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Pricing to compete

Discussion in 'Commercial Snow Removal' started by stumper1620, Oct 23, 2005.

  1. stumper1620

    stumper1620 Senior Member
    Messages: 222

    How can you price to compete when your fuel is over a dollar more per gallon than most of the other guys?
    This fuel situation is going to make this a hard year for getting new cleints. My current line up will stay because of the job I do, But I"m getting skeptical about selling new signups with My cost being higher due to the fuel.
    This is going to be a interesting season for fuel cost. It is already close to My upper fuel cushion and is still rising daily, while unleaded is coming down per gallon, I was not forcasting a dollar a month fuel cost increase.
    We have'nt even hit the yearly heating season increase yet!
    Last edited: Oct 23, 2005
  2. parrothead

    parrothead Senior Member
    Messages: 157

    well let me try to help you out. fuel cost is not only going up for you but i doubt if your competition forsaw this coming and paid ahead for fuel. i just bid a contract and put in a fuel surcharge that goes into effect at each dollar above 3 dollars per gallon and got it. so now im protected on that account for the rest of the season. good luck but every body is dealing with this fuel problem.
  3. stumper1620

    stumper1620 Senior Member
    Messages: 222

    Where I'm seeing the problem is with residential, desiel is up to 3.50 and gas keeps dropping now down to 2.40, this is making it hard to go after residentials to fill out time after all commecials are done and more work is needed to fill the day. the current sub rate is not going to be a very profitable deal if it cost me 50% in fuel.
  4. Killswitch

    Killswitch Senior Member
    Messages: 246

    I just hope everyone adjusts their price in relationship to rising fuel costs because what the oil companies are doing is retraining us to believe that 2.50 a gallon in the midwest is a great deal.

    By comparrison....we, as contractors need to retrain our customers.

    Been in the land industry for 20 years and rising expenses always outpace rising prices for service.

    Look at Fertilizer prices. Doubled in the last ten to fifteen years. Did application rates double?

    No.....profit margins went down and employee wages and benefits suffer.

  5. Mick

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

    I have both a gas 1/2 ton Dodge with a 7.5' and a diesel one ton Chevy with a 9' and 2 yd sander. So according to your thinking I'd be way ahead to use the 1/2 ton. But I, in fact, intend to use the Chevy. Why? Because the Chevy is more productive. Considering that I actually get better mileage with the diesel while under a load, I may actually getting better mileage (or hours per gallon, however you want to figure it). I initially figured 5% of gross income was spent on fuel and even with the fuel increases I still only at about 10% for some of the accounts. I had contacted them this year offering to leave rates the same as last year as an inducement. This will be offset somewhat by new accounts which are calculated for using 5%. I also adjusted by route eliminating some accounts which were several miles away in an area I was trying to break into.

    Bottom line - if you're fuel is costing you more than 5% (10% with current prices after signing contracts), you were too low in your pricing to start with. I think this has been practically beaten to death in a few "lowballer" threads.
  6. stumper1620

    stumper1620 Senior Member
    Messages: 222

    I hear ya,
    thing is those of us running desiel are going to end up absorbing to be able to compete with gas engine plowers, they now have a pricing advantage that is hard to compensate for. this is where the reputation is gold.
    I'm not concerned with my current customer base but I'm seeing a problem on new signups, I just can't price as low as a 92 ford with a 351 when his gas is a dollar or more less expensive per gallon.
  7. stumper1620

    stumper1620 Senior Member
    Messages: 222

    I am not a lowballer by any means, I'm probably the most expensive plower around this area, My point is I have to try to beat out a few more jobs to fill out the schedule, around my area I have joe bar hopper that has a plow and takes on residentials for next to nothing, I have several of my lawn care customers that I can't touch the deals they are getting right now for plowing, If a guy is willing to plow a country drive for 15 bucks, I'm not wasting my time to try getting it. a few of these I had 25 to 30 some should be 35 to 40 in my mind. these guys I think are all in a group and they have whole roads of customers for 15 no matter what the drive is like.
    Last edited: Oct 23, 2005
  8. Mick

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

    I get those around here, too. I just don't worry about them. I'd never get those customers, anyway. Just focus on the ones you can get. Maybe take a few new customers on a per-plow basis to offset the ones you have on contracts. November is usually a good month for that as there are always people who wait to the last minute to get a plow guy and know they'll be paying a premium, despite their yelling about costing too much.
  9. The Boss

    The Boss 2000 Club Member
    Messages: 2,099

    Damn, it was $2.96 here this morning.
  10. SnowGuy73

    SnowGuy73 PlowSite Fanatic
    Messages: 24,870

    Here in Minnesota diesel is $3.31, and unleaded is $2.19....This really sucks.:mad:
  11. stumper1620

    stumper1620 Senior Member
    Messages: 222

    it was 2.89 last week, jumped thursday to 3.39, yesterday it went to 3.50
    at the same time no lead dropped to 2.40 something from around 2.60 something
  12. The Boss

    The Boss 2000 Club Member
    Messages: 2,099

    What I can't figure out is that Diesel is less expensive to make yet it's more expensive at the pump? :dizzy:
    I think Bush has been conspiring with Bin Laden again.
  13. Grisi24

    Grisi24 Senior Member
    Messages: 166


    Diesel is ranging from 2.95 - 3.09 depending on location while gas is around 2.65 - 2.75

    Still I love the better MPG with the PSD 6.0 L :redbounce :bluebounc :redbounce
  14. SnowMatt13

    SnowMatt13 PlowSite.com Addict
    Messages: 1,559

    Gas in our area +/- $2.65/gal. Diesel +/- $3.50/gal. And just think, last year people in our are were going nuts over $1.79/gal for gas:cry: That price would now be golden:rolleyes:

    SNOWBIZ Junior Member
    Messages: 6

    The spread between gas and diesel IS truly unbelievable. I saw gas today for 2.10 and I paid 3.48 for diesel. The fill up cost me 104.00, if that had been gas it would have been 63.00.....OUCH!!!
  16. Kason & Riley

    Kason & Riley Senior Member
    Messages: 122

    You ain't kid-in ouch! I fill up Saturday $95 for diesel $3.50 per gas was $2.40
  17. Eyesell

    Eyesell 2000 Club Member
    Messages: 2,107

    You want to know something really funny, my contact has a fuel surcharge clause also, based on fuel being higher then $ 1.75 a gallon. Unfortunaltely I have to re-do my contacts or just "X" that part out and put in something like $2.50 - $3.00 range :dizzy: :angry:
  18. derekbroerse

    derekbroerse 2000 Club Member
    Messages: 2,377

    Anyone care to revise their vote on whether a straight plow vehicle is better off being diesel rather than gas?
  19. The Boss

    The Boss 2000 Club Member
    Messages: 2,099

    Diesel will be back down again. I'll never go back to gas of I can help it.
  20. stumper1620

    stumper1620 Senior Member
    Messages: 222

    Same here, just bites the way it is now.