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Ready fee

Discussion in 'Commercial Snow Removal' started by Groundstech, Jun 14, 2011.

  1. Groundstech

    Groundstech Junior Member
    Messages: 9

    Does anyone charge a ready fee for contract work? I have heard a couple of companies charging one but, I wanted to get some other peoples opinion on it. If you do how do you figure it? Is it a % of how much it will cost to push.
     
  2. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    This is just another sorry excuse to charge the customer more money. I have juast about had it with companies charging fees. Why not just raise your price per push, or however you charge. Fees are the same thing as a price increase. So instead of hiding the fees in contract language, just raise your price, so the customer can see the costs upfront.
     
  3. northernsweeper

    northernsweeper Senior Member
    Messages: 397

    I have a ready fee, an almost ready fee,an I hope to be ready fee,an I'm not sure I'm ready fee, I could be ready fee, and a fee for I'm almost but not quite sure if I'm ready. The percentage is based on how ready I think I might almost be.:drinkup::drinkup:
     
  4. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    What you're describing sounds like a retainer fee. More of an old school type of agreement on large sites than something new. Was pretty typical back when.....

    Covers the contractors butt if he's renting equipment (or needing $$ when it doesn't snow) while agreeing to per push or hourly work. Seasonal and all inclusive agreements were basically conceived from this type of thinking.

    But I doubt you'll find many (if any) clients willing to agree to something like this in this day and age that still desire a per push agreement.
     
  5. Andrew Hardscape

    Andrew Hardscape Junior Member
    Messages: 8

    We don't plow much anymore, but hoping to get baqck into it again.

    I'm a firm believer in retainers for snow services. Except, none of the local guys charge retainers.

    It cost's money to be equiped, have an inventory of ice melt, and be ready to roll with the time comes. And a contractor should be compensated for being at your beckon call.

    I'm all for it.



    ,
     
  6. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    I have always offered up a retainer amount as a option for a reduced rate. Offering a rate of $75/hour or a retainer fee and a rate of $70/hour. You may not make quite as much money on the hour on a heavy snowfall year, but you do have the security of that monthy retainer.
     
  7. Groundstech

    Groundstech Junior Member
    Messages: 9

    not trying to hide anything just cover the cost of the salt if it is not used. they want us to be ready and not have to wait on salt then why not charge it. I figured that you could charge it and it it doesnt snow that month which unlikely, then it covers the cost of salt. if it snows then that money would be credited towards the bill at the end of the month.
     
  8. wizardsr

    wizardsr PlowSite.com Addict
    Messages: 1,551

    I see a "readiness fee" more as an "I'm not financially sound enough to be in this business fee". You've gotta have the capital (or line of credit if you're one of "those guys") to be able to stock your inventory, pay for insurance, upkeep, training, etc. until the "snow dough" starts rolling in. Customers don't care if you don't have the money up front for this, and readiness fees or retainers could scare away a potential customer. It's like any business, what would you do if you owned a retail store, ice cream shop, etc? You've got to be able to stock inventory before you can sell it, pay rent before you can open the store, pay for liability insurance before a customer ever sets foot in the store, etc.
     
  9. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Our local mall has a retainer fee. Last I heard was it 500k for the seson for the contractor to have all his stuff on site. They then charge per hour for each loader.
     
  10. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,987

    Cover the cost of salt if it is not used??? What do you do, throw it in the garbage if its not used? Salt dosent go bad if its stored correctly.... That dosent make any sense.... What if it is all used? Mechanics, plumbers, electericians and ever other trade dosent charge a ready fee...
     
  11. Groundstech

    Groundstech Junior Member
    Messages: 9

    I see were your right wizard. I guess i should just look at it as an investment into the company.

    Triple. That is like comparing apples and oranges. Electricians and plumbers don't just go stock up on material inn hope of being able to use it over the next year. Normally they purchase there material when they know that it is going to get used.
     
  12. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,987

    Well if its such a big deal, why don't you do as they do, buy it as you need it... I'm sure there's a salt depot somewhere by you that sells bulk as you need it... All the other trades have to drive to a supplier to purchase material so if you want it as needed and don't want to put out up front for salt or deal with it, buy it off someone else... You got 30 days to pay them, cash flow is good, Problem solved
     
  13. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    While I see your point, how many contractors (builder, GC, remodeling, etc.) do you know that start a job without recieving some form of of up front payment. When I was smaller (couple trucks, skid steer, etc) it was no big deal to front everything. As I have grown, it gets tougher, I now have 15 (some are subs)or so trucks that go out, skid loader, & 4 wheel loaders, sidewalk crew, 3 salt trucks, etc. Getting all the equipment preped, buying new equipment for new growth, filling stockpile, ice melt, it all starts to add up to big monies. While I don't ask for a retainer, we have seasonals that start paying Nov. 1. Nothing like fronting 10K to get started on a contract....then having to fight till July to get your money. Ussally the ones that you have to chase for monies are also the ones that were your headaches all season.
     
  14. wizardsr

    wizardsr PlowSite.com Addict
    Messages: 1,551

    You make good points too. I'm running 5 trucks, a skid steer, and 2 sidewalk crews, so I don't have near the overhead the "big boys" do, and don't have issues covering the up-front costs. I also have a handful of seasonals that get invoiced Nov 1, so those moneys are certainly a welcome sight, especially if we get a few early storms.
     
  15. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    2 Years ago we had 60 inches before December ended, we were mostly all seasonal at the time, our average is 100 inches. Covering start up costs, then that much snow on 1 payment, to start the season was rough.
     
  16. MSS Mow

    MSS Mow Senior Member
    from Maine
    Messages: 983

    So what happens if it only snows 5 times all winter while you typically average 16 times. A slow season typically is around 12 and an above average year would be around 20. If you're being paid on a per storm or per hour agreement, you could lose your shirt on a season of only 5 storms. Why should a company not be paid to be "ready"??? There is tens of thousands of dollars of equipment that must be on hand and ready to roll at a moments notice. A company must monitor the weather 24/7 and be ready to respond likewise.
     
  17. wizardsr

    wizardsr PlowSite.com Addict
    Messages: 1,551

    Precisely why it's important to have a good mix of seasonal and per push work. payup
     
  18. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,987

    Hence why they make snow and weather insurance for this exact reason.... Buy into that if your worried... Take the good with the bad or someone else will be more then happy to do so...
     
  19. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    I have no problem selling people on a "retainer" fee, you pay such a fee to lawyers and such. To the post that suggested that plumbers and other trades don't charge such a fee, those trades are not weather dependent, and they charge a premium to come after hours etc, not to mention that when they work for one or two contracts, they usually make sure they are guaranteed a certain amount of work monthly. The idea that anyone would be expected to sit for a contract, do nothing but wait for the chance to work, with no assurance that they will work, is rediculous in my mind. And a lot of places will not work with seasonal pricing, so the retainer amount is a good compromise IMO.
     
  20. TheRealBuzz

    TheRealBuzz Member
    from ON, CAN
    Messages: 43

    It's about commitment. Your commitment to the customer and the customers commitment to you.

    How many of us have turned down work because you are already committed to others only to have those customers switch to another guy half way through the season just to save $5. Often without even the courtesy of a phone call!

    My take is it is like a security deposit. The amount would be aprox. equal to 3 or 4 pushes. If all goes well then it is used to cover the last bill of the season. If your late paying and it looks like your gonna stiff me and I have to cut you loose then it covers what I've already done.

    But it really depends on what kind of business you do and what kind of service people want. In some areas you can operate on a handshake. Some places not so. If customers just want the cheapest, lowest priority service then no big deal. If they want quality and high priority then their commitment to you should be equal to your commitment to them. And sad to say in this day and age the only true commitment is monetary.