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anyone ever charge a retainer???

Discussion in 'Commercial Snow Removal' started by buckwheat_la, Dec 29, 2009.

  1. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    just a thought to throw out there for all you guys out there that charge by the hour, or by the push, anyone charge a retainer fee for those months when you don't have any snow?

    We charge a retainer on all our hourly/per push contracts, (usually the amount of one push/event) i have always figured that if customers expect us to be on call for snowfalls, the least they could do is pay one event worth a month
  2. Premier

    Premier Senior Member
    Messages: 274

    We dont but i like the idea. Im not so sure we could pull that off around here, think i would loss more customers than i would gain by doing it.
  3. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    explain it this way to them, "if we don't get any snow in a month, i need to have some income to pay bills, retain my guys, misc overhead, etc."

    the other thing i would hope customers would realize is that the risk to them is minimal, not too often do we not get snow in a month,
  4. elite1msmith

    elite1msmith 2000 Club Member
    from chicago
    Messages: 2,762

    yes that is 1 of three contract options i give them , they pay a monthly fee no matter if it snows or not, then in addition they pay a per push rate- but its a very cheap rate...normally less than 50% i explain it to them like this... :think of it as a sams club membership - you pay a fee to join, but then get all your services very cheap
  5. MattR

    MattR Senior Member
    Messages: 218

    The same thing for my area too. It is tough enough to get past the word "contract" when gaining new customers, much less try to get them to pay for something that they did not receive yet.

    The overall concept would be nice though. I may try it next year when I do some door knocking (sales calls) in my area.

    Last edited: Dec 30, 2009
  6. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    we do it more like a retainer for a lawyer, they pay for a certain amount (usually quite low) but then if/when we get a event it comes out of the money they paid for that month, like i said, it protects us from not getting any money in a dry month, but they aren't paying much to secure our service and all there money goes towards their service,

    we do condo's like you do though, and we give options for service, the higher the service fee they pay per month, the lower their hourly rates go
  7. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    how about this then guys, what if you apply the retainer over the entire season, meaning, you carry a retainer through to the next month, to be applied against their next month bill,

    two good points to this
    1) you get a more secure/consistent money flow throughout a season
    2) good chance that the last month of the season you well get a little extra if it doesn't snow ie) if you charge until the end of March and it doesn't snow in March, then there isn't another month to apply this retainer to, so it becomes yours,

    just some thoughts on ways i have seen it done
  8. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    in recent weeks i have heard a lot of people talk about not making money the last few months, and i wondered how many didn't have a retainer system
  9. MattR

    MattR Senior Member
    Messages: 218

    If I understand it correctly, is it sorta like having a seasonal customer paying per push rates in advance? If so, that is one way to not screw yourself when an area gets well above average snow events, yet still allowing the customer to feel secure that their driveway will be plowed. If I am wrong in that, you might have to explain a bit more because my brain decided to take a break tonight I think..lol.

    A bit about my situation to maybe aid in explaining. I only do residentials so far. And only one is a prepaid/seasonal customer. I have a handfull of other customers that have signed a per push contract. Otherwise the rest are ones that call after a bigger snowfall. Or like over Xmas, we had 4 inches of snow fall xmas eve, then it rained on xmas and snowed over that. Then to top it off, everything froze solid on the 26th. Today, the 29th was the first day my phone hasn't rang asking me to plow what they call snow off of their driveways. I call it ice after it is frozen...lol. Yesterday I had one lady call and ask to plow her out. Small drive about 70' long and 1 car wide. I told her $50 since I was going to be in that area anyways. I was told that it was way too much. I told her "Thank you for calling" and hung up. I know those calls will always happen, yet I want to be to the point of having enough steady and loyal customers that I do not have to hope I get a few call ins. So yes having an option besides seasonal where they actually pay some in advance would be great. I hate to lower my price and I was even thinking of raising a bit for next year, especially for those who only call when a big storm hits.

    So that I explained a bit about my situation, how do I talk customers into something like this when they do not want a seasonal contract? I understand there is a few on my list that want to pay when I plow, and that is fine because those few are always outside as I drive in waving money in the air.

    Wow I rambled a bit there. Anyways, I am hoping to understand the concept a lot better because it seems like something I want to implement into my sales calls for next year.

  10. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    i think you have got the jest of it, but i well throw a example out there (two examples really)

    first way (carry over month to month)
    nov- pays retainer ($100) no snow
    dec- $300 plowable hours ($300-$100from nov= $200 charged for dec)
    jan- $50 plowable hours (bill out $100)
    feb- $300 plowable hours ($300-$50 carried over from pervious month = $250 charged feb)
    mar- no snow ($100 billed out)
    april- contracted ended, (although it is nice if you carry forward the excess if there is a snowfall in april customers well appreciate it

    the other way we do it (no carry over month to month)
    nov- no snow ($50 minimum for the month)
    dec- $300 plowable hours
    jan- $50 " "
    feb- $300 " "
    mar- no snow ($50 minimum for the month)
    april- contracted ended

    the thing with doing it this way is they well want a justification for this, the biggest one being, it is in there best interest not to see you go out of buisness, there is also the possible offer of alternate work to (earn) the amount you charge, this year i put up a couple of lights for people, the cool part of this one is it gets people thinking of things to eat up the retainer for the month, and really, how much does $50-$100 get you, not much, which means they well likely have you do things that well go over the amount, and you well have more work. We do a lot of peoples Christmas lights and allow them to put their retainer towards it, even though it costs more then the retainer amount they feel they received value

    hope this helps
  11. MattR

    MattR Senior Member
    Messages: 218

    Yes that does help a bunch. I think the example that I quoted from your post will probably work the best for my area. Mainly because I do not think that not carrying over the remaining amount to the next month would go over too well here. Customers want every penny worth and I want to know that they are at least serious about having a dedicated plowing guy. By using the retainer type system it might help out both sides. Next year I am going to make a bunch of changes such as advertising earlier and knocking on doors while the weather is good yet.

    I do appreciate the help with my questions. Hope someday I can return the favor.

  12. redman6565

    redman6565 PlowSite.com Addict
    Messages: 1,411

    you're in alberta though, have you really ever missed a month without any snow though lol
  13. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    YES, July, we have never had a snowfall in July, but every other month at some point throught my time doing snow removal, we have had snow!!!, how messed up is that.
  14. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    We call it monthly ready fee, most of our established accounts pay it, and we do it like is mentioned above, pay xxx on the 1st of the month, then any service provided is payed for by the ready fee, excesses are billed with 30 day terms. Seasonals don't pay the ready fee and in the interest of growth we suspended it for new clients this season and wrote it into an auto renew for next year unless they cancel us in writing. The economy is tough right now, some people will not even entertain this fee.
  15. redman6565

    redman6565 PlowSite.com Addict
    Messages: 1,411

    so you're like my area in the great lakes, so why do you have to worry about not plowing in a particular month?
  16. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

    I don't charge a retainer...

    I have roughly 3/4 of my accounts as fixed for the season with the only per event charge being snow melt application. These accounts make their first payment when the contract is executed. The balance is due in three installments over the course of the winter. I don't see the need to collect all the money upfront. There is no reason to be that cash positive...

    The other quarter are per event. These customers put down a deposit on my services, and then receive bills three times over the course of the winter. No snow and I keep the deposit... The only time this occurs is if someone has hired me to cover them for a week or two during the winter when someone needs to get into their house to walk the dog, and they want things safe for them...

    I like a good mix of per event and seasonal... Give me the incentive to want it to snow, and safety of against a lean year...

    All customers are under contract. I do take flag downs, but rarely will I accept a day of phone call job... (just not willing to deviate from my route, no time, no need...)
  17. jomama45

    jomama45 PlowSite.com Addict
    Messages: 1,190

    Same thoughts here as well. Same region of course, but where I'm at, it's far more conservitive & customers tend to have a harder time grasping new concepts like this in my experience.

    Example: A few (maybe 8-10 years ago now) years ago, two very local competitors tried doing this, charging for 1 event per month for 4 months of teh winter. The problem is that there were 4 good sized competitors in this local area (all got along well, freindly competition) and the first 2 did all of the legwork themselves & first introduced the concept to the other 2 late in the fall. The second 2 didn't care for the concept, fearing it would jeopordize their relationship with long term clients. The first 2 ended up instituting the deal for 2 years & lost alot of work in doing so before getting rid of it. It never paid off for them, actually hurt them in the short & long term. Had they gotten the other 2 cont. invovlved at the early stages, it may have seen some success. The major problem they faced was a dry month following a busy month with say 8-12 plow/salt events. The customers have a hard time understanding why you cant waive the fee in this case.

    Don't get me wrong buckwheat, IMO it's a good idea if your market will bear. It's good for the contractor for sure. The only other downside I can see when approaching the comm./indus. side though is it can come across as if your company can't successfully budget on it's own.
  18. eshskis

    eshskis Senior Member
    from 4
    Messages: 138

    If their is no work for me you will pay me anyway? Thats like me leaving on vacation for a few months and not using any heating oil but yet I get a 100.00 bill from my oil company anyway.

    100.00 no snow monthly retainer fee, I would F-in tell you to go pound sand get off my land before I beat your azz. A friggen 100.00 no snow monthly retainer bill for No Snow? ok so WHAT exactly are they retaining for that 100.00, If their is no snow then who exactly would be taking their spot on your route. This kind of left wing sense of entitlement pisses me off, This my friend is called 2 things Self - Entitlement and welfare for the self employed. In other words, I am NOT going to do anything for you but I am taking your money anyways. You want steady income buddy? sign your customers up on seasonal contracts where they pay X amount each month.
  19. eshskis

    eshskis Senior Member
    from 4
    Messages: 138

    This got me going, Someone else hear put a happy face on this self rightious sence of entitled theivery by calling it "A Monthly Ready Fee" I, f-in soiled myself laughing, Ok Im ready and so is your check come over and get it, and while you are hear grab that bottle of Windex and that roll of paper towell and do my windows, and as you walk by it change that litter in the cat box. Your check is on the kitchen table, but don't forget to do the floors on your way out. If I am going to give you a 100.00 your going to do something for it your not going to sit on your fat azz and download porn all day checking the mail box for your "ready" check like some fat azzed welfare babymaker....
  20. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    How long have you been in buisness??? lmao, you are not to bright are you?:laughing:

    :dizzy:Wow, it is time to read all the posts, and if you are having a problem reading them, (due to lack of education) get someone to help you, or if you can afford it, go to buisness school, get a education and come back when you have a grasp of what you are talking about.

    (NOT that i think you are able to figure this out) BUT, ok, a retainer fee isn't free money
    D!P SH!T it is prepayment on service in later months, and it is a common thing, (hope you never have to use a lawyer, they require retainers) , also one of the largest institutions in the world (insurance programs) are essentially a retainer system. A retainer fee is there so that both contractors (who need a monthly income) and contractees (who need to know contractors are there for them) have a way of spreading out the work and costs from month to month. Think of it as a minimum charge on a account, with the overpayment being carried forward and applied to months that you work OVER the minimum costs. with the only FREE MONEY happening IF they don't incure service on the last month of the contract and that doesn't happen very often, but when it does I usually include a extra service of some kind to balance it out (parking lot sweeping, or a fertilizer for the lawn) etc

    NOW if you are talking a service fee, (which is what i think you have confused a retainer for) that is a different story, that is a monthly fee that is paid by customers to their contractors, usually in exchange for a cheaper hourly rate/price, imagine you have the option to pay $100/hour for service, BUT, if you want to pay a $100 service fee/month weither you need service or not, and that $100/hour changes to $60/hour, or you could tier it like this

    no service fee = $100/hour
    $100 service fee = $90/hour
    $200 service fee = $65/hour

    esentially you are buying a discount on your hourly service, so if you are expecting lots of snow, then it is beneficial to the contractee, and the contractor gets a steady income.

    Go back to school, get a education, get a clue, start a buisness, then come back here when you better armed because right now you are bringing a q-tip to a gun fight.:gunsfiring:
    Last edited: Jan 3, 2010