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Discussion Starter · #1 ·
After reading several post it seems there are a few schools of thought about pricing jobs.

1) Price the job based how long it should take using an hourly rate. Ex: 30min job- $80.00 per hour, bill $40.00.(just and example).

2) Price the job after measuring billing by Sq. Ft. (1,000 Sq. ft. $5.00 per 100 Sq. Ft = bill $50.00.(again just an example).

3) Price job based on amount of snow fall. 1-3, 3-6,6-10 or 2-4, 4-8, over 8, only as a per occurrence, or quote a monthly rate.

4) Lets not forget about the clients that establish whatever performance requirements they think they want or need.

So I have a few questions in mind when I am reading these post about pricing. Like, are these pricing methods regional, is there an industry standard, or does each company just try to sell their way of billing as the best way?

I have been writing my own contracts for three years now after having plowed both as an employee and sub-contractor for several year and now having started my own full time lawn maintenance/snow plowing company. I have seems to found a price point that seems to gain new customers, retain current customers, get referral and make a profit. However, I am left wondering how do any of you establish a base line for pricing? I use a pricing method that was passed onto me from another contractor but, at the time he was doing all residential work and now I am only servicing commercial work. As I consider and deal with the growth of my account list (4 location in 2001/2002 one truck to 30 locations for 2003/2004 with two trucks and a sub) am I pricing correctly for the market and the industry??

Sorry such a long post but, I know there are 100's of years of experience here and I have gained so much valuable information and I hope some of you in a similar situation can offer some insight and advice. That means if you are actually are in the habit of pricing business that I would like to hear from you. Thank you.
 

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I do several commercial and private road accounts, and have yet to come up with an easy formula. The only major change I am doing for this year is any storm over 12" counts as two storms. All the other contractors around me have been doing this for several years, and after last X-mas and the back to back 18" and 22 " storm I learned my lesson. I could never understand charging by the inch, seems to be more complicated than its worth. If you come up with something simple, please pass it on. Thanks.
 

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Discussion Starter · #3 ·
I do most contract monthly salting included, but I did add a one time up charge for any one snowfall over 12" kind of a blizzard clause this year and none of my renewal or new customer had a problem with it. The other 25% are on a per push for 2-12 than the up charge for over 12 with additional billing per application of salt not per bulk ton. I think most people have the feeling the per bulk ton is a bogus over charging scam. Or at least when I started pricing salt at per bulk ton they most all asked for a per appliction rate. To be honest how does anyone really know how much salt goes down. I bill per application and sometimes it goes down light sometimes heavy, sometime more than one time per snowfall. I have had no problems with salting bills.

Thanks for your response.

Happy to be here on the new site with the OG Chuck and the crew
 

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One thing you need to be careful about with pricing formulas is that you don't depend on them too heavily. You must evaluate each site for its general conditions. Simply pricing by the square foot or by the parking space can be dangerous.

Ultimately your plow price will be a function of time. Time is based on area, level of difficulty, quantity of snow fall, etc. Assuming a 2" snow storm, how long will it take you to clear the area you're considering? How much do you need to charge for your time?

For example:

75,000 sq ft parking lot, or approx 1.75 acres

Production rates depending on level of difficulty (base your own production numbers on your own work):

Easy/Open lot with no curbs: 1.1 acres/hr = 94 min or 1.57 hr
Some obstacles, islands, curbs: .9 acres/hr = 115 min or 1.92 hrs
Congested, tight, backdragging require: .7 acres/hr = 148 min or 2.46 hrs

Assuming a flat $100.00 per hour for easy figuring, this lot could go for $157 to $246 per push based solely on square footage. It's important to consider the amount of time you'll need to back drag, move snow, stack, and work around existing obstacles.

Once you have enough data, you could draw some correlations between square footage and pricing for different lots. It will also depend on your pricing structure. For instance, you might charge the above prices for 1" to 5", and then more for successively more snow. However you price your contracts, you should track your work in those increments as well.

So if the lot above was an open lot and it takes you on average 1.75 hrs to plow with less than 5" of snow, you'll know you're getting about 1.0 acre per hour production. Over 5" for example perhaps the production on average drops to .8 or .7 acres per hour, or about 2.5 hrs.

Therefore, pricing for 1-5" might be $160.00 and pricing from 5" to 10" might be $250.00 and pricing over 10" would be xx. All of this is based on your time required to complete the job on average.

I don't think there is an industry standard perse. However, how you build up your pricing is going to be fairly standard - based on how much time you need to complete the job.

How you price your work, hourly/per push/seasonal contracts/per inch, etc. will depend on the local market and what the preferred method of pricing is, what your customer wants, and what you're going to offer (as in what's good for you). You're writing snow insurance policies and you're the underwriter/actuary (spelling?).

SIMA offers a brochure (which you can view on line) about finding/hiring a contractor. It goes through four sample types of pricing structures and what they are commonly used for and which one might be most beneficial. Although you can always find the exception to the rule, generally the brochure is on target.

Avoid hourly pricing if you can. You'll never make more than what you bill per hour for each piece of equipment. There is no incentive for the contractor to perform more efficiently. The incentive is to stick more equipment on a job to run up the bill. An hourly contract never really helps the client to know what their true costs for snow should be or will be for the winter. This is true as well with per ton pricing for salt. As asked earlier, how do you know exactly how many tons are being applied? Do you have a scale on your truck?

For most jobs per push or seasonal contracts are generally the best method of pricing. You may offer variations on the theme. Such as incremental per push pricing (e.g. 1-4", 4-8", etc.). A fairly standard contract floating about calls for the per push price up to 6" after which time the customer may be charged for a second clearing when the snow fall is over 6". Per push contracts may also include snow ready fees - where you charge for a minimum of one or two pushes per month even if it doesn't snow. For seasonal contracts you may offer a no limit seasonal contract or a limited seasonal contract that caps out at either a snow fall total or number of occurrences. Once the cap is reached the pricing reverts to the per push price.

Charging by the inch is sometimes confused with the incremental pricing as mentioned above. Per inch pricing comes into play more frequently when you have large areas to clear, and perhaps snow removal/stacking/relocating incorporated into the bid. This is where you might charge $xx per inch. How much snow will effect how many hours of clearing/hauling, etc you'll have and the estimator must be able to determine how many more hours will be required on site for each inch of snow. No differently in many respects than you would have to otherwise, however, this isn't generally used on medium or smaller sized properties.

When pricing your own work, come up with your own production values. Determine what your price is per hour that you need to make and then figure out a way to price it in your market that will be attractive to your customers. If you provide "funny" pricing strategies, your market may not be receptive to them and you may not get the contract simply because the buyer is not familiar with a style of pricing. Try to give the customer what they want, just make sure you're getting what you need for the job through acurate production numbers and knowing your costs to operate.
 

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Discussion Starter · #6 ·
Ditto from me WYLDMAN

Thank you for your time and interest Lawn Lad.

I would have to say that fort he most part I am consistant a pricing method as you discussed. My curiousity got the best of me when I read serveral post (on that other site) about flat measuring lots and pricing per square foot. In my business mind I was unable to see what type of formula coul dbe used to fairly adjust for all the things you mentioned(backdraging, stacking, obstacles and so on).

I have run across a few bid while meeting with clients and in some case my rate were lower but not by huge percentages. In most case my per push and salting prices are within $5-$20. As we all know just by offering salting services that open a large amount of the market share. All the growth I have seen in my business to date has been from refferals so I have to go with the facts and numbers thinking my pricing and service methods are working.

I am currently looking into a SIMA membership and looking forward to a mentorship so I can really decide how big I want to grow my business. I just learned that I actually work the same market as Jeff Tovar, an I know of his company TSP. I am guessing he might just know a few things about the business ead when it come to growing the business. Needless to say it has added a spark in the "how much snow business do I want next year" goaling setting.

Thanks again.I will be trying to get a few pictures of my equipement on here soon.

BTW, Wyldman, we need spell check...LOL
 

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On all of our "per push" customers, we charge each time we actually plow. On a small 4" snow fall we will plow once. On a larger 6-8 inch storm we might plow twice, once during the storm and once after. It goes up from there. We bill for each time we plow.

For instance, on one recent invoice, under the quanity collum we had "2", under discription we had " Snowplowing Saturday AM and PM", under price we had "$250", under total we had "$500". Sales tax was added to the total (Quickbooks Pro). The customer sent a check in a week later.

We have been pricing this way since the beginning, and have never received any complaints.
 
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