The snow plowing business is both…
- Very profitable
…but pricing your snow removal jobs is tricky. Most companies never get it right.
I’m going to show you an easy and reliable way to bid and win any commercial snow plowing job.
This quick pricing guide will allow you to make a boatload of money this winter, without “over-complicating” your prices.
First: Determine Your “Must Make” Prices
1. How long will it take you to finish the job?
Compute job length based on the hours it would take one guy, working alone to complete.
That way you can divide by the number of crew members to get an accurate gauge of how long it will take, real-time, even if the crew size changes.
2. What are your overheads for any one job?
- Wages (direct in the field and indirect for office staff)
- Drive time (all time dedicated to a client is billable)
- Fuel + time spent hooking up equipment
- Insurance (critical in this industry)
Second: Build in Your Profit
I can’t tell you how much of your price should be profit.
However, I can tell you the main factors that will influence how much profit you can get:
- Your Market
- How much are people willing to pay for snow plowing?
- Are your target clients generally wealthy, stingy, or low-income?
- Your Salesmanship
- How good are you at selling in person?
- How well does your online presence sell for you?
- The Supply and Demand
- Did they call you right before a snow storm?
- Is the only other snow plowing company all booked up?
I’ve seen profit on jobs anywhere from 2% – 50%. And some have even gone higher, when the demand is high.
When clients want to buy snow removal services, they will inevitably look online for basic rates. You can do the same to get an idea of what people are expecting.
You should also check with local friends and family (who aren’t using you… yet) and see what they pay for snow removal. This will help you gauge what’s normal in the market.
When you decide on your profit, build it into your price. Remember: it never hurts to leave in some room for accidents and mistakes.
Third: Decide on Your Pricing Models
You want to get familiar with the snow averages in your area. This will help you decide which pricing models will generate the most work and profit.
Some work better with lighter or fewer snow events, and for other it’s the opposite.
- Charge every time you clear the lot. This can be multiple times during a single event.
- Pro: best if they want you to push multiple times during a single event, since you’ll get the most money for the least effort.
- Con: not great if they only want you to push after a ridiculous amount of snow has built up.
- Charge once per event. Even if you push multiple times during that event.
- Pro: In an area with many low volume events, this will be intensely profitable for you.
- Con: In areas with a lot of heavy volume events, you can get crushed by event-based pricing. Also, if it never snows, you don’t get paid.
- Similar to per push or per inch.
- Pro: Flexible. You can charge by the event (total snowfall for the event) or by the push (how much you cleared). You basically set a rate per inch.
- Con: This requires a lot of experience to get right. You need to know your times.
- Total price for the season, usually paid out in monthly installments.
- Pro: Convenient for the client because it’s a set-it-and-forget-it plan. It also ensures you will come out ahead in a low-snow year.
- Con: This can hurt you if there is a lot of snow fall. You must set limits. Don’t have an open-ended contract. Set a number of events or pushes that keep you in the black.
- A longer term contract. This typically happens in the commercial plowing field. It’s not particularly common in residential, but you could make it work. This model should include an annual rate increase between 1-6% to account for cost increases and inflation.
- Pro: Secures your client for a long time. Builds a good relationship, and it can be very profitable for you long-term.
- Con: Hard to put together. Requires a good history or a lot of trust to sell this.
- A simple method, especially for job costing. You charge for your time on the job by the man. You bill every event, every push by the hour.
- Pro: This makes it really easy for you to ensure you’re making enough on every client because you’re directly setting the price on the same metric that you measure profit (by the man-hour).
- Con: Can be harder to squeeze in a healthy profit. Also, certain clients will pressure you to work faster when hourly, which is dangerous and not great for business.
In our Winter-Ready Checklist for Snow Businesses, we suggest diversifying your contract portfolio. This way, you stay profitable regardless of what nature throws at you.
There’s no reason to set one pricing model and stick to it. Your best bet is to apply different models to different clients, so no matter the weather, you will always get paid.
The Dangers of Pricing for Commercial Properties and Parking Lots
Commercial-sized properties take more time and materials than residential drives. Consider the size difference between a residential driveway and the average parking lot.
But there’s more to it than size:
- Will there be cars parked in the parking lot?
- Will you need a skidsteer to push and lift snow?
- Will they demand emergency clearing during a snow event? (Hospitals, commercial centers during business hours, etc.)
Keep these factors in mind when bidding for commercial properties.
Don’t overextend yourself. If you don’t have a way to service everybody, you’ll end up skipping people and juggling properties. You’ll end up stressed out with an overworked crew and a collection of pissed off clients.
Snow is already a demanding business. I’ve seen people work 36 hours straight. I don’t recommend it – those guys frequently end up losing money due to the amount of accidents they build up.
“But the money’s too good!” – yeah, while it lasts. Too much work will result in sloppy work. Sloppy work gets clients to drop you.
People will talk. If you’re not dependable, they’ll say bad things about you.
It’s better to have a few happy clients than a horde of angry ones.
Pricing Residential Services? Check out our Guide to Estimating and Pricing Residential Snow Services.
Snow is the Same as Any Other Business (Only Much Harder)
Follow these pricing tools and you can succeed in the snow industry. It’s all about knowing your numbers, cutting down on waste, and setting the right expectations with the client.
It’s hard business, for sure, but you can thrive in it. There are a lot of low-ballers and companies that exist today and vanish into the wind tomorrow. You won’t die out like them and the reputation boost will bring you more clients, year after year.
Mike Callahan’s Roadmap for Success that was in Lawn & Landscape is full of solid advice. He’s been in the snow business for a long time and has a lot of valuable wisdom for newcomers to soak up.
Patrick Hoffman is Marketing Director at Service Autopilot. He specializes in managing marketing campaigns and giving marketing strategies to the Lawn Care, Landscaping, and Cleaning Industries. When he's not writing, he's reading books on marketing, self-improvement, or science fiction. Contact Patrick: firstname.lastname@example.org