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Why plowing by the square foot?

Discussion in 'Commercial Snow Removal' started by Mick, Nov 28, 2005.

  1. Mick

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

    I've really noticed lately a lot of people wanting to price plowing by the square foot. Where does this idea come from? Since it happens so frequently, I've been assuming that it's something that's common in lawn care. I've also seen a lot of people asking for a "national average" in plowing. Is this something from lawn care, too?

    I'm not intending it so seem like I'm bashing anybody or any idea. I'm just trying to understand the frame of reference when these questions are asked.
     
  2. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,868

    Great question, Mick.

    I would like to add one of my own. What are we selling? This has a lot to do with Mick's question and gets to the bottom of how we price.
     
  3. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,981


    Rather than lawn care, it could stem from sweeping or from parking lot repair / install.

    I know when you quote for seal-coating or even redoing or installing a parking lot, alot of times it's bid on "XXX" / sq ft, for a total of......

    People probably already know what the square footage is of their parking lot, so...

    Plus, it's a price point tactic as well. Here the firewood sales are no longer 4' x 8' x 16" for $125. They're 4' x 4' x 16" for $75. People don't have to shell out as much dough then.

    Think about it. If you're going to charge $100 for an acre of black top to be plowed, in an hour, your basic, wide open lot, that's $2.28 / k sq ft.

    If you bump it up to $150 for the same lot, you're only at $3.43 / k. Basically, instead of raising your price by $50, you've only raised it $1.

    Alot of people don't want to deal with the math, they just say, "oh, yeah, that DOES sound like a deal."

    If you were doing it on an actual square footage price, you could raise your prices by 1/2 cent, and be almost tripling your price on this account.
     
  4. Mick

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

    Mark, that's a great question, too, and I think the answer is not cut and dried as we'd like to think. I've seen several people say something like - "keeping an area clear" or "service" or something similar. That may be true in some situations - like stores and high-end residential areas. But I think in many cases, the answer is "access". This is what it boils down to. The customer has to decide - "How much snow and ice are you willing to manuever through before you want someone to plow?". Then it's up to the contractor if he/she is willing to provide service as the customer wants. I've had several people who wanted triggers of 5" to 8". I had one who only wanted me to come when the snow was to the bumper of his car. I've turned those down - but I am missing out on some income. Although that's ok with me, it's money going to somebody else.

    So I think the answer is the ever-confounding "It depends".

    LwnmwrMan22 - That's a good possibility. I check profiles a lot of times and can get an idea there. I'll have to consider that maybe they do other pavement work. Thanks. Although that firewood example seems kind of deceptive - the 4x4x16 can't even be called a "face cord". But I guess if both the seller and buyer know what it is...
     
    Last edited: Nov 28, 2005
  5. ynvvbr

    ynvvbr Member
    Messages: 68

    Hey guys,

    I may be able to shed a little ligth on this, but I am by no means an expert on this. 2 things that I have heard from some large property managers i deal with as to why they request it like this sometimes.

    1) CAM fees: If its a multi-tenant location and the tenant is allocated a certain number of parking spots or sq ft of a parking lot. They sometimes charge snow removal extra. By asking us to price it this way we eliminate a step for them, which is no big deal. The other catch to this is some tenants are charged CAM for a lot based on how much bldg sq footage they use. So if they use 20% of a building they are charged 20% of the lot, te catch again is they will bill the lot as additonal sq footage.

    2) Natinaol companies, i have seeen bid this way, not all but alot of the one's i have seen. They get the square footage for XYZ company and price 100 stores based on these numbers. We all know a 50,000 sq foot lot with every obstacle imaginable is going to cost more then the one that is totally wide open. Sq ft pricing eliminates that and when these guys hammer customers on how sq ft pricing is better, well this is what we wind up with. And lets face it you can have anyone in an office multiple 50,000 by .30. Its the professional who would price that at .48 because they know its got alot of obstacles.

    IMO, Sq ft pricing would work, only if you still look at the lots and figure" well this one is a pain, lots of islands, etc. and you raise your per sq foot price accordingly and lower it accordingly if its a peice of cake, thuis way still takes expereince and know how.

    Again this is my 2 cents:)
     
    Last edited: Nov 28, 2005
  6. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,981

    Mick -

    I know the "face cord" sizes don't add up, but my point was that everything's a selling point.

    People now days are so strung out, that you have to fit something into their budget, not so much value.

    This goes back to Mark's comments about what is it that we're selling?

    You SHOULD be selling value, rather than just be trying to find "figure" that your prospective client is selling.

    I suppose by the sq ft would be no different than pricing by the inch, as long as you have different increments or steps in your pricing, depending on how much snow is actually on that sq ft of lot.

    Even in a seasonal contract, I suppose you could break it down into how many sq ft you plow in a year on average, and base your contract off of that, but it seems to me to be adding a step that doesn't really need to be there.

    I agree with ynvvbr's post about a multi-tenant building, where the CAM's would be figured on a basis like this, but the property manager should have a database that they would just type in the costs each year and split it however things are broken down, rather than depending on a contractor, who may or may not add the right areas together.
     
    Last edited: Nov 28, 2005
  7. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,868

    Value, access, safety, etc are part of it.

    But we are really selling our time, or our employee's time. This is why IMO that we can not price based on square footage. When we plow or even salt, we are producing a desired result--safety or access--but we are using our time to provide that access or safety.

    That is the true downfall to square footage pricing as has already been pointed out. Add obstacles and time goes up, but not square footage. Every time we estimate a lot we are really basing it on how much time it is going to take; whether it is a seasonal, per inch or per push price. We may measure the square footage and this is a good way to measure production times and even to develop estimating guidelines, but it still comes down to every lot is different and will take a different amount of time.

    If we bid by square footage, I would never have to leave the office to create a bid, as long as I know the square footage. But we all know that would be dangerous to the health of our companies, because we would lose either bids because we are basing all proposals on the highest number of obstacles or lose money because we are basing proposals on the lowest number of obstacles. Yes, there is a middle gorund, but why should one 'easy' customer pay for another 'difficult' customer's lot.
     
  8. oatka

    oatka Junior Member
    Messages: 16

    We are all "movers"

    I agree, we are selling our time, but to add to that we are all just movers. Wether you pick up a shovel and move snow, or move the plow on your truck by moving your steering wheel, or move paper and call your self an accountant, or wether you move your fingers on a keyboard to type replies, or move hamburgers on a grill, or move popcorn at a movie theater. really, every job is just people moving things. that's it. i guess now that i'm unemployed i have to find a moving job that pays me well. that's been impossible so far.

    Happy Moving!

    anyone want to give me a plow truck?
     
  9. All_Clear

    All_Clear Senior Member
    Messages: 206

    Hmmm never thought of it that way, kinda a different perspective.

    But when it comes to pay or pricing. Not everyone can move "things" as well as others.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    As far as the org questions....

    I agree with LwnmwrMan22 on the way some my price this way. If it sounds like a deal people tend to go for it. Even if its the same higher price they would have paid by per inch or per push. Making it appear to be a smaller increase may work better.

    My dad always says to sell an auto for $2,000 place your ad for $1,999. That $1 less draws more attention and a possible buyer. Its all a mind game really.
    Seeing that 1 instead of a 2 works most of the time. It's all in making the deal sound or look sweeter, more so when on paper.


    All_Clear
     
  10. PerfiCut L&L

    PerfiCut L&L Senior Member
    Messages: 178

    I agree with LwnmwrMan22 as well...

    Perhaps a per sq ft price is fine for your "average lot", with a "difficulty" factor added in for those lots that have more than your average obsticles.

    So in short, you could come up with a sq footage for a wide open lot of XYZ which equates to your hourly rate for that same lot. Now consider that same lot with lots of obsticles and include your "difficulty" factor rate.

    You could sort your diffulty factor into 3 catagories, low, moderate, and high. Each equating to a higher multiplying factor.

    You'd have to sit down and run the numbers on various conditions and lots, compare to current rates and come up with the right numbers. But sure, it could work.
     
  11. paponte

    paponte Senior Member
    Messages: 717

    How can you not base price off sq ft?? I think it simplifies everything. Here's why we use a sq ft based pricing schedule.

    First off I would have to agree that time plays and important roll in estimating. Everyone figures out "I need to make X amount per hour for an 8', 9', 10', plow truck etc.". If you have the sq ft of the property you can pretty much say on average you can push X amount of acerage per hr + or - depending on your setup. We all know there are 43,560 sq ft per acre, so now you know about how long it should take to do that lot. Of course obstacles and other factors play a roll. but you have the solid numbers or facts. Looks can be VERY deceiving.

    For salting, you need sq ft in order to know how much material you will need... period. What do you just guess if you don't know the sq ft of a property? :cool:
     
  12. plowinginma

    plowinginma Senior Member
    from MA
    Messages: 326

    I have priced parking lots by the square foot for over 10 years. I have spent years adjusting and tweaking it. I made a simple work sheet in excel (not so simple to enter all the programming, time consuming) . Enter the square feet, difficulty code, I have 3 different levels along with a few other variables and presto out comes the price. I also have it so you enter the property name and so on and presto out comes the contract. it just saves me lots of time . When I look at a parking lot I have a number in my head that I want to charge . The square foot price just verifies that number. So that’s the problem with the big xyz management companies. Takes a real simple minded person to measure out a parking lot . It takes Years of experience in knowing what to use and how to use it. Every one plows at a different rates so you would have to adjust this accordingly.
    Just my take on it
     
  13. IMoLwnz.com

    IMoLwnz.com Junior Member
    Messages: 25

    I just started to do the SQ ft pricing this year. Im still learning...

    What do you guys charge / acre? Last year I did a 3 acre job in about an hour or just over. for a 1-3.
     
  14. paponte

    paponte Senior Member
    Messages: 717

    What are you using to do 3 acres per hr?
     
  15. Stoney

    Stoney Member
    from NW OHIO
    Messages: 37

    I charge $2.00 per 1000 sq-ft. for a clean parking lot with no cars in it. I would rather bid a job. I tend to make more money on the bid jobs once the route is established and run a few times. My times come down and end up making more than $70 an hour. Most of my accounts have sufficient space for pushing as long as you push smart. I also have a factory parking lot and their truck docks and truck repair site I get $65 per hour per truck and $.30 a pound for salt. I truly know that I could make more money on a bid per push price than the hourly rate. But being a large factory they would only accept the hourly rate. Bidding is mostly common sense if there is going to be a lot of cars and obstacles in the way you must adjust your price. Just like if you are doing lots in a large town that does not have the space to push the snow you must haul it away and that costs more. I am fortunate to live in a medium size town that doesn't have the space constraints of New York or Chicago.
     
  16. Mick

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

    This is a perfect example of what I was finding wrong with per ft pricing. I'm glad it works for you in your situation, but think about this:


    At $2.00 per 1,000 sq ft, you would charge -

    $87.12 an acre.
    $126.72 for private road 12' wide and one mile long
    $2.00 for a 10'x100' driveway
     
    Last edited: Nov 30, 2005
  17. Stoney

    Stoney Member
    from NW OHIO
    Messages: 37

    give me a break

    No this pricing is for commercial lots only (not driveways) with a 1" to 2" trigger on a event. High traffic storefronts want their lots free of snow and ice for safety and for the clean looking appearance of their store front. Driveways are a seconday business they are done after all commercial lots are serviced. My residential customers understand this and most of them are not interested in being plowed at a one or two inch min. Also most residential customers do not want salt unless there is a ice storm like we had last year in northwest ohio. Of course you would not price a driveway that way it is common sense.
     
  18. Stoney

    Stoney Member
    from NW OHIO
    Messages: 37

    I also have 2 diesel trucks and one gas one truck has a 10' v-Plow on it I could do that road in 20min easy. That would amount to aprox $422 an hour. I believe that would be a pretty good rate. I have a large gated community that I have a fixed price per push on and I guarentee I can make a better rate on than you charging by the hour unless you are dragging your feet on it.
     
  19. ceoape

    ceoape Junior Member
    Messages: 2

    does this make sense?

    Hi everyone - I had posted a thread on this a few days back. My thinking was that, more than anything, using a sq. ft formula to bid jobs would sell the estimate better. First, to establish the universal formula, i was going to survey the lot and figure how much i would typically charge for plowing including a $20 p/50Lbs of salt applied, and sidewalks/entrances shoveled; $75 -$150+ depending on hazards, ect ect. I was going to then divide that amount i determined i wanted by the sq.feet, resulting in a price per sq.ft amount. I simply thought this would sell the estimate better than having to try and convince a lot owner that my FLAT PRICE was justified. Instead of explaining all the particulars involved, i could simply tell him that sq.ft formula includes salting, shoveling, and plowing. I don't know if it's a good idea, but i'm new to plowing and was having a hard time figuring out how to bid lots with a universal forumla. Of course, there's always going to be different charges for different lots, but i wanted to have a foundation to start with thus eliminating 90% of the estimating time concerned with snowplowing commercial lots.
     
  20. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,981


    What about the lots that don't want / need salt? What about the lots that you don't have to shovel the walks / door entrances?

    What about the lots that have islands, or the way the lot is set, you can't really get into an area with your truck to either push the snow forwards, or pull it all the way back, so you have to kind of "wiggle" it about in order to get it where you want it to go??

    I suppose a guy could have a bottom line price for sq ft, and then all the others would be an add-on, much like a base price for a truck.

    You could charge an extra $2 / island, or $5 for each 10' of backdragging on top of your sq ft price.