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Retainer fees?

Discussion in 'Business Fundamentals' started by beanz27, Dec 15, 2014.

  1. beanz27

    beanz27 Senior Member
    Messages: 984

    So a few property managers asked this year about dedicating equipment, long story short, I didn't get most of the properties as I'm trying to make money, not give it away.:gunsfiring:

    Anyways it got me thinking about this for next year, for the guys that do big sites, where they require a loader dedicated to them and only them, do you guys charge a "retainer fee" or something? I don't want to be required to have a $1400 month payloader sitting on their site and have it not snow. :help:

    Not sure if I put this in the right place, MJD if it's in the wrong place feel free to move it.

    In anyone has some insight, that'd be great. Thumbs Up
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    I posted about this last season. I feel you should be able too. If that piece of equipment has to sit there someone better be paying for it, But it also depends on what type of contract you have,Is it per plow or seasonal.If it's per plow then there needs to be a minimum payment to you whether you plow or not, seasonal,you can hide it in the price.
  3. beanz27

    beanz27 Senior Member
    Messages: 984

    That's what I'm thinking, if they required it why should I have to risk it, minimum xxx. Only thing I'm torn about is do I Bill that on top of hourly or just suck up the first few hours of use then charge?

    I kind of feel that's very one sided.
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    1,000 per month plus 125 an hr or what ever you want to charge.
  5. John_DeereGreen

    John_DeereGreen 2000 Club Member
    Messages: 2,921

    I can't imagine having a property large enough to dedicate a wheel loader and not having it on seasonal terms.

    We tried retainers and it left a bad taste in a customer's mouth when they paid a retainer fee in November, we got hammered in December and they paid the retainer fee plus many per push fees, same in January and Febuary and then clear in March. A retainer to me seems similar to a seasonal with a cap...why bother?

    Our seasonal prices include anything and everything except off site removal and greater than 12 inches in 24 hours. They're paying a seasonal price, and as long as the site is maintained to their specifications, the equipment used should be none of their concern,and thus far it hasn't been.

    We're on our second year of full seasonal, and third of mostly seasonal. No desire at all to do it any other way unless it was make or break a good account on it.
  6. BMWSTUD25

    BMWSTUD25 Senior Member
    Messages: 631

    I would be interested in what others have to say as well. Can't really see it applying to me anytime soon but my thoughts are as follows;

    Retainers are needed where large amounts of equipment and resources will be dedicated to a specific property and said property wants to either pay per time, per inch, or per hour.

    As Grandview stated any seasonal account and this cost of overhead would just be buried in the seasonal price. I do understand however that in some areas its not very common to have seasonal contracts thus leaving one with no real way to help cover fixed overhead costs without the use of a retainer, thus safeguarding them and their business in light years.

    I would think that with a retainer, the hourly or per push rates would be slightly lessened since part of the cost of running a piece of equipment per hour is its fixed costs and by charging a retainer you are in essence billing for some of your fixed costs.

    Not sure how the guys that do it this way actually do it, but I would be really interested in seeing what others have to say.
  7. beanz27

    beanz27 Senior Member
    Messages: 984

    That's something I never thought of, a retainer fee with reduced hourly pricing. That sounds like something fair. I doubt anyone would go for a retainer plus full rate pricing-they'd feel like they are getting the Sh*t end of the stick, and I don't blame them. But give them a slightly reduced rate and they might like that. Then it's a win win.

    Anyone actually do something like this? I think I could sell that personally, but if anyone has any real world experience that would help.
  8. Citytow

    Citytow Senior Member
    from phila
    Messages: 548

    difficult to do , but possible to a serious qualified customer .if we turn the key on a loader its a min. 4 hr. draw at 250 @hr .draw up a contract. always have full control and final say on sitting iron .
    for example; Large paving contractors get 5k a day for a milling machine, idle or working as long as its ON SITE . these are the little known facts the small contractors dont know.

    thats how scum creeps in and can lowball ur azz out of lucrative deals. never leave coin on the table where it can be deposited .fair n square
    Last edited: Dec 16, 2014
  9. Maclawnco

    Maclawnco Senior Member
    from OH
    Messages: 695

    We do an 18 acre site that is no retainer and per ooccurrence. We sub the loader work to an excavator who brings in their machine as needed. No fees for us or client to pay, equipment is there when needed.
    Last edited: Dec 16, 2014
  10. Citytow

    Citytow Senior Member
    from phila
    Messages: 548

    pretty fun hauling a loader during a storm
  11. Maclawnco

    Maclawnco Senior Member
    from OH
    Messages: 695

    Actually it sits there most winter.

    On a persoanl note, is it hard having all the answers?
  12. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,782

    Not billing for a machine that's not working and they're the scum...lowballers:rolleyes:
    We call it being outbid...
  13. John_DeereGreen

    John_DeereGreen 2000 Club Member
    Messages: 2,921

    Boy would that be sweet...
  14. snocrete

    snocrete Banned
    Messages: 2,862

    That's typical for our area, and what seems other areas with "lower" avg snow fall. Lots of farmers & excavating/trucking companies willing to do it.
  15. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,931

    I agree, seasonal you need to assume in your bid, and of course if little or no snow, you'll still get paid your seasonal rate.

    A per push, its one thing if YOU decide its best to keep it there, or you own it or for whatever reason... BUT when THEY meaning "the company that hired you" dictates that they REQUIRE it, then they need to pay.

    Case in point, and this is why everyone signs contracts even though lots are broken...

    A company we worked for 4 years as of last year, where we handled two larger accounts for, contracted us for one of the accounts for 2013-2014. We informed them that due to the manager at the one site, we no longer were interested in handling that site, and because i knew it would get to an issue where they'd try to not pay us a ton of money.

    After the first storm, Contractor that replaced us doesn't have the right insurance, and so the company calls us back, now basically begging for us to take the account another season AND about 10% better pay across the board.

    By that point, I had EVERY machine we owned, dedicated to other sites. Being that it was close to our other accounts though for that season, AND the 10% better AND keeping a good relationship with this company, we agreed. Dec 10th 2013, we take the account. We had a TON of snow/ice and goddarn like 30+ saltings from then until January 21 2014. At that point due to this SAME manager again, claiming we didnt plow, didnt salt, claiming other sites are clear and his isnt, they terminate us at 4pm on a day it snowed 20hrs prior, from BOTH accounts, claiming failure to perform.

    We BOUGHT another $3k 10' pushbox for the rental machine we got on a 4mo lease from Deere. So $1,900/mo for the machine plus $3k out of pocket i really didn't want to do, PLUS as always we stockpile about 50 tons of salt on site.

    To make matters worse, the salt delivery messed up and brought us an additional 25tons "extra truck" delivered to this address and not the other account multiple towns away. How could i turn away rock salt? haha,

    So on Jan 21st, we're barely a month into the contract, i have a $1900/mo machine payment "so almost 8k for the 4 months', plus a push box i bought out right just for this account AND well over 50 tons of salt left onsite still.

    We tried to pull the snow stakes out that night, 530pm, hardly any would come out, it was 7-10deg F out. I said screw it, add that to their bill too then, and guess who shows up? Some company with a 95-97 Ford F150/250 pickup truck and a small tailgate salt spreader and old azz meyer plow on the front, they start scraping the lot "literally snow flake dust is flying off the plow", and then they didn't even have more than 5-6 bags of salt in the back of the truck. This was a 300k sq ft lot!

    If i did it all over again, even feeling solid about the company we're dealing with, i'd require not just a retainer, but a minimum fee of $2500/mo for the 4 month term paid monthly for the equipment, then just reduce the cost of the plowing per storm 20-35% or something to compensate when it actually snows.

    Oh yeah, the insurance for that rental was $105/mo too added to our inland marine policy.