matter if it snows or not. I just can't charge someone when it doesn't snow. I guess to me it is not a very good way to run a business. You are getting payed for not working at all. Does that make sence? I am adding an other truck this coming winter so I guess it would be a option for me to do that you know. Like I said in the first post I keep doing more and more plowing every year. I am just throwing around ideas right now so I can get everything ready to go for this coming winter. The only bad thing is no matter how ready we say we are we aren't ready at all. HAHAH. But that happens to everyone.

    Ryan
     
  5. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Ryan, it's good conscience that makes you concerned about taking money for not doing anything. However, the situation you describe and what I've described, are not exactly what you think. You plow snow for a fee, a reasonable fee I imagine. You're branching off into commercial and bigger liability. By liability I mean your responsibilities to the customer(s), to insurance, to hired help, and so forth. While you will certainly be paid for all the plowing you do, you have to be in a state of ready day or night. The truck costs you the same to sit on a lot or in your driveway as it does out there pushing white stuff. That cost needs to be paid for by the customer. Taking someone's "retainer" or whatever you call it, contracts you with that customer and allows you to pay for the resources needed to handle the job. Imagine if you were leasing a loader for the winter, for example, because that's what the business owner wanted. Ok, it never snows, or the loader is never needed. Now you're out the cost of something without any reimbursement. And there's always the perspective of insurance companies as mentioned here, that you don't see State Farm sending us all refund checks because we didn't have accidents last year! I liken this theory also to the firehouse: we sleep always on the clock at night until something is called in, right? Many times we sleep all night, but we get paid the same as if we ran med calls or worked a fire overnight. So do right by taking care of the customer, but like on a fireground be sure to take care of yourself first to ensure you WILL be able to do so for others.


    ~Kevin
     
  6. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,853

    Ditto to YardMedic's post.

    I don't take money for doing nothing. I do take money for paying my overhead, my trucks, my plows, the preparation, maintenance and repairs of both, my insurance, my taxes, my employees, my utilities, etc. This is all stuff that doesn't go away whether it snows or not. I also get paid for being available 24\7 for 4-5 months. I also am getting paid for checking the weather 6 times a night whether it snows or not and not getting a decent night's sleep and then starting to snow at 6 AM and listen to the customers' ***** about not being done yet. I am getting paid for purchasing supplies ahead of time, whether that be salt, oil, wipers, scraper edges, fuses, etc.

    Are you starting to understand what I\we mean?
     
  7. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Mark, it's probably the carbon monoxide that firefighters take in that makes us a little slow sometimes!! We'll beat the right thing into Ryan someday
     
  8. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,974

    This is exactly what I try to get my buddies that are still trying to do this per push or per hour to understand.

    Then they don't understand why I'm driving new vehicles all the time, with money in the bank, while they're going broke, since we've not had any snow for the last 5 years, other than about a month ago or so, when we had that 30" in a week.

    Ryan - When you're doing commercial work, you sell your business as an insurance policy.

    Commercial accounts are requiring you to have the lot cleaned before a certain time. If you're going to just charge them by the push, you're going to have years where it snows 4 times all year. Then you're going to have to find a job, or a spouse that will support you otherwise.

    If it's a second job, how long do you think you'll have that second job once it starts to snow again, and you have to call in and say you're not going to be to work, because you've got to plow snow.

    With commercial accounts, and charging them a flat fee per month, I have MOST of my expenses paid for the winter. I say most, because I live a little higher on the hog than I probably need to, but I'm doing ok. Anyways, I guarantee that my customers lots will be cleaned by xx:xx am. I have to basically be on call from October 20th until about April 20th. I cannot drive more than 2-3 hours from my house and spend the night, for if there's more than 1" of snow, I need to be plowing.

    This is what the commercial accounts are paying for. Not just to have the snow moved.
     
  9. RBRONKEMA GHTFD

    RBRONKEMA GHTFD 2000 Club Member
    Messages: 2,592

    Okay now I am getting this. It must be all the c.o. that I took in on that last fire we had last week. Okay so what do some of you guys charged per season or per month, if I may ask? This commercail snowplowing is all new to me. I plowed residential for 4 years now and I am just finally working my way into the commercail scene. Thanks again guys for your help.

    Ryan
     
  10. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,974

    I base my plowing for $100 / hour, whether I'm plowing the lot or shoveling the sidewalk.

    I look at a property and say "it'll take 1 hour to make this lot clean".

    I mostly do commercial properties, such as banks, strip malls that have 3-4 small tenants, restaurants. We have an 'average' of 15 events per year where I'm at, so if you figure 15 events, at $100 / hour, that's $1500 for the season. I divide my contracts by 6 months, so most are $250 - 300 / month.

    Last year I plowed a total of 7 times, the year before that a total of 8 times.

    This year I plowed a total of 5 times, then we had 30" in 1,5 weeks where all the properties were hit about 7 times. I still have 3 more plowings before I hit my average for the year, and now it's supposed to be 60 and thunderstorms, so I'm confident that I'll average out just fine, even with the 30" in 2 storms in a week.

    One other thing, I've got it in my service agreements, that we plow at 1", and try to keep the lots plowed before 4" has accumulated during the day.

    Each time I plow a lot, I count it as a plow, whether it's clearing a 1" snowfall, opening up a lot with 3" on during the day, or curb to curb at night, after opening up during a day time snowfall.
     
    Last edited: Mar 19, 2007
  11. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,853

    Ryan, just remember it doesn't matter what I or anyone else charges, it matters what your costs--both overhead and labor--and what your profit goal is. Also, the only 1 of those 3 parts that you can really play with is the profit. Overhead and labor are basically fixed costs, unless your employee(s) will accept a lower wage or your insurance company will be OK with you paying them less despite the policy.

    It is also very difficult to give hourly rates for different areas. Holland has rates as low as $18\hour and even the bigger companies are charging out a truck at $35\hour. Get into GR and it varies from $60\hour for the JAA wannabes to $150\hour for those that know their costs and don't want to be the biggest in the area. So you will have to do your best at determining your costs and then what the market will bear. This last comment will probably get a bunch of people upset, but don't worry about them, they don't truly understand operating a business.

    Also, as I stated in another thread, snow and ice management is and should be considered an emergency service and should be priced accordingly, as long as your market will bear that pricing. This is where I agree to a certain extent with the guys who say "They could have been making this much", but they chose not to for whatever reason, mostly bad for the industry, though.
     
  12. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    I began plowing my commercial accounts (same account, 2 locations) about 10 years ago. I did myself a disservice by thinking of it LIKE residentials in terms of pricing and seasonal planning. I also used for a baseline what my grandfather had charged 10 years earlier. That's all I knew for pricing! Each year since then I increased, increased, and increased. About 4 years ago I picked up a new commercial account, and I was curious about what had previously been charged by others. The manager told me, and I revisited my original commercial account in terms of what I was charging (about 25% too low). There are a lot of things you have to feel out for yourself. Man, I wish I had plowsite available to me all these years to hear/read wisdom from others in the field! But, if you're doing your accounting and you're making a good wage (something that feels good to you, anyway) after covering expenses, that's all that matters. We learn, we grow... it's all good!


    ~Kevin
     
  13. RBRONKEMA GHTFD

    RBRONKEMA GHTFD 2000 Club Member
    Messages: 2,592

    Cool thanks guys. Okay one more question, about salting. I am buying a salter next year and planning on salting whatever needs to be salted for the customer. I can get a bag of salt for $4.50 a bag and they come with 50 on a skid. So $225.00 a skid, also they are 50 pound bags. How do you guys charge for salt? Per bag, per pound, or is there just a falt rate? I realize I will still be on the clock because of the fact my truck will have the salt on it and also be spreading it. But what would be a good ball park price? I was thinking if it was per bag $15.00 per bag.? I wouldn't have a clue on a per pound charge. I am thinking about getting the boss smart hitch 1100 or the tgs 600. Thanks again.

    Ryan
     
  14. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,974

    You're close using bagged salt prices, but you'll have to compete with the guys that get bulk salt and will salt an entire lot for $50. If I remember right, they're charging about $200 / ton spread here. That would be (40) 50 lb bags. So, what you're paying for your salt, that's what bulk salt guys are charging.

    I even think that's on the high side, the $200 / ton. I'm sure there's guys out there doing it for 1/2 that.
     
  15. troy28282

    troy28282 Senior Member
    Messages: 178

    Ryan, there is a few different way that you can charge for salting. Per pound is good for the mornings that its cold and salt doesnt want to work and the customer know exactly how much salt was put down everytime. Per application involves abit more math and experiance to come up with the right amount of material that would be needed to melt the lot down.

    If you are going to do salting (bagged or bulk), figure out your material costs and add in your other factors like what Mark said (overhead, labor, and profit). If you can speard a 50# bag of salt and make money at $15 bucks a bag, thats great. I dont mean to sound like a broken record but know your numbers.
     
    Last edited: Mar 20, 2007
  16. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,045

    Being in the Snow Plowing Business is the same as selling insurance. You commeercial account is buying your service for the winter, to ensure employees and product can move uninterrupted to and from there site. So if you use an average winter sometimes you'll gain sometimes you'll lose but if you can get a 3 year contract it will all work out in the end. On really light winters don't feel bad, they are paying for the insurance. Plus for budgeting companies like to know exactly what there costs are. I like to include salt,hauling and plowing. It makes for good cash flow.
     
  17. RBRONKEMA GHTFD

    RBRONKEMA GHTFD 2000 Club Member
    Messages: 2,592

    Okay so now that we have those out of the way what about insurance? I was thinking about getting some to cover any damage that might accour to a building or something and I read a thread that said something that they don't have a seasonal policy. What should I do. I am not worried so much about damage to a building but about a slip and fall. My buddy is going to be plowing for me next year and if he hits something it is coming out of his pocket. Not mine. Any advice? Thanks again guys.

    Ryan
     
  18. murray83

    murray83 Senior Member
    Messages: 420

    Most times one million in liability is the standard,Your friend would be a sub to you so If I was in your shoes I'd ask for him to hold valid liability insurance as well just in case anything was to happen and hopefully it won't.
     
  19. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Ryan, I think you mentioned putting on another truck of your own, meaning your buddy would be driving? If that is the case, the liability is yours. If it's not the case, then I echo what was said about seeing that your friend has liability insurance. As for slips & falls, that really only becomes an issue if you're salting/sanding, much moreso than just plowing. The damage to cars & buildings, that's a bigger concern than you think. Check with insurance companies about what they offer. Be prepared, though.... I can only imagine what regular insurance rates are now for guys under 25. Good luck!!


    ~Kevin
     
  20. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,853

    As YardMedic stated, not if he's in your truck, that's part of that overhead I was referring to. It isn't legal in MI to make an employee pay for damages done on the job.

    As for insurance, give Lenz & Assoc a call, they're in Zeeland. They've done a good job for me so far. And be prepared to pay, it sin't cheap. You'll want liability as well as property damage.