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What should I do?

Discussion in 'Business Fundamentals' started by articdan, Feb 15, 2008.

  1. articdan

    articdan Junior Member
    Messages: 6

    This is my first post on Plowsite. Need a little help. Currently snow plow 40 drive ways. 30 of them are on year round contract with me. They pay so much a month for snow plowing to grass cutting and fall clean ups etc. I have alot of contract renewals coming up in the next 3 weeks. My average driveway is 35.00 per clearing X 12 clearings. So each customer pays $ 350.00 for their winter service. My concern is this... that in the past in major snow storms it takes a lot longer to do any driveway and the customer still pays the same amount. This year for the renewals coming up I want to add an additional fee to the winter service

    2"-4" snow depth included in contract or maintenance agreement
    4"-8" snow depth an extra charge of 20.00 will be invoiced seprately

    8" + snow depth an extra charge of 35.00 will be invoiced separately

    Does this sound fair? During the winter we may never get a big snow fall . I've always heard other guys in the business complain when we get a big snow storm. They always say that they work harder and don't get paid for that extra work.....as well as the fact that its harder on equipment. I MUST ADMIT I DON'T LIKE STORMS EITHER . I've had these customers for over 5 years and some 10 years. I just don't want to Lose A FULL TIME CUSTOMER because of an extra charge. My gut feeling is that they won't mind. I've always been there and have proved myself in the worst of storms.

    Please any advice. What do you think of my extra fee's and the snow depth increments. THANKS IN ADVANCED.
     
  2. salopez

    salopez Senior Member
    Messages: 873

    on the flip side on a small storm they pay the same too....

    are you plowing with the storm? that will save your equipment...

    i dont like your pricing because its not annual anymore.

    maybe you need to re-evaluate your prices in general....fuel has gone up... how much snow do you get annually? firgure out your annual price off that.
     
  3. 06HD BOSS

    06HD BOSS 2000 Club Member
    Messages: 2,611

    personally i dont like that billing style. or those numbers either, if i got a letter seeing that, i would call someone else. like salopez said, re-evaluate your whole pricing structure...price each one accordingly as to how long it takes you, etc. still give them a seasonal price if youd like but just come up with a new price for each account, opposed to adding an extra $20-35, i dont think alot of people would be happy getting a seperate bill for that amount.
     
  4. articdan

    articdan Junior Member
    Messages: 6

    We get an average of 10 snow falls per season. I think you're right about the pricing structure. What about this idea?

    A seasonal quote includes 10 clearings. After 10 clearings the customer will be invoiced.
     
  5. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    Seasonal priceing is a law of averages. You make money on the small storms and light years, and you break even/loss money on the big storms and heavy years.

    If your are not happy then you need to raise your prices. But you offer seasonal which means your customers are happy to give you the money up front so they don't have to worry about being charged more during the heavy storms/years.

    I posted a letter that can be used to raise your rates. I don't know how to make a link to it, but the name was How-To Rate Increase Letter.

    On the other hand you could put in your contract a storm clause. I would word it something like "in the event of a major storm that has a total accumulation of more than 10" an hourly rate will be added above the cost of your normal rate and will be invoiced on a seperate bill. We are doing this to keep the costs done on average."

    Good Luck
     
  6. Oasis

    Oasis Senior Member
    Messages: 273

    I have to admit also being from Ontario ..... tymusic I have had the same delema. I also use an anual fee for our customers snow services and this year we have taken a hit. I would love to come up with some sort of protection in order to offer a competative price for snow services but be able to protect us in seasons such as this one where the law of averages is thrown out of the window and we have so many snow events and events of mass amounts. Im not sure if your proposal is the best idea but I have to admit its better then anything Ive come up with.

    We gotta come up with something though......
     
  7. articdan

    articdan Junior Member
    Messages: 6

    Yes. we've had our share of snow in Ont. This is one of those years. Customers want to see their money at work . Some years it hardly snows........so I guess I can't really complain. We lose this year and gain maybe next year. Thats all part of the game.

    I think I will raise my prices and base a residental contract on 12 clearings instead of 10 and forget the seperate snow depth pricing. Maybe on my per time customers I will charge according to snow depth.
     
  8. articdan

    articdan Junior Member
    Messages: 6

    Yes. we've had our share of snow in Ont. This is one of those years. Customers want to see their money at work . Some years it hardly snows........so I guess I can't really complain. We lose this year and gain maybe next year. Thats all part of the game.

    I think I will raise my prices and base a residental contract on 12 clearings instead of 10 and forget the seperate snow depth pricing. Maybe on my per time customers I will charge according to snow depth.
     
  9. articdan

    articdan Junior Member
    Messages: 6

    Oasis I was on your web site and I noticed you do residental maintenance as well as commercial. I do 100% residential . 60% of my customers are year round (full time) and the rest I invoice depending on the service. Im looking for help . Do you base the winter clearings on an average of 12? Same with lawn cutting How many cuts? 20 -22cuts. I find fall cleanups the worst to price for a season. There are different areas I need to fine tune. Live just west of London. Thanks
     
  10. PLOWIN DOUGH

    PLOWIN DOUGH Member
    Messages: 56

    $20. + seems pretty steep to me. Id say $10 is a fair add-on to cover your increase in work. I mean you still do the same work just harder on equipment mabe a little more time.
     
  11. KGRlandscapeing

    KGRlandscapeing 2000 Club Member
    Messages: 2,660

    contracts pretty much suck somebody always feels as if there getting rippd off. just chagre alittle more next year. if ur not covering ur butt u wont have one to worry about next year thou. even if i dont make as much money as id like i go out there and plow my butt of because then next year ill have more work and ill have a good rep
     
  12. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    I have mostly seasonal contracts. I like them, the customer likes them. I get paid. They don't have to worry about the bill going up.

    BUT. If you want to be fair to the customer no matter how much it snows (more or less than average) then you have to bill on a flat rate per push. If it snows more than average, you make more money. If it snows less than average you make less money. But the customer only pays for what they get.

    What blows my mind is that plowers in Canada are only getting, or basing a seasonal contract on, 10 plowings and something like 20 - 22 cuts. That's crazy! I thought you guys got more snow than us. I base mine here in MI on 20 plowings and 32 cuts. This year I have plowed 21 times. I only plow once per 24 hours so that means that there have been 21 mornings I have gotten up and plowed.

    I don't know how a single operator could make a living doing some thing only 10 times per season. I can have less customers because I know volume will make up for it.
     
  13. articdan

    articdan Junior Member
    Messages: 6

    Quad it all depends where you live in Canada. I'm not located in a snow belt area. A 30 min. drive towards the east can make a HUGE difference in weather. 12 - 10 clearings is average around here but those numbers would not work if I was living 50 miles to the North East..........but maybe I should raise my seasonal contract to 15 clearings in order to protect myself.

    We start plowing after 2inches and up. We have lots of 1 inch snowfalls. What is your standards. Thanks
     
  14. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    That's the same here. 50 miles east and they hardly get snow. We have a 2" trigger and this year we have only had a handfull of 1" snows. Been a very good year.