How to bid contracts per year?

[Billz]

Is there a set number of plows you count when you bid a yearly contract? If I decide I can plow a lot for $80 per push, what should I offer for a yearly price?

[Mick]

Depends on your location, which in turn determines the average plows per year based on your trigger. For instance, I use a factor of 12. Although I won't plow any location 12 times, some snow falls depths will be greater than others. I then multiply the amount I would charge for, say, 3"-6" times 12. The result is the seasonal rate.

[snonut12]

Perhaps if you would fill out your location in your profile, you probably would get some better responses from someone who is familar with your area.

[Billz]

sorry about that. I live in Grand rapids, michigan...

[snowjoker]

I had accounts that were plowed over 25 times last season. The customer might freak out if you tell them that a price for that many plowings up front. I did seasonals last year and made a huge mistake doing that. Like Bob Van says " Pay me for what I do" That is my opinion. I know you probabbly get alot of snow in Michigan so maybe you could make more doing per push instead.

[nsmilligan]

Don't be afraid of seasonal contracts, but it's best if you have some ( about 5 years experience in the local area) before you bid seasonal so you have an idea of the amount of service involved.
There's a big difference in the amount of plowing between my area and 60 miles away. Seasonal provide a guaranteed income which you can take to the bank. Charge more for a 1 year seasonal then say a 3 year in case you get a blizzard season, to even things out. As far as what you would charge based on a $80 / push, it would be impossible for anybody here ( except a plower next door) to be able to give an answer. I have a per sq/ft charge based on 30 years of plowing records which works for me, that I charge for seasonal accounts, and I measure any new contracts prior to bidding, I also have a fudge factor ( engineering term ) I apply based on the type of business ( service level) layout ( curbs and push off areas), and sometimes personality of the property manager. Most of your seasonal will be Gov, large business ( malls etc) that want to have a $ value for snow removal for their budget, and they want the best service at the lowest price. I don't think anyone here can give you a definitive answer to your question except a direct competitor
so make an educated guess, how many times you plowed last year X how much you need to make, bearing in mind it's a guaranteed income.

Bill

[wyldman]

Bill summed it up pretty well.It's all about being fairly accurate on the average number of pushes per season,and being able to ride it out long term,so the bad winters are averaged out by the good ones.Don't expect to sell seasonal contracts for one year and get rich.

The basic formula is the cost per average snowfall X average number of snowfalls per season.Around here it's 19-20.I have a blizzard clause in case of extreme snowfall,and a cap,or limit on the total amount for the season.The limit is nice,as you can sell it to your customer as a money saver,and they only pay more during really heavy winters.Keeps the contract price down some,and protects you as well.

[Crash935]

Billz, good to see another from GR here.

Plan on an average of 18 pushes per season starting at a 2" snowfall in this area. 2 inches is pretty much the normal trigger around here and its really hard to get anything extra until you get above a 6" snowfall.

[Billz]

Originally posted by Crash935
Billz, good to see another from GR here.


Thanks. Is it easier to sell plowing by th push? Seems like it would be more profitable, most of the residentials pay nearly $225 for a season...that is less then I would have thought...

[Pickering Snow]

I dont think you are gonna find seasonals in our state a good idea . I have a few left after all these years and really dont plan on doing anymore once these people sell or die. Mich is more per push market just too many snow events to sell seasonal to and way to many plow contractors willing to stick a fork in ya stay with per push if you have low cash flow problems you should consider a differnt way to make money , there will be bad winters here but for the most part at least in my area you will push 60 to 100 inches a year. Just remember with you being so close to the big lake iam sure the number of events buss and resi are running per push pricing.

[Mark Oomkes]

I'll have to disagree with you Fred. We have approx 60-65% of our customers on a seasonal contract. The rest are per push. Our average snowfall is 75". Most of these are multi-year, so for the most part it averages out. This is a very nice ratio. If we get hit hard, we still have cash flow from the per push (and salt).

One of our largest customers just asked for a seasonal price including salt. The management company is located in Farmington Hills. I am keeping a clause in the contract for anything over 6" may be charged extra.

Crash is pretty much on with average pushes. Our pricing of seasonal is also based on what side of town they are on, how many days a week they are open, etc. The west side--Grandville, Jenison--gets a lot more lake effect than Kentwood, downtown, Cascade. If they are open 7 days a week, obviously they are going to be plowed more. It also depends on the level of service they want.

I think the 2" trigger might be a little on the high side, though. I think most contracts probably read that, but the reality is most companies are out plowing before it hits 2". Ours are 1" triggers unless the customer's specs are different.

[Pickering Snow]

Mark

I understand what your saying and this was talked about alot in erie this past spring every area is diff iam sure but i guess i can only speak from my exper with seasonal contracts its either the cust thinks they didnt get there moneys worth or we the contractors end up short. In the begining i will admitt it was nice to have the up front money every fall but honestly anymore monthly billing and per push is what works best for me.I have been screwed both ways so i guess its a matter of opinion i still have two uncollected accounts from this past winter and i know either place would not of taken a seasonal . I guess i was trying to give advice has if this is Billz first year if he has one truck and no back up he could get into more trouble with a seasonal contract if he fails to show. Just my two pennys

[Billz]

yes, this is my first year, but I have my truck, and access to another if needed for a few days...it is hard for me to believe with all the snow we get here that a residential driveway for a season is $225.... if there are 30 events that need to be plowed, that is only $7.50 per plow....I guess if there are only storms in a year, it would be $112.50...but it doesn't seem likely! lol

[Mark Oomkes]

Bill, we don't do any residential, so I can't help you out there. You've already stated the reason. Money can be made in residential, we just don't want the hassle of dealing with that many 10 customers when we can have the same revenue (and probably a higher profit) on 1 customer.

If I went into the residential market and tried to charge what we get for commercial I would go hungry and cold. It doesn't fit our equipment or business plan. I'm not saying it can't be done, I don't have the desire or patience to deal with residential.

We would be closer to $320-$350 per season for an average drive. But there are a ton of contractors that have been plowing for many, many years that are happy with $65-85 per hour for plowing, too. Not me.

[Crash935]

Bill, You can make money on residential with good planning of your route. All of my drives are within a mile of my house, many times i have multipule drives on one street. This saves on drive time and guessing on wheter or not it snowed enough on the other side of town to justify driving all over town to see if evrybody needs plowing. I know that the 2" inch trigger is high for Mark, but i also know what type of work he specializes in and it wouldnt work for him, but 2" is pretty much the norm when it comes to residential.

30 trips per season is pretty high, I dont think i plowed more than 20 times last season and i'm pretty good about taking care of my drives.

Plowing seasonal accounts is like playing the odds. You will find that if a customer stays with you for years on a seasonal contract it will even out in the long run. Some years you come out ahead some years it favors the customer.

[REED384]

Ionly per push here. it works for me. i have about 30-50 drives i plow .yes it makes for long nights but i love the quite and solitude . anyhow i digress after 30 years i have found per push is only way to do things. my 2 cents

[Pickering Snow]

Seems per push is taking the poll here has i had said ,i like Mark have moved away from resi work has much has poss we have about 36 left and they are groomed cust that complain very little.
Commercial is what i prefer we push close to 70 small to medium comercial accounts and honestly out of the 70 i bet maybe a dozen would even consider seasonal contracts has far has billable time we average 125.00 per hour once again its what the market will bear you can set back and tell yourself your worth 200to 250 a hour up here in midland but you will be also telling yourself that to a row of trucks setting idle.

Billz my advice to you would be stay with per push if you need start up cash every year maybe take a few but honestly has the years go by you will learn to bank some of your plowing profits and use that every year for start up money instead of depending on seasonal contract money good luck to you

[North Country]

I think we are talking apples and oranges here.

Commercial and residential are two very different animals. Residential customers don't have snow budgeted into their yearly business plan.

We service 99% commercial accounts and most of them want to know within reason what they are going to pay for the season so that it can be budgeted.

If you include an Extreme Weather clause and a Snowfall cap of 5"-10" over the snowfall average in your seasonal contract you will be fine. I would advise picking up a few per push accounts to sweeten large storms. Also billing de-icing services separate will also add to the pot, but many of our seasonals include salt.

It is all about job costing, averages and a well written contract.

I don't see a lot of residential wanting a seasonal contract as they do not have all of the previous years expenditures to look at. They don't perceive value because residentials have a hard time paying for something they can not see. - michael