Snowplowing tends to be feast or famine — it might be 60 degrees on New Years Day one year, and you might have 2 feet of snow the next year. How can you still make money while maintaining all that expensive snow removal equipment? Firstly, snow plowing requires that you be prepared and ready at a moment’s notice. At any hour of the night or day, your equipment and employees have to be ready.
Secondly, snowplowing can be a “feast or famine” type of business. Trying to forecast how severe a winter will be is next to impossible.
Understanding which type of contract fits your services is one of the most important parts when dealing with snow.
We recommend doing what the ski resorts do — offer a variety of contracts.
Some seasons have a heavy snowfall that brings in the cash with your pay per time contracts but can kill you on your monthly snowplowing contracts. In mild winters with little snow, it’s precisely the opposite — you make almost no money on pay per time contracts but get plenty of money on monthly contracts.
Snowplowing takes a little more creative thought
Ski resorts always prepare for any type of winter by offering season tickets and one-day tickets. This way, they balance out their risk somewhat and can still make something — no matter how mild or snow-filled a winter they get. Using some or all of these contract ideas can help you set up a profitable winter for your business no matter how much it snows.
5 Contract Types We Recommend Using For Snow Plowing
Per Inch Contract
This is a simple contract that charges by the inch plowed. You can run into a “famine” type of situation here easily if there isn’t enough snow to warrant paying employees to be on call and maintain equipment. This one should only be used if you expect to see frequent snowfalls all season.
Limited Seasonal Contract
This contract is based on a maximum number of occurrences and a maximum number of inches per season with an extra charge when this maximum is exceeded.
Minimum Charge Contract
This type of contract has a built-in minimum charge if the occurrence or expected monthly income charge is not reached. It combines part of the per inch contract. Your customer pays a monthly fee but knows there will be a minimum charge, no matter how much you plow.
Multiple Installments per Month
This gives you the ability to charge a separate installment for each type of service you offer. Using the second part, you can build in automatic seasonal increases for long-term contracts.
Installment Seasonal Increase
With this contract type, you can build in automatic seasonal or yearly increases for a long-term multi-year contract. Start giving your customers options and start using all these different types of contracts in your company. If you only have a particular kind of contract that you offer currently, call up some of your customers and offer them a switch to a different contract and see how many take you up on it. You could also send a flyer in your monthly invoice that offers for them to switch contracts to 2-3 other options from what they currently use to gauge interest. The switch is easy with new customers — just let them choose which one they are most comfortable with. If everyone accepts a specific type, you might want to re-think precisely how you have the other contracts listed out and make sure that they benefit your customers as well as your own company.
You don’t have to lose money every other winter, use a variety of contracts, and you can always be in the black.