Every time we survey our members asking for feedback, they constantly tell us that they want more help bidding work. This is the reason we created our in-house programs like Build a Bid and Beyond the Bid. However, there are still many contractors out there who simply don't know how to create a sustainable bidding process, which may explain why you often have non-return customers; there is a lot of churn in this business!
Here are the simple steps a snow contractor must take to build a long-term pricing system, use these in conversations to feel out the prospect you are talking to and get an idea of their skill level:
1) Know the numbers: A solid snow contractor will do extensive job costing and understand their true cost of conducting work. This isn't just the cost of their truck or plow, it could include insurance on equipment, manpower, materials, overhead, and more. There are a hundred ways to work these numbers, but the key is that they have a solid understanding of their basic costs.
2) Production is king: A good contractor will be a data hound. They'll analyze how long on average it takes them to plow or salt a property, and they come up with production rates that tell them an amount (X inches of snow), a square footage/acreage, and an amount of time.
3) Predict the future from the past: Quality, seasoned professionals will take a close look at historical weather data and be very informed about the macro and micro weather patterns in their areas of service. They will then use these averages to estimate a number of events in a given year.
Once the contractor has this information, they can look at a property, determine how much time and effort (and cost) it would take to service for an average number of events. From there, they can calculate a burden rate, and start factoring in profit.
This all sounds very simple in written format, but its actually a detailed process that makes some basic assumptions, and is ultimately a bit of a gamble due to its reliance on weather. There is a lot more to this process from an operational/sales and marketing side, and there are some tools that good contractors use to mitigate the risk of operating a weather-dependent business, we'll address those in another post sometime!
Thursday, September 23, 2010
Subscribe to:
Post Comments (Atom)
Posts
Brian - Maybe one of the issues here is that in addition to these quantitative bidding elements, MARKETING is also another essential component. I suspect it gets overlooked because it is qualitative.
ReplyDeleteIn my 15 plus years of snow work we retained most of our clients from year to year, and having a detailed Snow Response Plan was a key reason why. That SRP was just as important, if not more so than the number (price). In fact, my belief is that it validates the number.
This shows to the client that you have a plan for getting the job done - that you have considered everything - different types of storm scenarios, efficiency, and of course - safety.
SRP's should be a snap these days with all of the info and technology that is available. We would also package ours nicely too. As a result, it becomes a working document that lives on for years ... hint, hint - and keeps the competition out as a result!
Jeff