Here’s How You Should Price Your Snow Removal Services
Setting the right price for your snow removal services is the key to running a successful company.
You need to set a perfectly balanced rate. One that’s neither so low that you end up facing losses instead of profits, nor so high that it leads to a significant reduction in your clientele.
To find the perfect rate for your snow removal services, follow these three simple steps:
1. Calculate Your Operation Expenses
Start by taking all your expenses into account, including but not limited to:
- Rent: Almost every snow removal company has an office for maintaining their paperwork, clientele, and records. If you do too, take it into account because that’s a major expense.
- Gas: Gas is not as cheap as you think. Add up the money spent on gas to reach your client’s home or office for every project done in the last month, and we bet the sum you’ll get will surprise you.
- Marketing budget: If you don’t have a marketing plan, create one. In today’s saturated market, there’s no way to succeed without a proper marketing strategy.
- Material required: Create a comprehensive material takeoff by calculating the cost of materials you will need to finish a job. Don’t forget to take the quantities and material types into account.
- Labor cost: Your biggest expense will be your employees’ salary. For most snow removal companies, labor cost makes up for at least half of their total budget.
Once you’re done, set a rate that will not only cover your expenses but return decent profits.
2. Use the Right Pricing Method
You can choose one of the following three pricing methods:
- Per Push: It means to charge your customer for each trip you make to their location. Determining factors for this method are normal prices for your area, how long the job will take, and which equipment you will use.
- By the Hour: For this method, the most important thing is to set different rates depending on the equipment you use. For instance, charge more for hours with the snowplow compared to man-hours shoveling or snow blowing sidewalks.
- Per Inch: Many companies across the country love the per-inch pricing model. This is very lucrative for heavy snowstorms and snowy winters.
- Seasonal Contracts: It means to charge per season. So if you want to get a guarantee that your client will pay for a long time, this method is for you.
If you’re wondering which method is ideal for you, the answer varies depending on certain conditions, such as would you rather get paid quickly or wait a long time to be guaranteed a large sum.
So take some time to figure out which method will work best for you — not in the short term, but in the long haul.
3. Find Out How Much Your Competitors Charge
After calculating all your expenses and selecting a pricing method, all you have to do is to charge a few extra bucks to make a decent profit, right?
You’re missing a crucial step. To find the ideal rate, you have to first check out how much your local competitors are charging for the same snow removal services. This is the most simple method in making sure you are pricing around the market rate.
Once you’re done, set a rate that is:
- Profitable for you
- Affordable for your clients
- Based on your local market rates
By following our simple 3-step method, you can figure out the ideal rate for your snow removal services. Also, make sure you can manage your services, revenue, and costs to understand your profit/loss per storm.
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