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My pricing thoughts.

Discussion in 'Commercial Snow Removal' started by glenspot, Sep 1, 2004.

  1. glenspot

    glenspot Senior Member
    Messages: 255

    I am just starting out, so I am trying very hard to build a customer base. Here is what I am doing.

    There are several small communities where I live. In Ramsay, there are 230 households. I am sending a nice postcard to them ALL next week. (costing around $70) If I can snag 10 - 15 people out of 230. Thats, what? 5% return. Not TOO much to expect I don't think.

    I am offering a 6am guarantee to the first batch I sign up. Research seems to indicate that plow guys around here are charging somewhere in the neighbrohood of $5 per push. (short, residential-type pushes) So, I am offering approx the same amount, maybe $5 less than what I think they would offer. Most of them had a 2" trigger.

    As an option, though, I am giving customers the option to pay a flat monthly fee. So, say, that drive way that costs them $25 per occurance last year, could cost him $150 a month this year. Some months they would make a killing, some months I would. Winters here can start in September and last into April or May. The flat monthly fee would mean that I don't charge them every time I have to drop the blade. They are paying for a season-long service. I don't want them to DREAD the sight of me. I want them to rejoice when they see me. To be happy that they hired the RIGHT GUY to do their snow. Also, with the flat fee system I know what my income will be. Even if we have a TERRIBLE winter I can count my chickens before they hatch.

    If they insist on paying per occurance then they are not gauranteed a 6am clean-out, and they pay every time I need to come back. So, if I need to come back 3 times in one day. They will be paying $75 for one day.

    Our winters here are ALWAYS over 200 inches of snow, and often over 300-inches of snow.

    Service is the other feature I want to offer. We have an older population here. But most plow guys just PLOW, then the old lady has to hire someone else to shovel. I plan on keeping the snowblower in the truck and clearing a path for them. (For an added fee) A couple swipes with the snow blower won't take extremely long, and hopefully will make the difference betwen "them and me".

    Thats my basic, FIRST YEAR stradegy. I will, no doubt, change it for my second year. But my thought is this: SOMEONE did their snow last year. They are going to need a good reason to change, and hire someone with no reference, and no history. If the reason is price, or service or whatever. I need to build that customer base the first year.

    I'd like to hear the thoughts of the seasoned pro's. And like I said, remember its my first year. So, think back to when you just started out. One truck, one guy, wife and kids at home. :) Eventually I want to give up my day job and run Pavlovich Property Care as a full time operator. I offer lawn care, cleaning service, rental caretaker service, and snowplowing blowing and shoveling.

    Last edited: Sep 1, 2004
  2. Mick

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

    Glen, I really think you're headed for a disaster. I'm not sure what you mean by "plow guys around here are charging somewhere in the neighbrohood of $5 per push", then "I am offering approx the same amount, maybe $5 less than what I think they would offer" then "that drive way that costs them $25 per occurance last year, could cost him $150 a month this year". With a 2" trigger, do you intend to push every 2"? Nobody is going to go for that. You are offering a 6AM "guarantee" but what exactly are you guaranteeing? That you will have it plowed by 6AM? That there will be less than 2" of snow at 6AM? How are you going to do either for, say, 20 driveways if it's snowing even 1" per hour (and that's not snowing hard). Now consider your seasonal pricing. Going with your example of a $25 drive being charged $150 per month is unrealistic. That would mean at least six pushes per month for the whole snow season (5 months would be 30 pushes). As an example, consider that I'm from Maine (we get some snow). I base my seasonals on 12 pushes per season for with a 3" trigger.

    Also, it appears you intend to be a "lowballer". This is bad. Somebody once said something like "In any service industry, there are three factors to consider - cheap, good and fast, pick two". You cannot have all three. You may get all kinds of business based on offering low prices, but you will not be able to keep up the level of service which lead to a good reputation and repeat business. When I give people a price, I often hear "That's kind of high". I say "Yes, and I try to be worth it". It pays off - just yesterday I got a call from a referral I've never met and doesn't know me other than what a current customer told him. When I gave him a price (which I don't usually do over the phone, but I know this road well - I've done it for the past two years), he said he'd "talk to his wife and get back with me". I told him I expected that he'd be talking to other plow guys when he interrupted me and said "No, it's either you or I'm buying a plow". He went on to explain that I had the reputation for reliability over any other guys. You just can't buy advertising like that.

    My suggestion would be to concentrate on the mechanics and technical aspects of plowing the first year. Plow on a "per push" basis. Forget seasonals, deals and any other pricing strategies until you've got some experience. Don't get locked into anything. Remember that it's very hard to overcome bad "word of mouth", especially in a small town and even more so for the sole operator.

    Good luck.
  3. glenspot

    glenspot Senior Member
    Messages: 255

    ok...i think i follow you.

    When i say "$5 per push"...what i mean is. If it will (in a perfect situtation) take 2 swipes of the plow to clear their drive way. Then its a $10 drive way. If it takes 4 then its a $20 driveway. So, if i think that their plow company charged them $25 per plow last year, I would quote them either $20 per plow, or to set up a month figure to agree on.

    There is a very good possibility in our area that you may need to plow driveways several times a day to keep them cleared. Obviously it doesn't snow EVERY day. But when we do get a lake effect storm, we may have 7" of snow by early morning. Then the same driveways that were plowed early this morning will need to be plowed again in the afternoon because another 3 - 4 inches of snow fell. If the customers arrangement was that it was $20 to plow their drive way...and the plow had to do it twice in one day--that day would cost them $40. Its not completely uncommon to have a driveway plowed 10 times or more in a month here. (Our community is nicknamed "Big Snow Country"). (Visit our Convention and Visitor's Beuarau) Once I had a plow company plowing my driveway for $10 per plow. Several months cost over $100 on a per occurance basis.

    We get so much snow that by mid-season most parking lots need to have a front-end loader and dump truck come in move the snow out.

    Here is an example of April of 2002


    Ski hills were still open and more snow came that year.

    I don't want to be the low-baller. I need a stradegy to get an "in". Like I tried to say before. All of these home-owners had SOMEONE do their driveway last year. They will need a REASON to change their plowing company. If at first I am the less expensive option, and that's their reason. Then, I guess I'm ok with that. Know what I mean? Once I have an established customer base, a good reputation and am actually making a few dollars, then I can adjust my prices.

    My Gaurantee, basically will consist of "If your drive way is not cleared by 6am, you don't pay".

    I appreciate this feedback, though. I want as much as I can get. If I'm screwed up and thinking backward..then I stil have time to change my first year stradegy.

    Last edited: Sep 1, 2004
  4. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    Honestly, the best "in" you can get is a couple of magnetic signs that read "SNowplower for hire. Competitive rates, blah, bllah, blah." and include you CELL PHONE number. Start driving around with the signs around the beginning of September. Believe me when I say you will get calls. That is how I started out. Also, place flyers with pull tabs in your local grocery stores or libraries. People need to shop and read books.

    Is this your first year plowing? Do you have a back-up vehicle? If it's your first year plowing commercially than don't bite off more than you can chew. That is the #1 mistake made by rookie plowers (and seasoned plowers alike). Make certain you have a back-up plan in case your truck takes a dump. You may be a great mechanic but what if your engine gets too hot you burn a hole in a piston or toast your tranny? That takes time to fix.

    I have never heard of a 'per push' base being every time you drop the blade and drive forward. Not to say it doesn't exist. I just never heard of it. To me, that seems like a lot of work to try to figure out how to bill. It also makes it easy for customers to say "I was watching you and you took 4 passes and charged me for 5". Unless you arfe using this system to get an average cost to do a driveway and plan on charging $25.00 for a drive that SHOULD take about 5 swipes.

    I would nix the postcard idea. It's great to get your name out but I would spend that money on a more permanent type of advertising like magnetic signs to put on your truck.
  5. glenspot

    glenspot Senior Member
    Messages: 255

    Magnetic Signs, Too

    I'm getting magnetic signs too, and doing radio station advertising.

    I have a trade arrangment worked out with the radio station. I took care of their lawn this summer and will do their plowing this winter. In exchange for advertising.

    Again....its a small town. Folks in big cities might scoff at the radio idea, but here it would work like a dream...and is AMAZINGLY affordable.

  6. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    And do you have a backup truck? Do you have a day job that could make for a lot of long days and nights?
  7. SCSIndust

    SCSIndust Senior Member
    Messages: 280

    It seems to me that your over planning your self. Maybe over thinking would be a better phrase. You have high hopes (which is good), but as they say, don't go to the grocery store with an empty stomach. If you've never done this before, you probably don't know exactly what to expect. As said before, what would happen if you get tons of residentials, and your truck craps out?? I have another contractor I work for periodically who can help me out if I get in a bind, and I do the same for him. I only have 4 years under my belt, but in those 4 years, I have made my snow income over 50% of my yearly revenue, as I run a Lawn Care biz between winters... Anyway, don't overdo yourself this year. I would grab a few residentials, and maybe try to sub for someone else. It makes more sense to learn from someone else. Then you have just made a new contact, too. Understand?

    As for pricing, save yourself the trouble and go with a per push, meaning a flat rate evertime you plow the driveway. Not literally per push. Everything you plow their drive, $xxx. Keep it simple!!

    Laslty, what happens if it snows while you are at your regualr job? Also, what happens if you plow all night,and go to work . Aren't you going to be tired?

    Just some thoughts. I hope you understand that everyone on here will have an opinion, and 99% of the time, your best bet would be to listen, and heed their advice.
  8. Mick

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

    Radio? Post cards? Are you ready to travel 10-20 miles to do one driveway?

    Seriously, I would advise you to forget all that; at the most get the magnetic signs with a company name, home phone and cell phone. Maybe take out an ad in the local shopper. Forget any guarantee. Have a plan for a backup, like was mentioned.

    Think about what you're doing by lowballing. You're getting customers, but are they the customers you want? They got you on price, even you are saying that. This type will nickel and dime you to death. If you try to collect when you plow, they'll have a hundred reason they can't pay at the time; including that they're asleep or not there. Then you'll spend a fortune chasing your money or billing at the end of the month. You'll still spend a fortune chasing your money and be here asking how you collect from deadbeats. Then, next year when you've got your "customer base" and raise rates a little, they'll go with the next guy to offer a low-low rate. It happens all the time and all over the country. As far as big vs small towns, I'm from one of the smallest towns you'll ever see - three businesses and a Post Office.

    I'd like to hear from anyone else about this "per push" billing as you're describing. How would you charge for some of the private roads I do? Pull in, put the blade down and push for a mile or so. Even my driveway couldn't be described in pushes. Again, I think you need to spend the first year learning the technical and procedural aspects. And learn the terminology ("per push" is explained and the blade is a "moldboard"). At least the Per Push needs to mean the same to anyone on Plow Site, regardless of where they are from.

    I know I've said it before, but the first year will set your reputation and the tone for your business future.

    I am curious - have you ever been on Plow Site before under a different screen name?
  9. PSDF350

    PSDF350 Senior Member
    Messages: 577

    small towns

    Mick i think i have you beat :) my town has a winchester (west) zip/phone but my kids go to school in fitzwilliam (east) :dizzy: but we do have town offices 2 police volenteer fire thats it.
  10. glenspot

    glenspot Senior Member
    Messages: 255

    I asked for it... :)

    First, no. I have never posted under a different name. I've lurked on the board for a while, but have just started posting recently.

    You're right...my terminology is probably off. I used the term "per push" incorrectly, apparently. Sorry about that. I was trying to come up with some sort of a system for knowing what to charge the clients. Some sort of system...rather than just pull a figure out of my head, you know? I don't share that logic with the customer....just somethign I do. SO, In my mind I have a reason that I would charge one customer $25 and another $35, and another $100.

    The postcards are perfect for my situation. Like I said, the town of Ramsay has 230 houses in it. All in one basic neighborhood. Like you said, there is a post office, two bars and the town hall. Thats all thats downtown. Ideally, I will get the majority of my business from the people there. (All within a few blocks from one another). If I can get 10 people out of those 230 houses. I think I am doing well.

    If spending some time advertising on radio gets me just 2 or 3 commercial lots. It will more than pay for itself. Epecially for the other aspects of the Property Care. (Cleaning services, Rental Caretaker, etc)

    My backup plan is a prayer! LOL. I recognise the need for one, but honestly right now I don't have a good one. I am going to make sure that everything is in good repair before the season starts, and--acting on the advice of those given here--see if I can work out a deal with someone to use one of his trucks in case of emergency.

    And so far as low-balling. Like I said. I don't WANT to be the least expensive plower out there. I really don't. Just trying to find my way into a very full market.

    In regards to my experience, etc. It has been some time since I plowed. But I have done a lot of actual plowing before. At one time I owned a house with a very long driveway and did all my plowing myself. I sold that plowtruck with the house, and haven't done it since. Now, I want to plow for hire.

    In regards to my "real" job vs my Property Care business. If it ends up being a small-part time thing. Where I only have 5 clients. Then, thats fine. But I WANT my property care business become my primary concern. I intend on giving up my day job sooner or later.

    Again, I really appreciate the input from everyone. I am slightly more discouraged now than I was this morning. But like someone said here. All of this is simply "advice". I am going ahead with this full speed. I'm taking all of this advice seriously and considering each point of view.
  11. Mick

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

    PSD350, I think maybe a tie :drinkup: , we don't have any police. We have a grade school, but have to ship kids, after that, to a private academy or Augusta (about 30 miles). Either option is common and the town pays a set rate for the academy. We, too, have a town office and a volunteer FD.
  12. Bolts Indus.

    Bolts Indus. PlowSite.com Addict
    Messages: 1,176

    I have to agree with Mick. The worst way to start off
    your business is by offering low prices. All you will be doing is attracting the LOWEST price will do customer. You will never be able to get those prices up on those customers because as soon as you do they will jump to the next low price. We are all selling the same service / product so how is it some do very well and some not. I shall refer to what an older wiser man taught me when I was young and starting my first business.

    He said, Son, At the end of the day it is not your price that will be the deciding factor if they go with you or with someone else. You are the most important factor. They either feel comfortable going with you or they dont. You may even have a higher price but if they feel comfortable with you they will even pay a LITTLE more.

    In short, when offering the same product as others.

    Sell YOURSELF :waving: not the product. This philosophy has to this day never let me down. Damm. Now everybody knows my edge. I guess I'm not the wise man he was or I would have kept my mouth shut. :gunsfiring:
  13. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174


    We don't mean to discourage you. In fact, I am certain most of us would applause your enthusiasm. No one can tell you how to run your business here. Just make sure you are taking in all the 'advice' you can. If you plan on going all out the way it seems, you should definitely have a second truck in case of emergency. You could even hire out a driver for that truck and lessen the work load on yourself and at the same time increasing your exposure.

    Let's say you get 20 driveways at an average of 15 minutes (Driveways ALWAYS take longer than you think). That's 4 hours of plowing and drive time before 6:00a.m. Not to mention any commercial lots you are hoping for. What if it doesn't stop snowing until 5:00a.m.?

    Ny advice to you is nix the radio and keep the postcards. If you are dead set on the radio than make your ads appear the night before a storm and/or the morning after. Your rates should always go up just after a storm if only by $5.00 or $10.00 and you can then offer than a reduced rate by signing a contract for the rest of the year.

    In short, don't spreasd yourself too thin as to create a negative image to your potential customers.
  14. SCSIndust

    SCSIndust Senior Member
    Messages: 280

    Seriously, we aren't here to discourage you. After all, you did post, so you have to expect everyone's two cents. Around here everyone's two cents are worth so much more! You may be dead set on what you want to do, and only you know what your area is like. But, we have all been in your shoes, and learned from our mistakes. The great thing is, we have a place to help others not make those same mistakes.

    I can understand that buying a backup truck may be a little out there, but you should have some backup plan. It might be as simple as buying an extra blade and an extra pump motor. Or hookup with a fellow plower. Either way, have something.

    As for your plowing experience, at least you know how to work a plow, but if all you did was your drive way before, you have a lot to learn! There are many different techniques to plowing. The key is to get it done, and get it done fast. Driveways are so different than commercials.

    I second everyone else in saying not to low ball. A lot of contractors in my area don't shovel sidewalks. I don't know why, but they don't. Anyway, sidewalks are one of my best selling points. I have competitive rates, do good work, and show up when I'm supposed to. Too bad everyone else has the same philosophy. :rolleyes: Low pricing will always screw you in the end. As said before, you'll never be able to raise your rates to be competitive, because your customers went with you because of your low prices.

    Take it for what it is worth. We are here to help. Keep your head up!!!
  15. glenspot

    glenspot Senior Member
    Messages: 255

    I'm still committed...

    I appreciate everyones and ALL of your suggestions. I've walked away from this conversation somewhat more realistic, maybe. At least concerned about things I hadn't completley thought of before.

    My postcards go out next tuesday (you'll love this....my post office is so small, they don't stock enough post-card stamps, and have to special order 230 post-card stamps. but they only order once a month, so I have to wait until next week....small town)

    If you are interested, I will try to keep everyone somewhat posted on how things transpire.

  16. SCSIndust

    SCSIndust Senior Member
    Messages: 280

    Let us know! Good luck!!
  17. Mick

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

    Second (third or fourth) on the not wanting to discourage you. I only started four years ago and had never even sat in a truck with a plow on it before. The one thing that helped me in so many ways I couldn't even count was Plow Site members (some of whom are no longer here) and SIMA (do a "search"). One very expensive mistake I avoided was buying a one ton truck for the sander. I found a fairly new quad cab that I really, really wanted. What I hadn't thought about was how long it was going to be with a sander and how hard to manuver in the driveways and small lots I do. I kept looking and found a nice regular cab for about $6,000 less.

    But the bottom line is this - It's your business and you are the one who has to put out the money, do the work and get paid. Everyone can give you advise but at the end of the day, it's up to you.

    (edit) Sure, let us know. That's what we do around here. Sometimes one of us needs encouragement or just someone to tell a funny (or not so funny) experience.
    Last edited: Sep 1, 2004
  18. cja1987

    cja1987 PlowSite.com Addict
    Messages: 1,407

    This is only my third year plowing, as you know physically running the plow is easy. The hardest part is dealing with all the aspects of running a business. When i first got my liscense i started plowing about 20 driveways most of which were customers that i knew for years before. Some would pay me but id have them give me what ever they felt like giving me and 99% of the time it was a fair price. Others paid me in other ways besides money. Halfway through my first year we had tons of snow and all kinds of people wanted me to plow for them and became regular customers who i had not known before. I was completely lost on how to charge them and keep track of their payments or when to charge them, way too much crap for me to deal with my first year. It took me all of last year to really get a good scheduel down and get good at keeping track of things. I would start as small as possible because i know that i went crazy my first year. I try to keep my customers as steady as possible its been 37 regulars since the beginning of last year and i don't want to change that at all, they are all very close to eachother. Talk to someother plowers and ask what they are charging in your area, its one thing to charge a few bucks less but i would try not to make that my only sales pitch. The guarenteed plow by 6am would work great in a perfect world but nothing ever goes right. Also too much room for debate between you and the customer as to weather it snowed before or after 6 am. As far as the back up goes, another truck is nice and you won't loose any money on paying a back up driver if your truck goes down. I have a guy who owns a landscaping company do my drives if something should happen. Usually id just let him take whatever money comes from the storm. However i don't operate a large business and i don't completely rely on it as at least for a few more years my parents pay for the roof over my head. the guy has never plowed my route ive always been around to do it. He has helped me in big storms before so he does know the route a little. I will be putting a plow on a 98 jeep cherokee that my brother just got so i will have a back up from now on. Good Luck!
  19. Grn Mtn

    Grn Mtn PlowSite.com Addict
    Messages: 1,644

    my 2 cents if anyone is still listening...

    I've owned my own landscape business since 2000, after watching a buddy plow for a bunch of years and finely owning a 3/4 ton truck, I jumped in last year for the first time.
    I put out 400 flyer's and landed 10, then I subbed 25 more. I was payed $5 per for the subs and I charged $10-$15 for my own.
    The good thing about subbing is you don't have any time invested in advertising or staking out the driveway, you also get paid for your work even if the customer stiffs. The bad is it only pays $5.
    Remember gas is expensive, my Ram2500 gets 9 miles to the gallon when plowing, so keep your route tight. Most of mine took about 4-7 minutes but as January rolled on (I plowed 18 times in Jan, with 3 back-to-back plowing night/days) and the snow piled up it took longer.
    Your best plan of action should be a great CYA contract. Protect yourself, your family, don't low-ball. An old retail saying goes that you will spend 80% of your time with 20% of your customers, and the people looking for cheep will kill you, IE bad word of mouth, delinquent pay or no pay.
    My contract was for $100/10 Trips @3" and than $15/Trip @3" for the rest of the season. I started my route at 2am and finished between 6 and 7am. Of course weather permitting, I needed 3" to start.
    If you are solo, try to have new equipment. I beat the hell out of my Ram and Fisher but they didn't break and are still under warranty this season.
    I'm looking to go small commercial this year, it pays better, but its every 2" so I'm only doing a few.
    Last bit of advice, get yourself a tow rope. Its a great way to make some extra cash.
    Hope you didn't fall asleep reading this, Roald Hughes -Green Mountian Landscape
  20. North Country

    North Country Senior Member
    Messages: 141

    I just came across this thread and I am going to pitch in too.

    We also advertise on the radio and it works great for name recognition. I don't know if it directly leads to accounts but after someone hears our ad on the radio, sees something in the paper, checks the yellow pages or the web site, it all starts to click for them 'Professional'. Cross marketing is very important to us in building our business through brand image.

    Now the other side of that is we are all commercial so we are targeting a different audience than the residential companies.

    I love the idea of offering 'premium service' instead of lowering prices. We are beaten to death every year by a new bunch of lowballers, who aren't around the next season to do more damage but a new batch of them will.

    Face it, many folks can plow snow but when you offer 'Value'[There is that word!] Now you have set yourself apart. When you cut your prices you are only hurting yourself, take a realistic look at your overhead - [Advertising, Insurance, Professional fees, Truck and Equipment PM, Fuel, Materials, Tools, Office supplies, Curb time labor, Shop labor and Bookkeeping labor] for starters. Your time is money!

    So instead of not be able to pay your bills, offer a free introductory service such as walk shoveling/ de-icing, free staking or something as simple as getting out of the truck with a shovel to clean around the garage, walks, garbage cans and mailbox etc..

    When we did residential we always had a shovel guy to clean up the proerty while we plowed. Your customers will come to expect comparable service and most likely other companies will not provide it. Also it is another factor of your customers accepting a price increase the next year.

    My next to final comment - Dump the guarantee! It will come back to haunt you! The most level headed customer can turn it trash when a freebee is placed in front of them! - Just follow the Domino's pizza guy around and listen to him argue with the people at a 1.5 million dollar house who claim 'it took 32 minutes' to get their pizza! LOL

    Finally - Welcome to Plowsite, check out SIMA and Good Luck! - michael