1. Welcome to PlowSite. Notice a fresh look and new features? It’s now easier to share photos and videos, find popular topics fast, and enjoy expanded user profiles. If you have any questions, click HELP at the top or bottom of any page, or send an email to help@plowsite.com. We welcome your feedback.

    Dismiss Notice

Whats Better? Hourly or seasanal fee?

Discussion in 'Commercial Snow Removal' started by mjmstaff, Dec 14, 2003.

  1. mjmstaff

    mjmstaff Member
    Messages: 88

    Ok guys, I need some more input. What would be the best why to charge an account? Hourly or Seasonal? I have one account that wants to pay for the whole season and I don't want to screw myself. It seems to me I would make out like a bandit or it could turn out to be a nightmare. Any advise??
  2. gpin

    gpin Senior Member
    Messages: 390

    The answer to that question is: A crystal ball. And if I had one that worked, I would stick to the lottery or the track and avoid the investment in equipment.
  3. CPSS

    CPSS Senior Member
    Messages: 334

    I won't use an hourly price schedule. There's no incentive for you to be efficient. The longer it takes you the more money you make. Thats not real good for customer relations. I use seasonal and per push pricing. A nice mix of each is the best way in my opinion. The seasonal pricing can make you money if it doesn't snow, the per push pricing can make you money if it does snow. You're covered both ways.
  4. whitetail

    whitetail Junior Member
    Messages: 22

    Pricing an account hourly requires no real understanding of the plowing business. You figure out what you want to make an hour and tell the customer, "it will cost you xx per hour". Pretty simple and easy for everyone to figure out and you should not lose money. How ever if you do get a winter that is mild or little snow you also will not make any money. If you do understand the business, and price hourly, as you become more efficient and better at your job you start to take money away from yourself by getting each lot done faster etc. To price seasonally you need to have a greater understanding of snow removal and business in general, also of weather conditions and average winters to make this work for you. Here is one way to look at seasonal pricing. Figure out what your costs were for the entire winter last year, in my case last winter was a record winter in my area. Take those total costs and add your profit margin to them. Do some research and find out how last winter compared with the 10, 25 or even 100 year weather averages. If it was a record year than your costs will probably not be much greater than last year in years to come. If it was a mild winter you will have to adjust your costs to match a worst case scenario. Once you have this price it is imperative that you get a multi year contract. This is when the law of averages comes into play. You might not make much or even lose a little money one year but the other years should make up for it by being average or below average (lets hope!!!).
    Seasonal pricing then becomes good because you can become more efficient and do the job faster, which then increases your profit margins. It also assists you as a company by giving you a set amount of revenue coming in which enables you to finance or lease equipment and know that you have the money coming in. It also helps the customer budget a set amount with no surprises. Hope this helps and remember that a balance of hourly, seasonal and per push contracts will ensure you have a better chance to keep your usiness financially stable no matter what the weather
  5. JasonJ

    JasonJ Member
    Messages: 34

    We charge the customer per push, but I am paid hourly (I have a good hourly pay rate). No one here wants to try the seasonal rate, they don't want to pay for nothing. The bad thing about charging per push is we have customers that try to be cheap and let it build up until they can't get they vehicles out and then they call us. We usually charge more if they do that just because it takes three times as long to clear out the mess, so they learn that lesson pretty quick and have us out more often. We also do some of the schools and they try the same thing. If it snows on Friday and keeps snowing through the weekend, they don't want us to do it until Monday morning. Again, we charge the snot out of them because we end up with way too much snow and it takes too long. We do a lot of local businesses that want to be cleared at 2 inches or more, and the shools need the same thing. Its the private residences that can be a pain. Some want it at four inches, others at six inches and so on. Every season is different for us also...