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What gives...I hate to be a whiner, but!

Discussion in 'Commercial Snow Removal' started by SnoJob67, Oct 12, 2001.

  1. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    I talked to a big contractor in our area. They have three branches in local cities to give you an idea of their size. They are charging $53 per hour for a truck. I know for a fact that there are others charging $100 or so an hour in my market. It seems the biggest companies are cutthroats who have no idea what they are doing to their own company's bottom line.

    I make twice that an hour. Is the company likely charging these prices honestly or ghosting the hell out of the customer when their back is turned? I REFUSE to do business that way as well as refusing to plow for subsistent rates.

    Unfortunately, the store manager has been happy with their performance and wants hourly figures to "compare". Unfortunately, the manager has no idea how many hours they get billed for, so he is just happy looking good with that "low" hourly price that I figure must include ghosts.

    Should I just skip these accounts that I know they are bidding at cutthroat pricing or is there another angle I am missing? It seems only larger lots and strip malls, etc are the market this company pursues. So, I feel I may be much further ahead pursuing the smaller office buildings, etc that Freebie Plowing doesn't bid.

    To give you an idea, we would spend 6 hours maximum in a 1"- 2" snowfall on this site. If I was getting paid by the job, I know we could be out of there in 4-5 hours. However, lets take 6 hours times $55 an hour. That comes to $330 per plowing (a pathetic return at best!) times 6 events average equals less than $2000. I have made that much in a 24 hour period before!

    Please give me some suggestions (other than ghosting) that could help me to obtain this account at a profitable rate. I'm not desperate for the work (already have enough contracted to survive comfortably), but am trying to break into some of the larger sites.

    The only good new is these jerks can't possibly service everyone in town. Bad news, obviously they are pricing against their competition which means there are several pricing levels in our market, for sure! I've been awarded work bid out as high as three times their hourly rate (small lots that include travel time in estimate).

    Should I just sub it out for $40 an hour and take the measly $15 an hour profit? By the way, they will sign a salting waiver, so making the money up in salting isn't an option.
     
    Last edited: Oct 12, 2001
  2. LI Brian

    LI Brian Guest
    Messages: 0

    I can't possilbly see how they will even break even. When you figure into insurance, gas, truck insurance and labor they will end up loosing money. My opinion don't sub it out it's not worth it move on and when they realize they can't do it for that price they will be gone, and you will still be around. Not worth getting upset about it.
    Brian
     
  3. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    My guess is these people aren't going anywhere. Maybe they are using plowing as their "loss leader" to obtain landscape and maintenance work? This company has been around for a while and I doubt they are going anywhere because they can afford to have a division of their company operating at a loss.
     
  4. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    As hard as it is to do.... walk away.

    If the customer insists on hourly rates (which alot of people who post here know is not very profitable to begin with), and given your great attitude about how to make money - walk away.

    Some will, some won't, so what - Next !!
     
  5. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    John-

    I take that as a big compliment, especially coming from a man of your status in this industry! Thank you.

    These locals could use a little SIMA, to be sure! If I get the contact information for the contractors, would anyone from the office give them a call or send some literature?

    How can a contractor educate a customer when they are obviously lacking some skills themselves? I'd bet it has to do with the "necessary evil of snow removal" theory. These people have yet to identify snow removal as a profit center.

    Thanks for the good advice. I know in my heart this account is a waste of time until they wake up and smell the coffee! They are either being duped, or the contractor loves public service work. I have decided to send a brochure with a short letter explaining why the bid we have enclosed is not based on hourly rates. If they throw the bid away, they lose! These people (managers) need to do a better job of doing their "homework." I'm going to send practice exercises. :) Thanks again for the responses and support, gentleman.
     
  6. nsmilligan

    nsmilligan PlowSite.com Veteran
    Messages: 704

    Your all assuming that every contractor is homest in the way he charges his hours. A few years ago I had a contractor tell me before hand his was going after a contract I had, it was bid on an hourly basis, and he undercut me by about $10/hr.
    At the end of the season the manager told me to bid again, because the other contractor ended up costing double what they had paid me in any of the previous 5 years! Turned out he charged his hourly rate for travelling time, no part hours etc. and since there was no one to record his actual time on site he overcharged. The contract went on a per push basis after that.

    Bill
     
  7. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    It is easy to understand why people are quite slow to trust even an honest contractor. If you are going to be a cheat and a thief, why not just build a criminal enterprise? Leave the honest tasks for those of us willing to put in the hard work and dedication necessary.
     
  8. Alan

    Alan PlowSite.com Addict
    Messages: 1,393

    It doesn't matter how educated they get or what associations they belong to,, some folks are just plain crooked! I see it in excavating contractors here quite a bit,, low hourly rate and then milk the job or load it up with equipment that sits and gets charged for. Snow is real easy to fleece 'cuz so much of it is done at night.
     
  9. OBRYANMAINT

    OBRYANMAINT PlowSite.com Veteran
    from ohio
    Messages: 534

    i can relate a bit to you snojob...bid on some box stores this fall (4-5 acre lots) i did not get them and was ok with that but i always ask what it went for......some of the lots went for a very small amount of money in my eyes , plow and salt, i bid them because heard they were not happy with their service...so i figured i will stay with my staple that i am happy with that is around an acre and under...yes dissapointing because one always believes bigger is better but maybe its not
     
  10. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    It is funny. I am in the running for several other similar sites. I have gotten return calls and have developed good lines of communication. Like John Allin said, "some will, some won't...."

    A recurring theme in business seems to be that there is work available at all price levels, within reason. It seems just as true in snow removal. Price levels are as varied as levels of service.;)
     
  11. ddm

    ddm Member
    Messages: 57

    Sno job, I know how you feel. Everyone who's done this for any length of time can probably relate. I hate to loose a contract for any reason, new or old customer. If I bid on it it's because I want to do the job.

    "the some will, some won't" quote from Jon sums it up best I think. It looks like we may loose a couple old customers this year to similiar circumstances; however I feel we provided unbeatable service at a fair price and I have to stick to that instead of bidding to see who'll do it the cheapest.

    Sounds like you have plenty of others that are willing to take their place as clients, so move on I say.
     
  12. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    I gave the service agreement to the store manager today. I didn't give him hourly pricing and explained why in a short letter that also discussed pricing strategies. He acted as if I handed him a Christmas Present! I'd have expected a much different reaction from our previous conversation. We will see how it goes. If nothing else, apparently I have opened his eyes a little judging by his reaction.
     
  13. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    Maybe he already suspects that he is dealing with ghosts, and you have now given credence to his theory. Good luck.
     
  14. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    Another issue to consider is if what potential customers are telling you is the truth. It has been my experience that smaller, family owned businesses try to play the market by saying "Well, I was quoted $50.00 per hour by XXX OOO company." when they were actually quoted a much higher rate. They are hoping you will submit a lowball account as a "welcome to my snow removal family" one season offer then jack it up next year. By then they have another company lined up for next year.

    Personally, I don't drop my blade for less than $125.00 per truck per hour plus salt. As for removal, I charge $175.00 per hour plus $25.00 per dump.


    I am sure you have done your homework on this issue but I just wanted to give you my 1.5 cents worth.

    Plow Meister
    95 F250 7.3 Power Stroke 9 1/2 Western Pro