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Average Price per Year?

Discussion in 'Commercial Snow Removal' started by plowfever, Oct 6, 2012.

  1. plowfever

    plowfever Senior Member
    Messages: 234

    Well I have been in meetings with my large factory that I have been servicing for the last 4 years. They have come to me stating that they would like to average the snow and just pay a flat rate each month. I like the idea for the simple reason I know I am going to have that income every month no matter what. My only concern is what if we get dumped on and I lose money. How do you guys bid this type of situation. I have done this for years with my lawn maintenance account but snow is so hit and miss that this is the first time in 13 years I have been ask to look into it. I just want to make sure my butt is covered and at the same time not be so expensive that they say forget it. I would love to have all my accounts on this type of payment terms but like I said snow is so hit or miss here that I am thinking it is going to be a hard sell. Any advise will help me tons!!
  2. John143

    John143 Senior Member
    from NEPA PA
    Messages: 254

    What i do in this case is give them the price that I need to make for that month with the average amount of snow fall for that month. So lets say it was 1000.00 bucks with an average snowfall amount of 10 inches. Then anything over 10 inches is this amount $250.00 per-push. Just put in the contract that over X amount of inches the price would increase to ? per inch over the months total snowfall amount or give them a per-push price.

    Hope this helps.
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Sounds like a seasonal contract.Figure out how many times you went out ,add a few to that times what your per push was,Need to have a blizzard clause just in case. Looks like they are trying to figure out their own budget
    Last edited: Oct 6, 2012
  4. plowfever

    plowfever Senior Member
    Messages: 234

    I agree it is so much easier for everybody to have a monthly contract in place. I believe they are going to include there summer lawn stuff in it also. The blizzard clause is a good idea. I figured what I would do is go back the four years and look at what the average number of events we had and then base it off that. I know in December say there payment is $8000 a month that we may only have one or two events in December here so there bill would usually not be that high. But in January and February they would make up the difference since those are the months we get the most snow. I do not want to spread there snow budget out over 12 months like we do with the lawn stuff I don't think. I am just in the beginning process so I will just crunch numbers and see what I come up with.
  5. BPS#1

    BPS#1 2000 Club Member
    Messages: 2,421

    Like the others said, take the average and put some extra event clauses in there.

    You should be fine.
  6. Maclawnco

    Maclawnco Senior Member
    from OH
    Messages: 695

    from their end, why would they pay monthly, then be subject to exceptions and surcharges? I would never sign that deal as a client. Use this seasonal amount to pay your winter overhead based on the last 4 year's averages and not a dime more (they have this same info too). Then, anything above and beyond what you expect to happen (above average years) will come from the remainder of your clients who still pay per event. There will be years where you loose and others (last year) where you win.
  7. MSS Mow

    MSS Mow Senior Member
    from Maine
    Messages: 983

    I agree. Keep it simple. Either do a seasonal contract where 100% is included or do a per event contract. Don't try to mix the two. It makes it look like you're trying to cover both ends and the middle. It's not fair to the customer.
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    My blizzard clause is if you want the piles moved that is the only extra they pay for ,and salt.
  9. goel

    goel PlowSite.com Addict
    Messages: 1,079

    I have contracts that are 1) all in and then some that are 2) all in Plowing, including x number of saltings (15 or 20 or ??) and then additional saltings above the contract number are xxx.xx per occurrence.

    This is sometimes requested for budgeting purposes. It keeps the budget figures a little lower monthly but the actual numbers are all that matters in April.
  10. plowfever

    plowfever Senior Member
    Messages: 234

    I am just going to average it out no blizzard clause except maybe for if they would want snow removed which they have never had done before. I am trying to be as honest and ethical as possible. I never want a customer to think I am trying to take advantage of them. I think the fairest and most honest way to do it is just average it out and see what happens. Some years I will make more and some years I will make less. The good thing is I run very efficient and lean and mean. I have very little overhead and I keep as small of a staff as possible. I even hire/sub out all my office work to a accountant. They do all the billing, payroll and bills. I used to hire office staff but this has worked out better for me so far. I believe it is always nice to have a outside set of eyes on things to help steer the ship if it starts to go off course.
  11. PhilFromErie

    PhilFromErie Senior Member
    Messages: 263

    Around here seasonal is seasonal.. Period. MAYBE additional charge for hauling offsite but like I said maybe. That dosent bother me, you just bid accordingly
  12. csi.northcoast

    csi.northcoast Senior Member
    Messages: 320

    Take the last four year you did them and compare the snowfall amount to your area typical or average snowfall amount. if they are in the ball park then, average out the last four years and that will be your number (remember the company bean counters also have that number so any bump they will notice). Also , i would try and get a multi-year deal so hopefully it would balance out in case you (we) get a bad winter