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Paying subs annual rates

Discussion in 'Commercial Snow Removal' started by Ipushsnow, Feb 26, 2009.

  1. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    I have the opportunity to pick up another guy's customers next year, he is moving out of state. The thing is all these accounts are annual, they pay one price for the year no matter how much or how little it snows. Prices are in line with what I charge now so its all good money wise. I try to keep 30-50% of my accounts seasonal so I have no problem servicing them.

    The problem is I would have to add another truck to the fleet, something I really don't want to do right now, so I was thinking of subbing out the plowing and salting them myself. What I was thinking is if it doesn't snow too much, or even if we have an average year I would be making good money, but if it snows a lot I could end up losing money, and that is something I do not want to do. With my own accounts I don't mind plowing them in a good winter because its really only my time and a few bucks worth of gas, but if I am paying someone to do it that is kind of a different story.

    So, I was thinking of subbing them out and paying the sub the same way the contract is written, one amount regardless of how many times he has to service the lots. My question is, what do you guys think about that? I was thinking some guys would not like it for obvious reasons, but some may love the chance to have guaranteed money every month. Without getting into specifics, the amount I would pay would be more than fair for the amount of work and average number of snowfalls we get.

    Thanks in advance for the input guys!
  2. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    Something to think about, and I am not acussing you of anything, but remember what everyone on this board thinks of US Maintanence, and all the other mangement companies that are slow paying, and so forth. Subbing is much easier to do when your paying by the hour, but as a business owner, I can see the advantages of wanting to pay the same way your being paid. The problem I see is if you get an above average winter will your sub stick it out with you if he is going to lose money on the deal. Say by Jan 15th you have had enough snow that he thinks he is going to lose, will he quit, or finish out the season? Just something to think about. Good luck
  3. justme-

    justme- 2000 Club Member
    Messages: 2,138

    All I can say is I wouldn't sign up for that. Loosing money is a risk in all seasonals, which is why I avoid them like the plague.
    You have to think about who (the quality of driver) you'll get with a subbing agreement like that. If you're making a fortune doing nothing but sanding them he's loosing his shirt and may disappear mid storm.
  4. erkoehler

    erkoehler PlowSite Veteran
    Messages: 3,279

    It would all depend on how "fair" the seasonal contract was. I would consider it as a sub if it worked easily in to a route that already existed.
  5. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    What does USM and slow pay have to do with his question?

    Is there really a risk of losing money on a seasonal?

    There is just as much of a chance to make more as less


    I think it would be a excellant oppurtunity for the right sub

    You will need to find someone that can think bigger than the average guy and look at the big picture instead of wages/paycheck

    You may have to pay on a delay or retain a percentage to make sure they finish the season

    PS your driver wins 2 in a row and you change your avatar? LOL
    Last edited: Feb 26, 2009
  6. qualitycut

    qualitycut PlowSite Fanatic
    Messages: 24,231

    I do some town homes and they pay per month. I got a call about getting them subbed and gave him a bid, it works out pretty good.
  7. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    LOL Crete, I actually did that by accident, but wont change it back now that he is winning!

    As far as fair, its what I would get paid from the customer plowing. What I charge my current customers to salt is the same as I charge them to plow. So he would get half.

    I have NEVER lost money on a seasonal account, but then again I have never paid someone to plow my seasonal accounts either.

    As far as seasonal in general, I try to keep 1/3 to 1/2 of my accounts seasonal so that in lean years I can still pay the bills, In a good year I can still make a killing with the 1/2 that are per push. The guaranteed money coming is something I thought the sub might like. Last year we got 100 inches of snow, this year we will end up with around 50 which is the average. But we also have have years where we only plow 3-4 times. Its varies greatly around here.

    And the comparison to US Maintenance...I don't even get that.
  8. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    Crete, I was making the point to US Maint. as (I push) would have to make sure he had the money to pay the sub, and not wait to get paid before he pays. You know as US Maint. is known for slow pays, and so on.
    As long as he can find some one who is serious and trustworthy as a sub, I say go for it. I just think it would be hard to trust some one completly enough to do this on a seasonal contract unless he already has an outstanding repore with a sub already.