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seasonal contracts questions

Discussion in 'Business Fundamentals' started by z_plow_master, Jul 14, 2005.

  1. z_plow_master

    z_plow_master Member
    Messages: 49

    hello all
    i live in the chicago suburbs,we usually get a 35" average snowfall.i've been doing a per push pricing all the time,but today i have to give an estimate of a full plowing/salting season.if i am charging 75 dollars per visit, how much roughly a per season should do (75$*14 visits?), so me and the customer are happy. :help:
    and if he is gonna pay me in full before the season starts, and then let us say in mid feb he wanted to cancel, do i have to return back any money.
    will it differ much if i start plowing after 1 inch of snow or 2?price wise
    thanks for the replies ahead
    i never had to sign anybody a contract since i used to sub 80% of the time, and my own customers were only residential
    is 75 dollars fair enough for a lot that is kinda same as mcdonald's lot but more square and no obstacles in the lot (perfect square)i mean i think there is about 40 parking spaces...and should that be good with salting included
     
  2. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,964

    I charge an average between $75 - $100 / hour.

    What I do on my contracts is I figure out how much time it'll take for each push, depending on if it's a 1" trigger account or a 2" trigger.

    After that, I multiply it by 15, the average number of 1" snowfalls we have here in MN per season.

    So, now I've got an account that's an hour, so $100 x's 15 would equal $1500 for the year, then divide by 6 and you have $250 / month, from November through April.

    If it snows in October I just include it, if it snows in May, most likely it'll melt before I can get to plowing it.

    Usually April's check, there's nothing to do, but once in a while we might get a late season snow.

    As far as the salt, I charge $75 / hour + materials extra, customer's request, meaning they have to call, unless already prearranged.

    Last year I collected snowplowing money for November, December and January with no snow. We didn't have any snow until February.

    I did have a couple of event of about 1/2" of slush that froze at night, with about 5 calls for salt the next day, so I went out and spread some salt and told my customers no charge seeing as we hadn't had any snow yet.

    Sometimes I do those things so people feel like they're getting a deal.
     
  3. tomssnow

    tomssnow Junior Member
    Messages: 4

    $75 ?

    I'm sure the feel like they're getting a deal, because they are. Have you factored all of this into the equation?
    1. Insurance (liability as well as vehicle insurance.)
    2. Fuel (I don't know about Dupage County, but Cook County is now $2.48 a gallon. Last year fuel was $1.78 a gallon.)
    3. What about multiple visits and times were you are plowing deeper snowfalls.
    4. Employee or sub payroll.

    There is nothing worse than having to plow a lot and finding yourself saying "Why am I doing this for this amount of money?".

    One last thought, a few years ago we had 9 snowfalls in the month of December alone. A few plowers in my area pulled the plug and went out of business because they were charging by the season and couldn't afford to pay their subs and other obligations.

    It's your business and, of course, you can run it any way you choose. I just would make sure all the bases are covered.
     
  4. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,964

    I don't have any subs, or employees, so that part doesn't bother me.

    As far as fuel, I can plow my route in about 15 hours, using about 20 gallons of fuel, or about $60, including gas for the snowblower for the sidewalks.

    I bill out about $4500 / month in contracts, which pays all my bills, both work and personal, for the winter, with about $400 to spare.

    Now, with that said, I agree, that if there were 7-8-9-10 events in one month, that I would blow the budget out of the water for that month with the fuel cost.

    However, anyone that's been in this business long enough knows that to get 2-3-4 months in a row like that is quite unlikely, just as last year, when I didn't plow at all for the first 3 months is very unlikely.
     
  5. lawnmedic

    lawnmedic Senior Member
    Messages: 703

    We do some seasonal pricing, but it is only for full service customers(Mowing, treatments, beds, and snow). Would never go beyond 50% annual. Banks love seeing guaranteed income...
     
  6. zippoz

    zippoz Member
    Messages: 64

    considering how much and how random the snow we had in chicago was last year... i wouldnt really bet on anything...
    personally i prefer the per push contract option, although it would be nice to have one or 2 seasonal's to go along with it so i could get capital up front...

    i saw that you had it figured as 15 1 inch snowfalls.. dont forget about the 12" snowfalls, or that pain in the ass we had over thanks giving last year...
     
  7. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    If your going to go after seasonal contracts you have to be in for the long haul. When I say long I mean a minimum of 3 years, preferably 5. One bad season should not put you out of business ! What happened to the boat load of cash from the "dry years". This is basic business 101 guys its all about the 10 year average. Of course you will get a couple bad winters but there will be light ones too. If you try to get rich in one season, or loose your @$$ in one season you still have 4 more years to average it out right !
    So what works for Lawnmowerman may not work for others. It sounds like he knows what his average amount of pushes are and that works for him. If you cannot afford a heavy year dont attempt a seasonal contract.

    As far as salting goes "dont" include this in your seasonal contracts. way too risky as who can average out freezeing rain or run off. this is also were you can recover some money if you do have a rough season.
    Todd
     
  8. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,964

    Salting COULD be included in your contracts, as I have 2 banks where it is.

    However, it's only included the average 15 times plowing for my total bill, and it's only included for the walks, and the areas where the people park, not including the drivethrus.

    I will still salt after I plow, regardless of how may times I plow / season, since that's what's listed in my contract.

    If there's plowing to be done under 1", or if the lot needs to be scraped for whatever the reason (3) 2/3" snowfalls on back to back to back days where it wasn't enough for the plowing trigger, or freezing rain / sleet, I bill at a rate of $75 / hour / event.

    As for the previous posts about the 12" snowfall, usually I can get into an account every 4-5" of snow that falls, and keep it clean. If you really look into the amount of events that you have per year in your area, unless you're into lake effect snow or other type of deal, I'd bet you'd probably average about 15-20 events / year.

    Most of my properties are just wing it over to the side. No one really wants it stacked in one seperate area, so it's not really that big of a deal to push 1" of snow or 6" of snow. Plus, if it does get too deep, I'll bring the tractor in and push piles back for another $75 / hour.
     
  9. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    Actually your write on target with about 15 to 20 "total " pushes for the season for this area on average. Going back ten years thats write on the money.
    Todd
     
    Last edited: Aug 6, 2005
  10. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    I should add those would be 1" triggers for 15 to 20 pushes for this area, and it is an average. We have had lean years and heavy ones so they "average" out. Some season's 10 pushes, Some 22 pushes. Now remember one storm may require 2 or 3 pushes .
    Todd
     
  11. Killswitch

    Killswitch Senior Member
    Messages: 246

    15 hour route?

    Or was that a typo.

    If it wasnt thats nutty and you also need to charge 125 an hour at least in my opinion.
     
  12. Killswitch

    Killswitch Senior Member
    Messages: 246

    And Chicago only averages 35 inches of snow a year?

    That sounds low too.

    Here in southeast Michigan we average 49. Least thats what my figures tell me.
     
  13. Mick

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

  14. Killswitch

    Killswitch Senior Member
    Messages: 246

    I guess thats right. My average of 49 for my area is from another site and seems high compared to that links 43 inch average, but I dunno I just assumed Chicago got more snow than 35 inches.
     
  15. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    2 years ago we had had 27" for our total so that year was very lean. Last season was good for me, 2" trigger guys had a so so year.
    Todd
     
  16. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,964


    Okay... 15 hours, meaning, what???

    I need to plow more hours?? Or less??

    With 15 hours, I can leave my house around 6 pm, plow all the commercial stuff and finish up at 9 am the next morning just as everyone is opening up.

    As for what you think I should be charging, as I've stated before, I try to average between $75 and $100 / hour.

    Where I'm at, there's guys that are still plowing at $40 / hour, so you're always competing against that.

    Last year I plowed a total of 7 times, with an average of $293 / hour.

    Now other years I'm sure I'll plow 23 times, with an average of around $60 / hour.
     
  17. Killswitch

    Killswitch Senior Member
    Messages: 246

    What Im saying it that a 15 hour route seems to long and large. Last year was an exception.

    What are you going to do when its snowing an inch an hour?

    What happens if it snows during the day?

    SDont your commercial and high test resi's want it cleared better than you could do every fifteen hours in a bad storm? Especially during the day?

    I dunno man. Granted Im new but everything tells me that you need a second truck to provide at least the kind of service my people would want.

    I agree on the pricing. Kill the Lowballers!
     
  18. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,964

    Well Killswitch....

    I know that even 10 years isn't that long, and even after that long I still learn new techniques or equipment to use.

    Anyways, to break it down for you...

    First, the only residential yards I do, are 3 neighbors across the street, and they get plowed when I'm done plowing all the other accounts. They're okay with that. They all drive 4 wheel drive vehicles, plus we live on a dirt road that gets plowed, hopefully, the same day that the storm ends.

    There's been a few times that either I, or another guy that lives on the road that plows, or another neighbor with a tractor have actually plowed a path wide enough to get cars through. So, it doesn't really matter if the driveway is plowed, if there's still a 1/2 mile of road that isn't plowed yet.

    Second....
    I've got 2 "smaller" industrial places that have alot of vehicles in them that are parked all day. Both of these places call me if they want a dock cleaned out, but usually they just wait for the end of the day for me to clean it out, the forklifts don't work the greatest in the snow.

    Third.....
    It's listed in my contract that all lots will be plowed, curb to curb within 24 hours of the end of the snowfall. If there's more than 4" of snow within a 24 hour period, or rather during business hours, there will be all "safe" attempts to get to the parking lot and clear paths.

    I put "safe" in the contract, so if it's snowing 2"+ / hour, or if there's a blizzard and roads are impassable, I'm not on the line. Now I know that some of you think how would a customer ever put up with that, but I'm covering myself in extreme extreme cases.

    Fourth.....
    As for sidewalks, I don't do any during a storm. I only clean sidewalks at the end of a storm when I do a curb to curb cleanup. Most customers aren't going to want me shoveling a sidewalk @ $75 / hour when they can have a $10 / hour employee doing it.

    I realize that if they have their own employee doing the shoveling, that they're on the line if that employee gets injured, but so far they're all okay with that.

    Fifth.....
    As for the 15 hours, that means I can leave my house at 6 pm at night and finish up around 9 am the next morning.

    If we get a real heavy snowfall, I can get enough cleared where everyone can use the lots, and I can go back during business hours and finish the corners on the lots, give the piles that extra push back effort, etc.

    All of the lots I do, I just wing off to the sides, I don't have to clear out an area, and then try to move that entire pile all the way across to another area of the property to stack it. This way a 7-8-9" snowfall doesn't take TOO much longer than a 2-3-4" snowfall.
     
  19. hickslawns

    hickslawns Senior Member
    Messages: 617

    Don't worry about it LwnmwrMan22. If it works for you that is great. 15hr seems good to me. I take on big commercial stuff and I am out first, and in last. I am roaming between accounts and dispatching from the road as the lots are ready. Different parts of town may get different amounts of snow. My usual snow keeps me out there an average of 24 hours. I don't go to bed until the last lot meets my expectations. The killer is 2-3 days straight snow. That usually puts me out there non-stop with catnaps in between. I will do whatever I need to in order to deliver A-1 service to our customers. By the way, I do this all clean. No pills, no Red Bull, no BS. Drink plenty of water, and eat frequently to stay hydrated and maintain energy with a catnap thrown in periodically. I do however go thru a lot more Skoal. lol Sounds like a new topic to explore!