If you don’t separate your salt contracts from your push contracts, then you probably left money on the table this year.
The snow didn’t start as early as many might have liked, but once it came, steady snowfall and a few big storms have kept crews moving since before Christmas. The lake-effect snow machine dropped record accumulation in Pennsylvania and New York. But even the late 2017 dump in the Midwest and the East Coast couldn’t push December snow totals to average numbers. Outside of Montana and Wyoming, snow states failed to hit average precipitation totals.
January began like December ended, with a few strong storms and more lake-effect snow that should bring January snowfall totals up to 10-year averages. So, there is some optimism that snowfall totals will trend toward average numbers in the beginning of the new year.
One thing that makes this snow season a lot like other years is that you are probably wondering if your contract types are helping or hurting your profitability. Your yearly contracts likely are playing out fairly well, whereas your per-push and hourly customers are getting a good deal this year. Sure, they are only paying for when you are there, but you are paying for the infrastructure to service them year-round.
In this year’s dynamic, salt contracts should be a large contributor to your overall revenues and profits. It’s been a perfect storm for ice contracts this year. First, there are the snowfalls of less than 2 inches that made up most of the precipitation in December. Those salting events probably didn’t even need a push, which affords almost drive-by efficiency.
The unusually cold temperatures for most of the country means that the little snow that did fall stuck around parking lots and walkways longer. If you’re not salting, it probably looks like you’re not doing your job very well, and I would expect the guy who writes the checks will re-examine your contract for next year.
I’m intimately familiar with this no-salt scenario every time I walk through our parking lot here at the offices of PLOW and PlowSite.com. Our snow contractor might be a good one, but you wouldn’t know it given the constant ice sheet that has remained for the past month. Never mind that the discerning owners of our Class B office space likely declined the salt contract at the beginning of the season. It’s still the contractor’s job to convince them that salt is a necessary management technique. You wouldn’t tell a dentist which instrument to use, and how you manage snow events depends on your expertise and judgment as a contractor.
Additionally, compared to recent years, salt looks to be fairly inexpensive and in abundant supply, as is the case in many low-snowfall years. Cities and departments of transportation aren’t buying as much and driving up prices in the name of public safety. That means more profit for the de-icers that you use.
These factors, plus the overall safety of your clients, should prompt snow contractors to re-evaluate the structure of their seasonal contracts. Salt should be separate, and it should be insisted upon as a tool for snow and ice management. Consider that salt contracts are generally more profitable than push contracts. You should make at least 50 percent profit on salt contracts, and they should be structured on a per-event basis. That way there is no wasted resource for you. You show up when there is a trace to less than 2 inches, the times you otherwise wouldn’t need to service the property. Sure, you will be showing up to sites more often, but the level of service and the final product will cement your commitment to the property owner, manager and public safety.
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