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Contract Work

Discussion in 'Commercial Snow Removal' started by downrigger, Jan 16, 2009.

  1. downrigger

    downrigger Junior Member
    Messages: 7

    Do any of you put provisions in commercial plow contracts specifying that exceeding a certain number of pushes or exceeding a certain number of inches in a season there will be an extra charge? Thanks for any advice on this.
  2. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    Yep, all seasonals have a cap- base it on a "real" number, average number of storms over so many years, average saltings over x years, or average snowfall totals over so many years. I walked away from a contract this year because they wanted a garunteed price no matter what for the season, couldn't do it, what if it snowed every other day and we had a record year?? Always base your price on one of the above or something like it, if you exceed whatever cap you have established go to per inch or per inch brackets and per app for salt. If you wanna make it really "fair to your clients" offer them a 15% credit on next years fees, never actually handing them money back, if you don't reach half of the average you used to build your number, this way they have an incentive to stay with you...and in these days of lowballers every little bit helps....and since you didn't provide even half the service for which you were paid it doesn't cost you a penny in the long run...........I assume you mean seasonals when you asked you question, if you meant on a per storm basis put in what I call a "blizzard clause" basically if you get over 12 inches in a single snow event they pay by the inch, starting at 0 this is a set number, I do all of mine 1-4,4-8,8-12 then this blizzard number is 12+......
    Last edited: Jan 16, 2009
  3. TCLA

    TCLA 2000 Club Member
    Messages: 2,707

    No, we don't. Our seasonal agreements are for unlimited plowing. Now we will build in extras for exceeding certain depths or snow relocation/removal, but no cap on the times it may need to be plowed for the season. Anything less would be some kind of hybrid per push agreement. I know alot of people do put caps on the amount of pushes they are willing to do for their customers.

    forestfireguy, does your insurance carrier give you refunds when you don't make a claim each year?
  4. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    You know that is a very good ? but no, we end up with the yearly audit and owing them money as we have been fortunate enough to grow each year.....Or so I hear, it's my first season with this company...That is if I understand your ? correctly, did you mean as it relates to the topic of the thread or was that a side question.........
  5. TCLA

    TCLA 2000 Club Member
    Messages: 2,707

    As it relates to the credit you issue your customers according to your statement. Do you volunteer this credit or are your customers demanding some sort of break in their seasonal plowing agreement if you only........let's say plow them only 4-5 times when the regional average may be in the 12-15 times a year range.
  6. green frog

    green frog Senior Member
    Messages: 246

    We use a max amount of plows and on the contract it states what the charge per push would be if we go over the max. We also have the cost for just moving snow and the cost for removal in the contract.
  7. downrigger

    downrigger Junior Member
    Messages: 7

    Thanks for all the feedback. The main reason I am asking is that in my area (south western ontario) I am having a lot of troubles landing contracts b/c commercial sites are wanting a "fixed cost" to attach to their budget. Not only that, I am running into other contractors that are offering up "unlimited" pushes for rediculous prices. The way I see it is, why should I pay the price and try to predict how many pushes will be required! Our weather here has been so unpredictable over the last 5-10yrs that if I base my estimate on 15 occurrences I am pricing myself out of the market. However using 10 occurrences doesn't cover my expenses for a season like the one we are having. Very frustrating! I have actually heard other contractors state that they just try and break even with ploughing and make up the difference with salting! I feel thats preposterous. Why should I plough for free?
  8. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    Wow, heads I win, tails you lose :dizzy:

    What a nice concept.

    Why would anyone sign that?

    do you give money back if it doesn't snow?
  9. downrigger

    downrigger Junior Member
    Messages: 7

    I just spoke with a local architect who used to be in the maintenence biz. This is his take on the situation, apparently big contractors would rather keep someone employed (for fear of losing a good one b/c of layoff) and their equipment operating (to make payments). This way instead of losing 10K a month b/c of idle equipment and employees sitting around drinking coffee, they are only losing 2K a month. I suppose these contractors are operating with a net loss over the winter season and making it up over spring, summer and fall. This totall *&@#'s the smaller guys like me with two trucks on the road. Losing 2K/month just isn't a viable way of doing business in my opinion. At this point I think some innovative theory is necessary which may have to include offering some sort of rebate if the snow doesn't come! Not 100% but some incentive to sign with me. I don't know but if as a small biz. owner I lost money month after month in the winter season I wouldn't be in business too long! Maybe that's a cost of being a small business. Just doesn't seem right!
  10. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    No not actually giving anything back........really it comes down to giving a discount on future service, if and only if they sign the following season, often it's a nice enticement after the first "try out" year to secure a multi year deal. And TCLA nothing is relflected accounting wise because it's not really a credit per se, it's done as a discount towards the next seasons service. I really didn't explain it properly the first post, sorry. And it's loaded to our favor, if you didn't actually provide the service-salt-labor the contract was tailored to then you are basically letting their money work for you, having not provided the actual work there was less "cost" to us than there would be if the work were performed. This is a "tough sell" push, only used when people ask for a discount or present a lower bid, these days more andf more people are shopping bottom dollar, this way they see a "back end" for themselves. And if it is an above average year it's still fair.......most companies can understand that the weather is not anyone fault or under anyones control, thus they benefit from being able to plan a budget and we are covered in case its a rough winter

    RODHALL Senior Member
    Messages: 374

    I think i said this before but....

    equipment setting still will not make you anything but can cost you. at times you have to work to break even, just to keep the equipment. truth is at times your need to work at building a relationship with the persons your working for.

    honestly i can't see how some of these contractors do not already have the equipment paid for. if you know you have 3 good seasons (spring summer and fall) and one poor season (winter) why are they not covering the 4th season in the other 3?