Pricing for snow removal services is never easy.
First and foremost, there must be brand awareness, so clients are seeing you out in the first place.
In today’s digital world, a good online presence is critical and really needs to be part of a company’s overall branding.
“Having a large online presence and a comprehensive online profile increases brand awareness and visibility will help you fill your sales funnel with qualified customers,” says Mark Bradley, CEO of LMN. s. “The more prospects you can speak to, the more opportunity you will have to sell work.”
For example, Jeff DeLine, owner of J & R Property Services in Cicero, New York says he has a Google ad budget and regularly posts on Facebook to try and reach potential customers.
Bradley notes that being active with Google My Business, organic social media and some paid advertising can help ensure your business is at the top of the list on the first contact.
“Today, where people turn to social media to ask for referrals, you’ll want to be sure to have a presence to capitalize on consumer interest,” he says.
Once the interest is there, then it is time to determine what to charge.
Sizing it up
DeLine says there are a few variables to consider when pricing for snow removal. Size of the lot, complexity of the property due to obstacles and other things that may add time or liability.
J & R Property Services labels their customer lots under A, B and C designations with A being the wide-open easily plowed lots, B having some complexity and obstacles and C having many obstacles and other liability issues. From that point, DeLine says pricing is calculated per square foot to determine the seasonal contract cost.
Seasonal contracts are common throughout the industry to provide a consistent cash flow, although it can be problematic in heavier winters.Protech
Prices can also be altered for properties such as those that are open 24/7 or that have multiple shifts that require multiple visits based on when cars are moved out of the way.
When you’re assessing both how to bill but also how much to bill based on job requirements, it's important to use tools throughout the estimation process.
“To price your work profitably, you must be right on two sides of the same coin,” Bradley says. “You need precise quantities, and you need accurate prices. If you're not precise on both sides of this coin, you're losing money. Unfortunately, contractors go to great lengths to estimate quantities accurately, then watch all that accuracy go to waste by pricing those quantities incorrectly.”
He suggests using online tools to measure site areas (Google Earth, Bing Maps, findlotsize.com are some free examples). Size is critical when estimating the costs of snow removal at commercial properties.
“This will allow you to have a better understanding of the size of the area the customer needs cleaned,” Bradley says. “Be sure to also visit sites to look for obstacles, problems, historical issues, and other slow-downs that don't show up on overhead pictures. It is so important that before committing to any job that you conduct an onsite survey to understand any challenges.”
Without a clear view of every element, you can quickly take on jobs that will consume your labor and costs and erode at profits.
“These jobs are great, but you must be smart with them,” Bradley says.
Keeping stock on supply is an important part of the overall estimation and pricing process.J and R Property Services
“Finally, know your company, your prices must recover your costs and your overhead and desired profit,” he says. “Are you confident the expenses you’ve outlined in the estimate covers yours costs and allows you to hit your numbers? If you consider these variables, you’ll be able to develop more precise estimates that will ensure you’re delivering on customer needs while also growing your business. And don’t go at it alone, use proven software that can help throughout the process.”
Determining supply and demand is always a challenge, especially for small contractors. Bradley says most determine both supply and demand through word of mouth from other contractors and customer feedback.
“In some markets, a contractor will hear from customers if their snow removal costs are too high, and they may see competition undercut prices,” he says. “Seasonality also can impact demand. In some parts of the midwestern United States, they’ve had inconsistent snow falls the past few years. This can cause companies and homeowners to question just how much they need snow removal services.”
For example, DeLine says the commercial properties in his area are primarily seasonal and nearly all receive professional service.
“We monitor each month pre-season to determine availability in our routes and as we get closer to winter, we review weekly and, in some cases, add the equipment as needed,” he says.
For those commercial sites, J and R Property Services tries to do multi-season contracts, if possible, to allow for planning, training, and general preparation. “We also offer a small discount over the 3 years, and they will be locked into that price even when prices can and usually do increase each year,” DeLine says.
Pricing models
“Snow removal billing methods can vary based on contractors, but the biggest thing we recommend is no matter what method you use, you have a system in place that allows you to manage billing efficiently, provide accurate estimates and collect data to allow you to forecast for your own business purposes,” Bradley says.
Here are some of the pros and cons for general billing methods:
- Per push: Is exactly what it describes, charging each time you send a crew out to clear a lot. It can be beneficial if they want you to push multiple times during a single event. Bradley notes that these are also requests that come at the last minute in the event of a major storm and the customer may not have been prepared for it and has a significant need to clean up snow quickly (i.e., meeting, etc.). Because some of these are unexpected by nature, they can often pay well as you can set your price. However, if the customer didn’t plan for the event, they also may be late on payments. The challenge with per push orders is you cannot plan for these, and you also must quickly reallocate resources if you choose to take the jobs on, impacting other customers. In addition, on a regular per push contract, in a light snow season, it may not come out in your favor.
- Per event: These are common throughout the industry, where for each storm, a fee is charged. Bradley says in some parts of the US and Canada, a per event cost can be challenging to be profitable on, especially in the event of large snow amounts. In warmer climates where each snowfall may only 1-2 inches and can be more predictable, these may be beneficial to a landscaper. However, in areas where an event could result in one to two feet of snow, your crews would need to be onsite multiple times, impacting your equipment usage and labor costs, driving down profits. Neither are ideal if you’re in the business of earning profits.
- Per inch: Another common model, especially if you’re in a region with high levels of snowfalls. Most companies will want to be locked into more regular cost structures, especially if they know a lot of snow will fall. The positives of this model is you can earn greater revenue based on the forecasts, which is great. However, Bradley says there is the unpredictability of the model and to labor costs associated with it.
- Seasonal contracts: A total price for the season, often paid out in monthly installment. These are also common across the industry, especially on a year over year basis. Bradley notes that it could be a business or homeowner that wants to try snow removal for this year or next, and then assess how much was used in each season. The benefits of these from a landscaping company is that you no longer need to sell or compete for this business as they are locked in,” he says. However, depending on the structure of the contract and amount of snow, you could still lose money in heavier winters. Generally, there is a consistent amount of cash flow, which allows for better financial forecasting.
- Multi season contracts: Longer term contracts allow for even more financial forecasting. DeLine says planning, budgeting, and forecasting is easier and it provides better growth opportunity. Bradley notes that these should be built carefully to account for rising costs of supplies and unexpected weather events.
- Hourly: A simple method of charging for time on the job by the crew for each event and each push. This can be very challenging for a landscaping owner to forecast for, because you’re at the mercy of storms to determine how much time it will take per storm and lot size,” Bradley says. “A small storm in a small area could be a fast job, but the larger of either item, the more you can bill your customer but the harder it is to manage your resources." Customers also likely won’t like the billing model if storms get bigger, because they will see higher prices. Also, Bradley says it is difficult to lock in regular customers through the hourly structure with multiple customers. A regular flat fee based on snow size is a much more effective way to manage these costs for both customers and your business.
No method is set in stone as the best pricing model as it can vary by client. To ensure a consistent cash flow regardless of the type of winter or number of snow events, it is best to have a diverse style of contracts among your customers.
Multiple variables need to be considered when pricing for snow removal, including the size of the property and any related complexities such as obstacles.BOSS Plow
