HOW-TO BID SNOW REMOVAL CUSTOMER QUOTES AND PRICING FOR CLIENTS WITHOUT LOSING YOUR SHIRT
Whether you run a fleet or a single plow, at some point, you may have wondered if you’re charging enough for your snow removal services. This is an important question that may determine your business’s financial success. In this guide, we’ll teach you a simple and dependable approach for bidding on snow plowing projects which will help you offer competitive pricing while also making a profit. Our article isn’t comprehensive, but it should help you pinpoint keys to ensuring your business’s success.
The amount you charge for snow removal is determined by the existing market and competition, as well as your equipment’s upkeep, the experience and dependability of your team, and the pricing structures that work best for you and your customers.
If you’re a pre-established company that offers professional landscaping, lawn care, or agriculture during non-winter seasons, you’ll be able to charge more for snow removal than an individual would, especially if you have an experienced crew. A professional company will often have greater access to equipment such as snow blowers, plow blades, and tailgate salt spreaders, allowing them to take on larger or more difficult operations. They’re also more likely to carry insurance to cover equipment or a customer’s property in the event of a disaster. Having a team also allows you to call in other employees if someone is sick or swap machines if a truck has broken down. Keep in mind that customers who are willing to pay a higher rate expect a level of dependability, quality, and service that professional teams can more easily provide.
This isn’t to say that those who ‘go it alone’ can’t succeed, but it’s likely to be an uphill battle. Depending on your local competitors and resource availability, establishing a profitable one-person snow removal operation can be quite the challenge.
Step 1: CALCULATE YOUR BASE COST
What Are Your Job-By-Job Overheads?
Earnings - What does it cost to pay both your office staff and field crew?
Time - This is more than just time on the job site. Consider how long it takes to maintain or set up/tear down your equipment, refuel, or travel to and from job sites. You’ll also want to account for the time you spend searching for new clients and resolving billing-related situations with existing customers.
Maintenance - What does it cost to keep your equipment on the road? Even the best truck or plow will need maintenance and occasional repairs. Having a reliable company to get replacement parts from is vital to your business’s survival. The ROP Shop not only provides that reliability with our wide variety of parts to choose from, but we’re proud to provide fast and FREE standard shipping within the lower 48 states. We also offer bulk-purchasing discounts, quotes to organize your jobs, and informative blogs through Rugged U. On top of that, The ROP Shop’s parent company has operated a plow fleet of their own for more than two decades. Even if our knowledgeable customer service staff doesn’t immediately have an answer to your plow-related questions, we can get one from our experienced snow removal team.
Insurance - This is a critical necessity in the snow removal industry. Having insurance can be costly, but not having insurance can destroy your business.
How Much Snow Does Your Location Get on Average?
The cost of snow removal should be determined by the estimated amount of snowfall and the number of snow events that hit your area. The most accurate approach to calculate this is to look at the typical number of snowfalls per season for your location, then add a buffer for unexpected occurrences. For instance, if your area has 10-14 events every year, plan for 15-17. Don’t make the mistake of focusing on just one season. Examine snowstorms that have occurred in your area over the last 10 years to help you plan ahead. This will safeguard you and your bottom line. It will also help you determine which pricing options are ideal for both you and your customers, but we’ll cover that in a later section of this article.
Keep in mind that snow removal will cost more for significant storms than for modest dustings. This has as much to do with the urgency of the service as it does the amount of snow that has to be removed. Snowfall of 5 or more inches generally results in a greater cost rate than snowfall below 5 inches. If your area normally sees a high number of significant snowfalls, you’ll want to factor this in.
What Does Your Customer Base Look Like?
Are your customers' one-and-done, or are they locked in for the full season?
If your client signs a full-season contract, you might consider offering a discount on their snow removal visits. A committed, stable customer base allows you to better estimate labor and equipment requirements. Plus, it assures you employment for each snowfall and lowers customer hunting expenses. Bottom line? It’s cheaper to retain an existing customer than it is to generate new ones.
If you don’t have many contracts or committed customers, or if most of your customers contact you on an as-needed basis only, you might find it difficult to manage your budget.
Step 2: CALCULATE YOUR MARGIN FOR DESIRED PROFIT
After you’ve calculated how much it will cost to run your venture, you’ll need to consider your profit margin. This is where things can get a little hairy. If the cost of running the business exceeds the average price of the service you’re providing or if your rate is a lot higher than your competition, you’ll price yourself right out of the market.
What Are the Average Snow Removal Rates For Your Area?
This vital question determines how much you should charge for snow removal. Don’t be scared to ask around if you’re unsure what your competitor’s rates are. Look for websites in your region that provide free cost calculators or pricing ranges. This will provide you with a solid foundation for your services. Keep in mind that what someone would charge in Denver is probably not what they would charge in Louisville.
We’ve compiled data from ProMatcher.com which shows the average rates from across the United States. This site is a useful tool that you can use to research the typical price in your zip code. This will assist you in determining the local industry standard.
Snow Plowing National Averages
- Commercial Parking Lots: $126/hour (ranging from $93 – $158/hour)
- Roadway Plowing: $134/hour (ranging from $102 – $167/hour)
- Residential Cul-De-Sac Plowing: $76/hour (ranging from $102 – $167/hour)
- Driveway and Sidewalk: $46/visit (ranging from $38 – $53/visit)
Snow Blowing or Shoveling National Averages
- Driveway and Sidewalk: $58/visit (ranging from $41 – $76/visit)
**Average prices rounded up to the whole dollar based on ProMatcher.com national average for 2021.
Snow removal in locations where there’s a lot of snow and/or fines for leaving snow on sidewalks will have a higher per-visit rate. Customers with less snowfall or no fines are in less in a hurry, thus they have more time to price shop.
If you’re the only one providing these services in your area, you can set your own rates. However, if you live in an area with a large number of small and large competitors, pricing will be more restrictive. Customers will sometimes pay more for better service, but even this may have its limits.
HOW MUCH TIME WILL EACH JOB TAKE?
Calculate the cost of the project based on how long it would take someone to accomplish it alone. Here is an example of working through the math:
Start with your overhead expenditures that we covered in the last section, such as time, insurance, vehicle maintenance, and gasoline. Then subtract that from the going rate in your market. Whatever amount you have left is your profit margin. Based on demand for services, quality of services, and how competitive you must be to secure the job, your bid might need to be higher or lower than the current rate. This will be discussed further in a later section.
Divide your decided company rate by 60 to get a per-minute rate. Then multiply that by the length of time you’ll be on site. Based on the time spent, this will offer you your job’s basic pricing. You can always raise the price or time if you need to include a deicing product or other client services, such as snow removal from automobiles, decks, and roofs.
Let’s assume it takes you 10 minutes to thoroughly plow a driveway that can fit two vehicles, and another 10 minutes to clear the walkway to the front door, totaling 20 minutes. You should be able to quote this customer reasonably now by multiplying your per-minute rate by 20. Even if the crew size changes, you can divide by the number of crew members to get a real-time estimate of how long it will take.
Common Pricing Problems
- It may be obvious that commercial properties take longer and require more investment than residential homes. The difference in size between a residential driveway and a typical parking lot is significant. Their prices should not be the same.
- If you’re clearing parking lots, any private property on the lot (such as employee or customer vehicles) brings additional risk. You’ll want to use extra caution or assign your most experienced driver to avoid damage and potential insurance claims.
- To push and move the snow, will a skid loader or other heavy equipment be required? If you don’t own heavy machinery, does your customer? This is a factor to consider when drawing up a snow removal contract.
- During a snowstorm, certain businesses may require emergency or priority clearance. This is usually the case with hospitals and other healthcare facilities. Other commercial and industrial clients will want to be pushed first and often during business hours.
- If you’re just starting your snow removal business, don’t be so ecstatic to acquire a big job that you promise more than you can deliver. This can result in poor quality work. Making your smaller customers wait to get your big client done hurts your business. You’ll be stressed out, overworked, and your reputation will suffer. You’ll lose current and potential prospects through word of mouth. It’s preferable to have a few satisfied customers rather than a slew of irate ones.
STEP 3: PICKING YOUR PRICING MODELS
- Before we jump into pricing models, ask yourself the following questions.
- Are you comfortable speaking face-to-face with customers? Are you able to act as a salesperson for your company?
- How effective is your web presence in terms of generating interest? Do you have a website or email address?
- Are your target customers mostly wealthy, frugal, or low-income? What is the maximum rate they are prepared to pay for snow plowing?
- Who are your competitors and how likely are you to take business away from them? Can you beat their rate and still make a living?
- What is supply and demand like in your neighborhood?
- What type of snow is common for your area? How many times will you have to clear the same area during a single snow event?
6 DIFFERENT PRICING MODELS WHICH MIGHT WORK FOR YOU
With the former questions in mind, take a look at the options below and consider which might be best for you and your customers.
With this pricing model, you would charge your customer for each instance you clear snow. During a single snow event, this could be several times. If your customer wants multiple pushes during a single snowstorm, this can be a profitable option. On the other hand, if you charge by the push but your customer only calls you out after heavy snowfall has accumulated, this could be more taxing on you and your equipment.
2. Per Event
The per-event fee only covers each snow event, even if that same snow event requires you to clear the same location many times. This pricing model can pay off in a region with a lot of low-volume snowstorms. However, consider this option carefully before deciding on it. If your location has a lot of snowfall in a single storm, event-based pricing might be devastating. If it doesn’t snow more than a few times each season, you won’t receive much compensation unless you adjust your rates accordingly.
3. Per Inch
This is comparable to the concept of pre-push but more adaptable. You can charge based on the total snowfall in inches per storm, or you can set a specific rate per inch for whatever you push throughout an event. If your jurisdiction spans a large area, calculating fees for this method requires time and effort. For example, if your south client receives fewer inches of snow than your north client, you’ll have to adjust your rate accordingly. It could be wise to implement a pricing structure that protects against heavy snowfall by charging a predetermined price for 2 to 4 inches and a higher rate for 4 inches or more.
4. Seasonal Contract Payouts
Seasonal contracts function the same way that a financial budget does. The whole season’s price is generally paid in set monthly installments. This is useful for billing and for forecasting asset and overhead costs. Most customers will appreciate the fixed monthly pricing, which allows them to budget your services into their operational expenditures without having to guess.
The main advantage of this method is that your income remains consistent even if there are fewer snow events than expected. On the flip side, the main disadvantage comes into play when there’s significant snowfall. You may be required to work overtime and to fill your fleet’s gas tanks more frequently, which significantly increases your costs.
Adding restrictions is the best approach to guard against this. Your contract can agree to push at the stated rate until a certain amount of snow or snow events has occurred, after which a new rate will be triggered. If you include this to protect yourself, expect a similar request from your customer. They may want you to give them a percentage back if you push less than a set number of times per month or year. This isn’t uncommon, so don’t be surprised if it appears in a contract.
5. Multi-Season Contracts
Commercial buildings and corporate entities are more likely to sign a longer-term contract with renewals every three years or so. This is something you could see in a private homeowners organization, but it’s not typical. You may need to incorporate an annual percentage rate hike in this model to account for cost increases and inflation.
You may also choose to include out-of-season months for the agreement, which would incur an additional fee if your services were required. If your snowiest months are November through March, you might find yourself in serious trouble if significant snow falls in early in October or late in April. This safeguards you as well as your customer since they aren’t being charged for a month or two in which snow may or may not fall.
While multi-season contracts secure a job for a long period of time, getting a customer to agree to one requires a high level of trust. As a result, such a contract can be difficult to put together, and normally happens either with a commercial business that wants to contract the lowest bidder or with a long-established customer.
Multi-season pricing can also trigger bidding wars between local companies vying for a contract with a commercial entity. Be careful not to get caught up in the feeding frenzy. If you bite off more than you can handle or underbid the job to get the contract without properly accounting for costs, you can wind up in a world of hurt. This can pull a snowplowing company into the red and out of business.
This is a straightforward method for calculating cost and profit. The client pays you for your time on the job. Every event and every push is billed by the hour. However, there’s little motivation to complete the project in a timely manner or expand your customer base. Some clients might question your efficiency, wanting assurances that you aren’t milking their pockets.
Remember that getting a job done in a timely fashion will allow you to complete more pushes, which in turn will allow you to expand your customer base and develop trust and a good reputation. If you are an experienced, professional snow removal expert, completing jobs quickly should not translate into less income.
Which One Is Right for You?
There’s no need to adhere to a single price schedule. Many contractors use a variety of models depending on customer needs, their location, and the competition. You may even create a hybrid of two or three methods. Which will bring in the most income and allow you to provide the best care for your customer base? Being mindful of this will translate into a long and fruitful business.
JUST LIKE ANY OTHER BUSINESS, ONLY COLDER
At the end of the day, it’s all about understanding your finances, reducing waste, and setting realistic customer expectations. Many low-ballers and big talkers exist today that won’t be in business a year from now. It’s a difficult trade, but a profitable one, and you can make your company a successful one by staying consistent and asking the right questions. As they say, work smarter, not harder. By showing your professionalism and dependability each season, your sterling reputation will bring you, new clients, for years to come. Be sure to check out our blog "SNOWPLOWING AND SNOW REMOVAL BASIC TIPS AND TRICKS FOR CONTRACTORS LOOKING TO BREAK INTO THE BUSINESS" for a guide on snowplowing basics.
Keep up the good, my friend, and Stay Rugged.
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