Snow and ice removal can be a complicated endeavor for lawn care and landscape businesses. On one hand, it’s a great way to make money during the off season. On the other, it’s hard to ensure profitability when you’re dealing with unpredictable weather patterns, demanding physical labor requirements, and equipment concerns.
If you’re in a northern area where snowfall is fairly consistent throughout the winter, it’s easier to plan. For other regions, though, snow events vary widely from year to year. You may have a season of weekly snowfalls up to 5 inches, followed by a year with only a handful of small storms.
How do you prepare for these possibilities? And what’s the best way to price your services so you don’t lose money?
Know your costs
The first step is to understand your costs.
Consider all direct and indirect costs—wages for billable and unbillable hours, fuel, insurance, equipment, maintenance, materials, etc.—in coming up with your hourly rate. Whether you choose to bill hourly or use one of the other models we cover later on, establishing an hourly rate helps you plan effectively.
If you’re using your own equipment, it’s safer to overestimate (rather than underestimate) maintenance expenses that are likely to occur given the nature of the work. Or, if you’re planning to hire subcontractors, determine how much you need to add to their rate in order to make any profits of your own.
Finally, when you take on a new client, always conduct a thorough site audit just like you would for a landscape estimate. For snow and ice removal, make sure you have accurate measurements for the entire lot and walkways and organized notes regarding any potentially problematic site features (e.g., presence of parked vehicles, narrow drives, etc.). This will help you calculate how much it would cost to service the property in various types of events (ice only, minor snowfall, major snowfall, etc.).
Protect your margins
If you’re concerned about profitability, there are things you can do to create “buffer space” in your margins.
For example, consider shrinking your service area. You may cater to a wide range of counties for your regular lawn care and landscape services, but when it comes to snow and ice removal, less might be more. Since snow events can be sporadic—and will probably affect all your customers at once—limiting your scope of properties can help make the load more manageable and reduce stress on yourself and your teams.
You can also use resources from the Snow and Ice Management Association (SIMA) to keep up with industry best practices. SIMA’s Best Practices in Snow Service Procurement infographic, for instance, shares seasonal timelines that can help you prepare for winter storms long before they occur.
As you can see in the graphic, SIMA recommends ordering the materials you need early on to spread out your costs. You’ll also want a system that can simply and reliably track materials once you’ve purchased them. (For example, you want to know how much salt was used on a site after an event compared to how much had been allocated.) The robust job costing features in Aspire allow you to manage materials and view changes in real-time so you can check your progress throughout the season.
Determine the appropriate pricing model(s)
There are several options for pricing your snow and ice removal services, and each has its own pros and cons. It’s less about picking the best one and more about choosing a model (or models) that makes the most sense for your business based on your location, cash flow requirements, and number of customers.
The most straightforward pricing model is to offer a set of services at fixed hourly costs. Shoveling and blowing for $75/hour, for example, and plowing for $150/hour. This hourly method (also called “time and materials”) can be used on its own or built into seasonal contracts if snowfall exceeds a certain amount.
If you choose to use time and materials pricing, you’ll need to decide at what increments to bill (15-minute, 30-minute, 60-minute, etc.) and whether you want to set a minimum. For example, if you visit a site, you probably want to bill for at least one hour—even if you’re only there for 40 minutes. Once you pass the one-hour mark, incremental pricing would kick in.
If you want to charge the customer every time you clear a lot, use per push pricing. This can be a good option if you foresee the need to clear an area multiple times during a single event. It can come back to haunt you, though, if a customer doesn’t want to pay multiple times—leaving your crews stuck with the unpleasant task of moving extremely high volumes of snow all at once.
A common pricing structure is to charge per event. This means you would charge customers once every time you service their property during a storm—even if you clear it multiple times.
Per event pricing can also be broken down into event types (ice only, 2–4 inches of snow, 4–8 inches of snow, etc.) and billed according to those increments.
One of the main drawbacks to the models above (if you’re in an area with unpredictable snowfall) is that you might not get paid at all. If it doesn’t snow, you’re stuck with inventory you don’t need—or subcontractor fees you can’t get back.
That’s where seasonal contracts come in. When you contract with a client, they agree to pay a set price for your services—regardless of whether they’re needed. You can also protect yourself by adding language to the contract that increases the price if snowfall is much higher than expected.
Multi-season contracts are just like regular contracts, except they span more than one season. These can be preferable for customers because the risk of overpaying for unused services diminishes when you cover a larger time period. It’s also easier for them to build anticipated expenses into their budget using a model like this.
Finally, multi-season contracts are great for maintaining strong relationships with customers. Just make sure to include an annual rate increase to cover the costs of inflation and growth so you don’t start out profitable but taper off as time goes on.
A single pricing model might not make sense for all your jobs. You may need to offer contracts for some clients and per event pricing for others. The good news is that you can create project templates using any of these models in Aspire Landscape business management software—giving you the flexibility you need to run your company efficiently.
A word of caution, though: While a single pricing model might not work for everything, the simpler your set-up, the easier it will be to manage your jobs—no matter what system you use. If you offer too many options, or base pricing on too many variables, it’s difficult and time-consuming to manage. And when you’re battling the chaos of a winter storm, anything you can do to make life easier for exhausted crews and administrators helps.
In a sense, pricing snow and ice removal jobs is no different from pricing your other services. You use data from past years to determine how much you need to spend on time and materials, build estimates based on a review of the site, and monitor job costing data to stay under budget.
If you’ve worked in snow and ice for long, though, you know it’s not that easy. The unpredictability and harsh conditions brought by winter storms can make snow removal a mammoth task. And when you’re in a region where weather patterns fluctuate, it can be difficult to prepare.
But if you know your costs, protect your margins, and choose pricing models that work for you, you can brave the winter season with confidence—and make a profit in the process.
Interested in seeing how Aspire can make your life easier when it comes to snow and ice management? Sign up for a personalized demo below!