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Salting Prices

Discussion in 'Ice Management' started by danthegrassman, Apr 12, 2003.

  1. danthegrassman

    danthegrassman Member
    Messages: 31

    Ok next year i will install a salter unit on my f350 diesel because i will have the need for it. If i get a good deal over the summer i will get a used one otherwise i go for new. Now my question is how much to charge for salting rates?

    My uncle who's been in the business is charging $90/ton
    My friend charges $140/ton.

    Now i am perplexed do i charge a lower rate and make up the difference in overbilling (by that i mean billing 1.5 yards for 1 yard of salt), or do I go somewhere near the actual rate and forget having to calculate how much to charge extra?

    My cost for salt would be $68-73 per ton. I wanna double my cost but that would be $140, a figure which I whink I can lower to say $110/ton and charge a little more for salt.

    What do you guys recommend?
  2. Mick

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

    I'm not quite following here. Do you mean that you would charge for the salt, then charge for delivery/spreading? Generally, you will have one charge which is for the salt - spread. In your case, you would have a single charge of $140/ton, which I think is a good rate given your cost.
  3. digger242j

    digger242j Senior Member
    Messages: 672

    The way we do it is to check the size of the lot and figure out how much we need to treat it. (Other threads have discussed the application rates and methods needed to get good results.) Billing is done as a "per application" price. The customer is not told a quantity. That way we avoid the pitfalls of competing on a "per ton" price. Others have posted that standard practice in their neck of the woods is to overbill, just so they can make a profit. I'm glad we don't need to resort to that.

    Figure out how much you need for the amount of square feet you're bidding on and give the customer a price. If your price is in line but they object because everybody else is bidding per ton, document for them how much salt their square footage needs. Then ask why your competition is billing them for twice that amount. If the competition is being less than honest on tonnage, how else are they being less than honest?
  4. Chuck Smith

    Chuck Smith 2000 Club Member
    from NJ
    Messages: 2,317

    BINGO Dig!

    You will always make more per app, than you will per ton. This is an old topic of much debate, but I will never be convinced that you can make more per ton, than you can per app. And as Dig said, so many people admit to overbilling when billing by the ton. This statement may offend some, but I have been in this business way to long to think that those who bill by the ton do so honestly, 99% of the time. I know this is a fact.

    I guess it's the same as you can make more per push than you can hourly. If that wasn't the case, then no one would be paying subs hourly now would they? ;) This also reminds me of a property manager I met who was billed hourly for X amount of trucks on a site all winter. He noticed one of them seemed to never move. Upon closer inspection, he found that the truck he was billed for had no motor in it!

  5. danthegrassman

    danthegrassman Member
    Messages: 31

    Yes the common way of charging customers around here is to charge a rate for per appication, but events such as an ice storm may require double salting or more.

    If the salting is left up to the contractor (zero tolerance) then I would rather charge by the ton vs per application. Light dustings need only a little salt as ice storms need multiple salt applications.

    Now if salting is requested by property managers or only when a certain number of inches falls then I would be charging by the application and not the tonnage.

    Either way I would base my charge of $110/ton and add extra 1/2 ton to actually make some money on salt. I hear from many guys this is how they make the profits. Advertise a low rate for per tonnage but actually apply less and charge more.

    So the real question is would I be logical (and to a lesser extent ethical)in charging $110/ton but padding the actual tonnage usage reflect my target markup of 100% on materials?
  6. Mick

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

    In my opinion, it would be both unethical and illegal. What would you do in case you are in court testifying that you salted the account and were asked "How much salt did you apply?" This would seem a very likely scenario, if they were getting expert testimony as to whether or not you applied sufficient material for the job to avoid the injury. However, I also understand that this billing for more than was actually applied is standard practice for your area. So maybe it would be ok to tell the judge " I applied one ton, but billed the customer for 1 1/2 tons".

    If you're billing "per application" and have two applications (ie: ice storm as noted), you would simply charge for two applications.

    I just know that I bill for what I apply. I apply only what's needed for the job. One time I may bill for three times what I bill for next time on the same lot, depending on conditions. I discuss this with the customer so they understand why the discrepancy. Of course, my situation may not be comparable to yours.
    Last edited: Apr 12, 2003
  7. Mick

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

    I'm still not quite understanding one point - If you're billing "per application", how is a charge "per ton" getting in there? You would give the customer one price per application regardless of how much salt is used. So, if you base your charge on more than actually needed, wouldn't your bid be higher than your competitors'? Make more sense to just bid the area based on how much it will take on an average and a realistic price. You should get at the same figure "per application", just based on an honest way of calculating costs and profits.

    Example - the area bid will average one ton used:

    Billing by the ton:
    $140/ton - Bill $140
    $110/ton - Bill $165 (you would bill for 1 1/2 tons)
    This would vary with each application as you would use different amounts each time.

    Bidding per application: You would bid $140. There would be no additional charges. You would get $140 each time you salted whether you use 1/4 ton or two tons.
  8. danthegrassman

    danthegrassman Member
    Messages: 31

    Just to clear up things a little. I currenlty only apply salt at a select few lots by broadcast spreader. However I have picked up two large church lots and now have the demand for salting. I have been in the business for 5 years but next season will be my first for full scale salting.I really don't wan't to screw things up on salting.

    Both church lots want a per application rate. What I tell them is my rate and the approximate tonnage that I will use on a normal salting event. I also explain to them the pre-plowing salting and post-plowing salting and ice storm salting may require more salt, and is applied at my reasonable discretion.

    I want to get $140 a ton regarless on if I'm quoting per application or by tonnage. I already know that most people charge way less then that and make up the difference by overbilling or using less salt.

    Final question: Given my goal of getting $140/ton regarless of price per app or price per ton. How should I best set up my pricing structure to achieve a target of $140/ton?

    a.) just charge $140/ton and explain
    b.) charge a lower rate but charge more for plowing?
    c.) charge a lower rate and overbill (dont feel comfortable)
    d.) just charge per app and don't explain the ton rates
    e.) other suggestions.

    BTW you guys have been great in answers...Hope someday I can help a future plow guy out.
  9. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    Let's think about it this way, we own gas stations. If "I hear from many guys" in my area that they pump 10 gallons into a fuel tank but charge for 15 gallons to make a profit, does this mean I should also do that? This is basically what you are asking. How ethical does that sound to you now? Legal? not IMO.

    To answer your last question. Some events will require more salt than others. I think if you read through the threads on application rates we can say that 400 pounds per acre would cover a good average. So you measure the church lots etc. and find your rate. Now what you will find is that you need to determine a minimum charge because a 1 acre lot will only generate $28.00 at your $140.00\ton rate. Let's say one of the lots is 5 acres. Now your application rate would be $140.00 for that lot. Sometimes you will use less than a ton for that lot, and sometimes you may need a little more, but you and your customer know what that cost will be. Now if you have to salt the lot 3 times during an event, you charge them for 3 applications. Since you are salting with the storm, you may use 1500 pounds per app, but you are charging that $140.00\app each time. Now you have reached your target of $140\ton, you are being legal & ethical. Happy salting!!
  10. digger242j

    digger242j Senior Member
    Messages: 672

    Obviously, that's the one they used to spread that extra ton of salt.... :D
  11. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    LOL Digger242j,
    Now it all makes sense. We can't expect that contractor to waste gas & wear & tear by having one of it's running trucks make that extra application :rolleyes:
  12. cos

    cos Junior Member
    Messages: 28

    Now that's a good story. Can you imagine the explanation that the plow guy had to give when questioned about the truck that sat there and he paid for that didn't even move?

    Kinda reminds me of this guy....

  13. wyldman

    wyldman Member
    Messages: 3,265

    Well,I'll chime in here,as we are one of the ones who bill "per ton applied".

    If your doing small stuff,like churches,etc,then a price per application will probably work out better,and make you more money.If you have an ice storm,you bill for more applications.As long as your estimating\pricing per application is close,you should turn a good profit.

    Pricing per ton applied is only better when you get into large scale salting,and then it can be quite profitable.With this pricing structure we normally have a 1 or 2 ton minimum,as were not going to fire up a truck to salt for 1/2 a ton.Minimum charge usually depends on,location,size,how often they take salt,etc.

    Shop around for your salt,depending on where you are in Ontario,you should be able to get it for under $60.00 a ton.

    We are one of the ones who often bill for more than we apply.It's not that we want to,it just due to the market.Around here everyone prices "per ton applied".All of the property management co's expect pricing like this,and will not even consider anything else.If your out of line on pricing,you don't get the work.There are also times when we use more thant we bill for,so the customer doesn't get hosed during big events.All of the lowballers have driven the per ton apllied pricing way down,so we have no choice to do so.I would love to change this if I could,but we'd be out of business if I did.

    Just as an example,on of our largest clients,we tried to get an increase of $5 per ton applied,and they said if you do that,we'll go somewher else.They had several other qoutes for salting as low as $60 per ton applied.I tried to explain they would get hosed,as these guys are gonig to bill double the tonnage we do,but they don't care.They only look at the dollar figure per ton.

    Here in North T.O. most per ton applied rates are in the $75-110.00 range.If you can get $110.00 or more,you'll be doing well.
  14. Mick

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

    "I just know that I bill for what I apply. I apply only what's needed for the job. One time I may bill for three times what I bill for next time on the same lot, depending on conditions. I discuss this with the customer so they understand why the discrepancy. "

    As I was reading this thread, I realized I actually use a combination of "per application" and "per yard" (yard is used for sand/salt). In several cases where there are small areas and they would be fairly consistent from one time to the next, I will quote a "per application" - meant to be more of a minimum charge which equals out to 1/2 yard plus mileage charge. To charge the standard "per yard" rate would be a losing proposition. I use this usually for small, flat driveways and very small parking lots (one I sand on a fairly regular basis in approx 30'X40' and three miles off my usual route). The larger accounts will usually be bigger lots and private lanes/roads with hills. These will vary in the amount of material I use. I discuss this with the owner that I will apply material based on need. Sometimes just the hills, sometimes a light application of the whole road and sometimes a heavy application - as in treating an ice storm.

    Sorry if I mislead anyone.
  15. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    From those that charge the Per Ton method - at what point does it makes sense to charge in this manner, or when does the per application price not make sense.

    As BRL was giving the example of 400 lbs/acre - this would mean one ton would cover five acres of parking lot. If you use a 1 ton minimum charge (whether you need that much on a particular storm/application is a different matter), than you'd need a 5 acre site to justify it.

    Let's compare this to per bag pricing. From previous converstaions on this site it's been discussed that a 50 or 80 bag applied will cover approx 8,000 to 10,000 sq ft (fitting into the 250 to 400 lbs per acre also discussed as the application rate on this site) and many bill $15 to $20.00 per bag applied. I use this math to come up with pricing.

    A 40,000 sq ft lot will take 4 or 5 bags to cover - so $80.00 to $100.00 per appication. A fixed price per application then is set based on what I think I can get in that range. Take this same rate/pricing and figure one ton of material - you can get $400 to $500 per ton applied. All the better if you can apply in bulk.

    So I look at the potential of generating large dollars per ton on the smaller sites. But what can you generate on the mid sized lots? 2 to 5 acres as an example? 10 acres?

    If you charge $140 per ton applied - you'll only get the $140.00 for a 5 acre site at 400 lbs/acre. So at what point does it make sense to switch to per ton pricing? 10 acres? 15 or 20?

    I understand that on a 5 acre site - my pricing method won't be competitve - or maybe it will, I don't know. Using my numbers above it would come to $430.00 per application. I would think - gut feeling, that $225 to $300 would be more appropriate. What about when you just have to salt parking spaces from the previous day's storm or just entry/exits, etc doing only 20 to 30% of the parking lot space? Do you simply prorate for that application? When you get to large 10, 20, 50 acre sites I can see how a minimum and per ton price makes sense since you most likely will not apply to the whole site - only those areas that require it. And on a large site you'll have high and low profile areas requiring more or less attention/de-icer.

    Sorry for the long winded post - Just trying to make that transition from bagged to bulk product and from smaller to larger sites and how to determine the pricing change since I'm sure I won't get my price that i get on the smaller lots under 2.5 acres in size.
  16. wyldman

    wyldman Member
    Messages: 3,265

    It's hard to calculate "exactly" how much salt is required per sq\ft,or per acre.Depends on if your trying to just prevent icing,or burn off almost 2 inches of snow.Most of our contracts are 2" triggers,anything less is salted.If we are trying to burn off almost 2 inches of snow,in cold temps,you use a lot of salt.You would only use a little bit to prevent freeze up after plowing.Combine this,with very large properties,and you could get by with a ton or two,or have to dump 10-15 tons,to get the job done.Way too hard to try to bill per application,as the material amount varies wildly.It also depends on storm timing,and if we decide to just salt the aisles,laneways and entrances,or do the entire property.Again,the numbers can vary wildly,so billing per ton is the way to go.

    5 acres and under would probably do better with per app pricing.Anything larger,or that requires frequent salting,would benifit both parties by billing per ton applied.

    I also think it also depends on the particular market and the common practices of local contractors in your service area.Sometimes you have to go with the flow,or you get left out.
  17. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Wyldman - This makes a lot of sense. I tried a couple of times to burn down 1.0 or 1.5" of snow - not easy to do when doing it by the bag. I can see how tons will be needed at times. Not too good by the bag.

    What would you do on those sites where you have per application pricing - but you don't do a full application? Do you pro-rate? Do you determine this price before hand or just vary the price according to what labor/materials you have into it and what seems appropriate for the application.
  18. wyldman

    wyldman Member
    Messages: 3,265

    We only have a few that are per app,and we charge the same rate all the time.If you discount it then your losing money.The whole benefit of per app pricing is you make more the less you need to put down.Remember,a large portion of the per app price is you getting paid to show up.We always do a full application,just cut back on the salt,if it doesn't need much.

    If you've got a property that varies dramatically in salt usage,but isn't big enough to bill per ton,then maybe consider a flat rate application fee,and then add on the materials.You still make the same to go do it,and your extra materials are covered when you need a lot of salt.It doesn't take any longer to dump 800 lbs of salt versus 400 lbs,just your materials are higher.

    I am thinking of just rolling the salt,inclusive,into the contract price,so they don't have to worry about it.The 3-400 lbs per app,with apps only when really needed isn't worth all the hassle of billing it every month.
  19. Aspen Snow

    Aspen Snow Senior Member
    Messages: 148

    One point that comes to mind.

    If we were to charge per ton legally, (in New Jersey) we would need a certified weight ticket for each application per site. My point is that how do you know how much you have applied to each site, by the ton! That is why we charge by the application for salt on any site!(5000 sq. ft. to 10 ac.) It just makes sense to us.
  20. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    Great point Aspen! I had meant to post that also, but forgot after writing everything else I did. I don't have any way to measure a ton (or part thereof) while out salting, especially splitting a hopper full among multiple sites, so I can't say how many tons I applied at each site for billing purposes. I do make an approximate educated guess for record keeping purposes, but as Aspen posted, it would not be legal for me to charge by the ton without providing the clients with the tare sheet from a certified scale.

    So back to the discussion. I do provide a partial application rate. I factor the items that Wyldman mentions in his reason not to pro rate it, so that those issues are covered to my satisfaction. Some of my clients are billed a per bag price because I know that any partial app. at those locations will require enough bags to make it worth my efforts at $25.00\bag applied (most of those are customers I've had for years now, so I know what, when, why, & where spot salting is needed at those locations with my eyes closed). For others and new accounts I factor my price by figuring a partial app would be what it would take to salt the entrances & lane ways where vehicles aren't parked during operating hours, vs a complete app to all asphalt during the overnights. Many of these fall under the minimum, so those partial apps are priced at the minimum.

    I have a site that is 5 acres of pavement & my complete app price is $295.00. Many times I get a good app that makes safe conditions at 1500 pounds, most times in the 1800 - 2000 range & a few times this year, while melting 1-1.5 inch snows we burned through 2500 pounds or so per app.

    Last year I managed some work for another contractor on a couple of sites that were probably in the 8 -15 acre range each (I didn't measure the pavements, but that guess is based on comparing to my 5 acre lots). The salting price for those was per application. I didn't have a scale there so we estimated usage rates by the yard based on the bucket of the loader used. Sometimes we used 4-5 yards per app and sometimes 6-8 roughly. Partial apps were supposed to be charged at a pro rated price. However when the general contractor became 30 -60 days past due for paying for work at those sites I had contacted the client to see if they had payed the general. This is because the first excuse from the general was that the client hadn't payed them yet. I found out the client had payed them, and I also found out that the general billed them for complete apps when we had only done a couple of partial apps for one particular month. So the general had billed over $6,ooo to the client for around $500.00 worth of my labor & equipment charges & a few yards of salt. So even with per app pricing some contractors will make us all look bad & "ghost" applications, not just the contractors charging by the ton that do so.

    I feel bad for Wyldman & the situation that he is in. If the majority or whole customer base is ineducable about how better service can be provided to them, then it's their loss I guess.