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Seasonal Contracts "Take it or Leave it"

Discussion in 'Commercial Snow Removal' started by Snow Picasso, Dec 28, 2006.

  1. Snow Picasso

    Snow Picasso Senior Member
    Messages: 249

    Hey guys, I started a thread on "Has anyone ever seen it so bad before" and the response was awesome! Alot of good conversation about global warning and such. There were a couple of threads about "Seasonal Contracts" and I had this thought. Seasonal Contracts are going to be a thing of the past! Already seeing it happen! The winters are so weak the past few years that alot of my customers would rather take their chances now! Interesting isn't it! I actually had an owner of a strip mall call me the day of our 1st storm and ask me to plow his lot. I asked him what happened to his guy and he replied...Never got one, don't need to guarantee a contract because It doesn't snow that much and there's always plow guys around! I laughed...gave him a price...then he laughed! Said he would get someone for 1/2 the price! He must have because his lot got plowed! Go figure! What do you guys think?
     
  2. mcwlandscaping

    mcwlandscaping 2000 Club Member
    Messages: 2,557

    These snowless seasons helps weed out the lowballers as they dont' have the money comming in to keep that POS running or the new truck/plow payments paid.......It's only really been bad here last season and this season so far.
     
  3. B&B

    B&B PlowSite Fanatic
    Messages: 12,777

    Yep, I've noticed it already.Their's a whole bunch of plow trucks for sale around here. The plow dealer's seem to be sweating a little too!
     
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    It depends on the type of place you plow. Some companies like seasonals so they can budget it through the winter. In my last post I said I have doctor offices so they like the idea of having someone on standby.Your right when you said about these guys that just flag someone down and take the chance.
     
  5. GSE

    GSE Senior Member
    Messages: 108

    I hear what you're saying, however it's still only December. Last year was somewhat light around here, with only 12 plowable events and 20 ice control trips. The year before was a record snowfall year with close to 30 plowable events.

    My customer base, for the most part, demand seasonal pricing and I don't see it changing. I try to sign at least a three year deal, and it always seems to come out in the wash.

    So everyone in plowsite land, keep you chins up. The snow is coming!
     
  6. SkykingHD

    SkykingHD Senior Member
    Messages: 368

    one price for all season

    This seasonal bidding is a crap shoot at best. If you get a lot of snow the contractor takes a hit and if you get no snow the customer takes the hit. I have a few who pay by the season but most pay by the push.

    As far as the lean winter, this will bankrupt or cause many to get out of the snow plowing business. A heavy snow winter causes many to get into the business. Yes there are many trucks for sale. Some from last year also.

    Nothing we can do about the weather as we can't control the weather. When the snow comes we will plow it.

    When there is no snow to plow some contractors bid low to get a commitment from the customer. This does nothing to bring snow it just lowers the price. If there is no market it does not matter how low you bid as no one needs your service.

    Dave
     
  7. Brian Young

    Brian Young PlowSite Veteran
    Messages: 3,382


    Dave I agree with the last statement, well agree with all you said. This is where everyone should be bidding higher I would think. IMO, If snow is becoming more "rare" in some parts I think the price per push should be on the rise not decline. Its just a matter of guys bidding with confidence not just to get the job, but that in itself would be a miracle
     
  8. Superior L & L

    Superior L & L PlowSite Veteran
    from MI
    Messages: 3,039

    Long Live The Seasonal Contract !!!!

    Remember ITS ONLY DECEMBER!!!!!!!! it does snow in Jan, Feb, march

    I don't think one bad season will stop people from doing contracts. I think property managers love them (dont know for sure). Most leases on commercial buildings are triple net leases. This means all costs get past on to the tenants based on there square footage. The cost per tenant can be figured out at the beginning of the year and its done. If its by the push/salt every month they are re figuring every tenants amounts.
    Little strip malls would be no big deal but large strip malls, malls, or office parks could be a royal pain.
    The amount of money we are talking about is a lot to the little plow guy but nothing to Best Buy, Home Depot, Macys, etc etc
     
    Last edited: Dec 29, 2006
  9. Haworth's

    Haworth's Junior Member
    Messages: 6

    IMO a good balance of seasonal rate contracts with per push contracts covers us both ways. This season so far I'm in better shape than last year. I took a few extra seasonal rates than per push rates. Business is like the weather, sometimes its really good and sometimes it sucks. The only difference is with a little planing and good business sense we can manage our business a little better than the weather. The guys who are selling out have not managed there business right, if it's not snowing then have a backup plan. It will snow one day sooner or later and you'll regret selling your equipment. Every year I learn a little more about business and every year I use it!
     
  10. Snow Picasso

    Snow Picasso Senior Member
    Messages: 249

    I like the way you think! :salute: :salute: :salute:
     
  11. Snow Picasso

    Snow Picasso Senior Member
    Messages: 249

    ABSOLUTELY!!! I couldn't agree with you more! The less it snows...the higher our service fees should go. We still have to pay for our equipment.:salute:
     
  12. bigskytom

    bigskytom Junior Member
    from Montana
    Messages: 13

    Blend of contract

    I do only apartment buildings and condos at this point, and the contract I write is a blended seasonal contract. We are east of the continenal divide and see 10-12 plowable events per season. I base the contract on 8 pushes and charge that amount up front. If we get less than 8 events, I will actually refund 50% of what is left of the contract fee. If we go over 8 then I bill the owner for the additional push. Since the properties are all managed by the same company, the billing is easy.
    BTW we have had 3 events so far, so my numbers are on track to be a normal season.
     
  13. JPMAKO

    JPMAKO Senior Member
    Messages: 660

    The way that I structure my Snow Plowing business is half Seasonal and half Per Visit.
    This ensures that I have a set amount of money at the beginning of the season and "NOT IF BUT WHEN" we get some snow I am making more money. As far as bidding low this is a problem in our industry, but also in just about every service business out there.
    The way that I view this business is we are providing a LUXURY service, and all work related to this industry should be priced accordingly.

    When you get off of the airplane at the airport you can take a taxi home or you can call a limo. Guess what costs more? well the limo company is not going to bid to compete with the taxi service because they offer a luxury service and they know that we understand that.
    You get what you pay for...

    As far as signing new Seasonal Agreements I tell the potential customer that they will automatically be added to our "Priority List" and that they are paying a premium price for a premium service. If it is all about price with the potential client I will simply explain to them that what they are getting for their money is someone who is constantly monitoring the forecasts and has the experience, equipment and knowledge to perform the right services at the right time. When you or someone you love gets hurt do you want to go see someone straight out of med school or someone with experience in his/her field?

    Now let's all hope that we get some snow so at the very least we have something to do, and we get to use these VERY expensive shovels that we have on the front of our vehicles.


    Jason
     
  14. 2moresleeps

    2moresleeps Senior Member
    from Ontario
    Messages: 131

    Two light seasons and the world is gonna change???? Let's say for a moment that everyones perception changes and they (our customers) demand per push and totally go against seasonal contracts.....good. Next year we get SLAMMED with 20 inches every three days and that very same customer who was paying $400 per month is now paying $400 a week....what do you think will happen then....we will all be back here next year saying how great it was that they only took on per push accounts.

    Lastly, how would a lean winter benefit the reputable outfits and not the lowballer? A lowballer goes in super low and sweeps up 200 accounts (example only) he charges way less and doesn't need to plow...wouldn't that benefit him? I would think it would be the other way around.
     
  15. WildRidge

    WildRidge Member
    Messages: 80


    Because there is a good chance that if he lowballs his plowing he lowballs his lawn/landscape stuff. Therefore by the time he has spent his money on repairs from beating up his equipment to get his 200 properties done he is hurting for money. Then realizes that he needs to sell his equipment and find another job to keep food on the table.
     
  16. Tommy10plows

    Tommy10plows Senior Member
    Messages: 345

    Seasonal Contracts

    My few seasonal contracts are on residential only. I take in just enough in seasonal money to meet the needs of whatever new equipment I am going to buy, or for the cost of any refurbishments I am planning. That way I get the equipment taken care of and at the same time I avoid burying myself in flat rate accounts in case of large snow events.

    Of course, the downside is, if there is no snow, I "lost" income by not taking more seasonal accounts on board. But if you follow my way it is much safer for the plowman, protecting me from being overcommitted to jobs.
     
  17. fernalddude

    fernalddude PlowSite.com Addict
    Messages: 1,105

    I love this topic.For years I have heard about season contractors who gleam with pride how they sit back and just rake in the money when nothing happens but never hear about when the get slammed and loose money because the have to work for the money.Myself I prefer to get what I work for and my customers feel the same. If we get no snow they save if it snows they pay, simple gamble but iam not going to lower prices to get contracts. We provide a service sometime we win sometimes we loose but over the years we profit. This type of work is not the get rich quick method that is why so many fall off to the side. After over 25 years of plowing we are still going and growing each season. We don't do any other type of lawn care or landscape just snow and ice control. Two years ago we broke there banks last year about even with there budget too early to tell this season. Guess we don't have the overhead that most guys have but that's why it does not cost me anything if it does not snow. Had a guy ask me today about the season so far I said my chemicals will be just as good next season. My own business plan don't owe anybody for anything
     
  18. JPMAKO

    JPMAKO Senior Member
    Messages: 660

    Ultimately go with what works for your company and what your market will bear.
    Some say seasonal some say per visit. I know what works for my company, and has for many years. I will ALWAYS have a mix of both. Money up-front and Money coming in.
    These are the intellectual/ informative posts that I enjoy so much.:D

    Jason
     
  19. dmontgomery

    dmontgomery PlowSite.com Addict
    Messages: 1,238

    I bet there are some guys in Colorado right now that wish they had done per push agreements.....payup
     
  20. Snow Picasso

    Snow Picasso Senior Member
    Messages: 249

    You guys all make sense! I guess to each their own! I know in Illinois if you had seasonal contracts for the last 4 years... your ahead of the game! Myself personally feel I should get paid when I work, but my money is in my multipliers (4" plus)! All my accounts are priority accounts and I have great relations with all. This year reallly sucks! One big plow 12" and 0 saltings! Go figure! Thank God I'm not trying to make a living at this! Let's hope we get something in January. I'm getting really bored! :dizzy:

    Good Luck Everyone & Happy New Year!