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How do you guys contract your accounts?

Discussion in 'Commercial Snow Removal' started by Pjslawncare1, Sep 21, 2008.

  1. Pjslawncare1

    Pjslawncare1 Member
    Messages: 38

    Just wondering what you guys do as far as contract pricing....Most of my driveways are $35 per push but I was wondering if you guys charge a 2 push/month minimum meaning no matter what I would get $70 on one account....or if you just do it by the push.....also wondering if there's something different that you would do with a condo complex...

  2. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,362

    I have a $225 / month minimum for 6 months.

    I know alot of guys around here are charging somewhere between $30 and $50 per unit, per month.

    100 unit townhome complex would between $3,000 and $5,000 per month, depending on where to stack snow, how many miles of roads, etc.
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    You could work out a seasonal contract.
  4. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    I've never heard of charging a minimum monthly charge for per-push accounts. That would be like a hybrid of a per-push and seasonal billing, you're basically taking the most advantageous part of each type of contract and leaving the customer with 100% of the risk. So if it doesn't snow you get paid, and if it does snow you get paid even more.

    If people sign up for it, then more power to you. But if you're looking for a lot of customers then maybe you should go with a more typical pricing plan, that's more competitive. If you want to assume as little risk as possible just mix up your accounts evenly between seasonal, and per-push.

    If someone approached me for an estimate and told me they were currently signed up for that type of plan that you mentioned, i'd explain to them what i just explained to you, and i'd probably walk away with a new account.

    This reminds me of another post from a while back that QuadPlower posted. He basically did the same thing, but he did a deposit type payment for per-push accounts, which was non-refundable. Essentially it was a minumum charge deal. He ended up getting sued.

    The more complicated a billing system the better the chance people will think they're getting screwed, whether they are or not.

    Edit: and if every customer pre-pays for 2 plows a month, and it only snows once in X month. Then wouldn't you start getting flooded with calls near the end of the month to 'clean-up' or something? people will want to get the plow they paid for even if they only remotely could use it. What do you say to those people? "Sorry that plow you already paid for is only good on days it actually snows, even if there is snow in your driveway".....
    Last edited: Sep 22, 2008
  5. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,362

    With the bold faced line... there's been some talk with other threads about a hybrid.

    I've actually started to give a 3rd option using this hybrid as far as new bids.

    I take my price that I would charge hourly, and drop it 40%.

    I take my monthly price that I would charge, and cut it in 1/2.

    The numbers I show are just round, easy numbers to use, not what I charge, nor implying what you should charge.

    Say I have an account that would take an hour and I charge $100 per hour, so $100 per push.

    For the per push price, I would charge $100. For the seasonal, with the amounts of snow that we get, I would charge $300 for 6 months, from November through April.

    Now for the hybrid bid, I would charge $150 per month, and then $60 for each push. This way I can have some bankroll to make payments if it doesn't snow, yet make enough on each push so I can cover wages / subs / expenses.

    You cannot sell your snowplowing as a service. People expect to be able to call a service when they need it, such as a plumber, HVAC, electrician, etc.

    You have to sell snowplowing as a sort of insurance plan. You have to tell your customer that you have to be on call all winter. You cannot get another job, if you've got enough work, because you'll never be able to get it done in time.

    You have to tell them that it's no different than making an insurance payment, that insurance is only expensive until you have to use it. Their monthly payment insures that you're sitting at the ready, plowing EVERY time.
  6. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    The per hour/per push/per month/annual debate will never end. What I do, and what I find works best for me is 70% of my accounts are per push or per hour and the other 30% are annual. I try to maintain the 70/30 ratio as much as possible and here is why:

    I live in an area where we might go out 5 times a winter, or we might go out 50 times a winter. If its a bad winter and we only plow a few times my 30% annual contracts bring in enough money to keep the lights on, pay the mortgage...etc.

    If we get a good winter like last year I am making so much money off the other 70% that the money lost on the annuals doesn't really matter. And by "money lost" I mean lost compared to if they were per push or per hour. Even last year, the second most snowfall on record, I still ended up making money on my annual accounts and didn't actually lose money.

    So I guess my per push accounts are my money makers and my annuals are my insurance policy if there is a bad winter.

    I hate the annuals cuz they are calling for salt before the second flake hits the ground, but they are worth it. Like I said, this system works for me, others might not like it, the thing is to do whats best for you.
  7. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    LwnmwrMan22, I understand what you're saying, but the only plow contract that can be compared to an insurance policy is a seasonal IMO.

    The cost people pay me to be put on my list is their signed contract for the whole season.

    I can't think of a single thing i've signed up for that costs me a fee up front for simply being on call. I can just imagine my oil co. charging me a fee to bring me heating oil.... lol.

    "Well the oil is $X.XX a gallon, but we have a $100 fee a year for being on call for when you need oil."
    (Me:) "What?!"
    (Them:) "Well we have to be on call all winter. We cannot get another job, because we'll never be able to get here in time if you run out.".... "it's no different than making an insurance payment, insurance is only expensive until you have to use it. Your monthly payment insures that we're sitting at the ready with heating oil whenever you need it."
    (Me:) "*&##@(*&(*&$#(*&$#(*$#(*&$##@(*$"
  8. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    If you look at your electric bill it has a charge per month even if you use none
  9. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    That fact is that I sold my customers 10 plowing for the price of 11. I plowed them with a 2" trigger. The customer changed when they wanted me to show up and 7 months after the fact they wanted their money back. Do you remember what the judgement was? Oh yea. I was right and I won!

    Of course you never did answer my posts asking what you did with seasonal contracts if there was less than normal snow fall in a season. I just assume since you are a saint among snow plowers you would get your calculator out and figure out what you should write the check back to the customer for. And if there was more than average snow falls for the season, you bite the bullet and not charge extra.

    LwnmwrMan22, the reason he hasn't heard of anyone else doing it is because he hasn't been here since June.

    I still think that the pre-pay for a certian number is the best way to go. If your area has 20 snow falls, sell them 10 at the begining of the season. Then depending on when they use those up, either sell 10 more or go per time.

    Benefits: This allows you to get money up front to cover costs. The customer gets a free plowing (or some kind of discount). You get paid every time you plow (up front). Customer doesn't have to write a check every time it snows. If it doesn't snow, you still got something and the customer didn't pay for a Seasonal Contract, which would be higher. If it does snow a bunch, then you ask if they what to buy 10 more (or however many you want to sell) or go on a per push rate. It really is win win.
  10. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,362

    I sell just about all my accounts on a seasonal price, 18 times / season.

    Couple of years ago, we plowed 7 times, with the first being in February. I got paid for November, December and January.

    You know what?? All my customers signed up again the following year. They know my service and they know it costs money for it.

    Although, I did go around in the spring and topdress everyone's mulch for no charge, seeing as they all paid me $1200 each for 3 months of snowplowing and I didn't do anything for it.
  11. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    If you locked in a price for your heating oil for the season, like I did with my propane, they charge a fee to do that. Has to do with paper work more than being "on call", but they still charge for it.

    I bet you paid a cell phone bill this month and did not use exactly all of you minutes. That is the price for that phone being "on call"

    Your home phone number might have a 911 fee. That is to help pay for that service to be "on call"

    You may not sign up for it, but the snow plow mechanic at the local dealer charges more for 3:00a.m. repairs than they do for a drop off lawn mower in the summer.

    I just named 4 things that charge for being "on call"

    Anyone else pay a fee for something to be there when you need it?
  12. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    LwnmwrMan, It sounds great if it works for you. Especially if your customers like it.

    QuadPlower, none of those are great examples, although i don't doubt you could probably think of one.
    The first thing that i came to my mind was my BJ's wholesale club membership.. Federal taxes like the 911 fee i guess work too.

    The plow dealer is good though. That's sorta my point. You should be able to include the 'price of doing business' surcharge into the plowing price, like everyone else in business does.
  13. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    and i think you quoted me out of context. I wasn't taking a shot at you. It just seems to me that you got sued because you customer didn't understand what they were getting into because your billing system may be excessively complicated.

    One day one of my customers called and was confused about my billing system. She was being charged per push, and had balance of one push. On the bottom of each check she wrote what plows she was paying for. Well she wanted to know which plow she hadn't paid for and i had to explain to her that i had no idea which plow she hadn't paid for because my billing software just showed a balance of one push. Took me close to 30 minutes to figure out exactly which plow she didn't pay for, and i still don't think she was fully satisfied, although she appreciated the time i spent talking to her. That was per push!
  14. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    Sounds like she is a headache no matter how you would bill her

    and actually a seasonal would be probably be easier for her its just X per month
  15. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,362

    No offense cjason, but you should be entering the check number in line with the invoice that was being paid. That way you could have instantly looked to see which invoice was still outstanding, rather than just click on "receive payment" or whatever invoicing program you have.

    I've run Peachtree, Quickbooks and Microsoft Money, and they all have the option of entering a check number when you apply payment to an outstanding invoice.

    I agree with crete, use the seasonal, then they can only argue which month didn't they pay for......:rolleyes: