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Refunding for Unlimited Plowing Contracts?

Discussion in 'Commercial Snow Removal' started by Architerra, Jul 7, 2014.

  1. Architerra

    Architerra Junior Member
    from USA
    Messages: 9

    Hey everyone, new to the forum but from what Ive seen there is a lot of good information here. I do have a question that Im hoping you all could shed some light on. So we have a group of Medical offices that we do full service snow removal for, and this past year we did an unlimited contract for each of the offices, which totaled ~100k. However, because of the heavy snow here, we barely made anything. So, I want some feedback. Say we do an unlimited contract again and raise the price, they might not like it- what do you guys think of having some kind of refund if it doesnt snow, which is applied to their next years plowing? That way, we still get guaranteed income, they still get plowed as much as they need, and if need be we give them a refund that could bring them back next year?

    Another idea (which I'd probably rather do) would be making them a per push, but giving them a decent amount of room above the average snow fall being covered (say avg is 45, give them 50 or something to keep them happy.)

    Thanks for any advice!
     
  2. White Gardens

    White Gardens 2000 Club Member
    Messages: 2,665

    Multi-year contracts are the only way to go with seasonals. This way the law of averages work out for both parties. 3 year minimum.

    Only other thing to do is negotiate a cap on the amount of snow, then drop their seasonal price down a tad to reflect it.



    .....
     
  3. Architerra

    Architerra Junior Member
    from USA
    Messages: 9

    Good points. Ill look into those further and see how they'd look
     
  4. Whiffyspark

    Whiffyspark 2000 Club Member
    from SOMD
    Messages: 2,402

    He'll no

    Did they pay you more because it snowed more?

    The only way to cover your ass with that is a cap for x amount of snow. But that defeats the purpose of seasonal
     
  5. Architerra

    Architerra Junior Member
    from USA
    Messages: 9

    True. This is why I'd rather just have them on a per push
     
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

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    what do you guys think of having some kind of refund
     
  7. Buswell Forest

    Buswell Forest PlowSite.com Addict
    from NH
    Messages: 1,668

    The whole reason for them to go seasonal is whay you are asking this question. It illustrates why I too prefer to plow by the push. It is exactly fair to both parties. Generally though, when you have low snow years, you still make money on the salt and sand due to more rain and ice events.

    If they still want seasonal, and you risk losing them due to a price hike (?) I would work it out with them so that after X amount of snowfall occurs, say 6" less than this past season, you charge only overhead each event thereafter. At least then you don't actually lose money. Word it as being for "abnormally heavy snowfall seasons".

    Good luck.
     
  8. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Seasonal only work on multi year contracts. Bite the bullet and try to get them to sign a 3 or 5 year deal, then the averages will reward you in the future.
     
  9. MIDTOWNPC

    MIDTOWNPC PlowSite Veteran
    Messages: 4,452

    then it doesnt snow and you made nothing.
    or it doesnt snow at the start of the season and someone undercuts you while you wait for it to snow. they offer a better deal and you dont hear about it. sure you have a contract but then you show up for the first snow fall and the lot has already been cleared.

    price right, take calculated risks, sell the service,
    if you had it hard chances are so did the other guys
     
  10. MIDTOWNPC

    MIDTOWNPC PlowSite Veteran
    Messages: 4,452

    multiyear keeps you from having to negotiate year after year and saves alot of time. while the other guys are out pounding pavement your getting your machines ready
     
  11. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Why they recommend a mix of "per push" and "seasonal."


    Even my per push contracts are multi year with season increases built in.


    Grandview (oh great king of seasonal contracts:drinkup:) stop spoofing and lay it out for him.:nod:
     
  12. jrs.landscaping

    jrs.landscaping Senior Member
    from Maine
    Messages: 638

    See if they'll do stacking/moving at a predetermined hourly rate. Bad winter you can bill out moving the snow, also capping salt tonnage, blizzard clauses etc.

    I also agree with having a mix, the problem is after last winter they all want to go to seasonal pricing.
     
  13. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    My opinion is this. Guys with per plow most times take on more then they can handle if an above a pedal happens. Then they are running their ass off trying to plow or they have the mentality of your only paying to plowing when I get their so you can wait. Then they lose some accounts and the following year bid lower to try and make up what they lost and lowers the price for all of use. For me. I know how much I need to make to break even wihich I prefer not to do. So not I bid to that amount then work up from there. But if you have long term customers you came bump up your price in good winters and bad.it's all about service.a lot of places don't like to change every year so they accept prices increases. If they fight you .time to look for someone new.the only real unknown is fuel costs everything else is fixed cost now if you have employees much different pricing and plowing process in seasonals
     
  14. cet

    cet PlowSite Fanatic
    Messages: 7,202

    For all the guys that want to put caps on seasonal prices, are your customers not smart enough to ask for a refund on light years. Usually you are dealing with fairly smart customers.
     
  15. allagashpm

    allagashpm Senior Member
    Messages: 703

    Sign them on again or do a multi year contract like they said. Landscape company here got the bid for 3 years for plowing roads in a small town. First year I bet they plowed 6 times. Next year they did more last year rhey were out all the time. Averages out sometimes you win sometimes they do.
     
  16. Buswell Forest

    Buswell Forest PlowSite.com Addict
    from NH
    Messages: 1,668

    I don't accept the logic of win some lose some. In business, lose some is bad. Win every time is my goal. The bills come in the mail even during the lose some years. The premise is you save bank on the win some year. Nobody ever does. It gets used.
    This is the only service industry I know of that willingly accepts that they will eventually have a no income season with a client- or multiple clients.

    Ask a plummer or electrician if they would work like that. Ask a builder.
     
    Last edited: Jul 8, 2014
  17. ponyboy

    ponyboy Senior Member
    Messages: 957

    We are insurance that their business will be open during snow
    There has to be limits on services offered nothing is unlimited
    If you use your car insurance too much what happens you get an increase or dropped why because you are costing them money any no business will loose money on a customer why would any of you
    If you are not making money sit home watch tv and don't ruin your truck
     
  18. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    And this is why per push is a bigger gamble.
     
  19. SHAWZER

    SHAWZER PlowSite.com Addict
    Messages: 1,150

    I have a mixture of per push , hourly and seasonal . No refunds on seasonal. Thumbs Up
     
  20. Buswell Forest

    Buswell Forest PlowSite.com Addict
    from NH
    Messages: 1,668

    Ice control kicks in, and it always snows here. Might be low snow, but it does snow eventually. If I lived in a place where snow is a true gamble, then I would do what I am doing here anyway, which is generate revenue with unrelated ventures. But in those areas, getting more snow than you can make money on must be quite rare?
    I will concede, seasonal has it's allure. However, my customer base would throw boiling water on you for suggesting they gamble with their money.
    The thought of losing money on a gamble, which is how they would see it on a low snow year, is abhorrent to a Yankee.