# Factoring Overhead and Operational Costs into Quotes/Bids



## OneManWithAPlow

How do I factor operational costs and overhead into my pricing?

Weve had one plowable event this season in Central CT and through that I realized that my pricing didn't scale appropriately. I ended up charging too little for residentials that had also wanted walkways cleared as some customers only wanted their driveways done.

As this is my first year I understand my overhead is going to be exceptionally high and I cant pass that cost directly onto the consumer.

Say my total cost thus past year has been about 15k-17k including everything from insurance to trucks to plows to business cards etc.

I know it varies by location, but an example would be greatly appreciated. If I have two people out in a truck, at $16/hr with $10 in gas/hr that alone is $42/hr, than on top of that there is the cost of insurance and maintenance and overhead, how difficult is this to estimate without knowing the total amount of potential work hours?


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## Philbilly2

Are you a snow only operation or do you offer year round services?

The reason that I ask is if you are a year round outfit, it makes things easier to figure.

Here is how I do it.

Take each thing that you have a cost on and device it by 2000 hours (typical average) and it will give you an hourly cost on your overheard.

For example my two of my biggest nutts:
My insurance package is $34,000 annually, so I have $17hr of insurance that I need to absorb to my hourly rate to cover insurance
My fuel bills average $500 a week x 52 weeks = $26,000 annually, so I have to add $13 per hour to absorb to my hourly rate to cover fuel.

EDIT: Left that very vage... my apologies: 
Need to add that that number is spread out over multiple employees so the numbers does not go on to just one employee hour. Adding that $30 plus on one hour is hard to do, those numbers are based on 8 men so 16,000 hours if you catch what I am saying.


So on and so forth.


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## OneManWithAPlow

Philbilly2 said:


> Are you a snow only operation or do you offer year round services?
> 
> The reason that I ask is if you are a year round outfit, it makes things easier to figure.
> 
> Here is how I do it.
> 
> Take each thing that you have a cost on and device it by 2000 hours (typical average) and it will give you an hourly cost on your overheard.
> 
> So on and so forth.


That is very helpful. I intend on doing year round services, starting this spring which is why im trying to figure everything out before than. I have been browsing LawnSite as well as Turf and strive to obtain as much information as possible. Any resources youd recommend that would help moving forward? My first year I can only hope to have 2,000 hours of work.
Would I also multiply 2,000 by $42 and factor that in on top of the total cost thus far? In theory the following year my overhead would drop assuming I didn't sustain any growth on the business side...would my prices decrease?
------------------------------------------
I took an apprx $42/hr costs and multiplied it by 2000 work hours. Gave me $84,000 for "rough operational costs". In addition to the $20,000 start up costs, that totals $104,000. Divided that by 2000 working hours, and got $52/hour as my "charging rate".

If anything this has allowed me to see that my "startup" costs is really only a small fraction of the total expenses...most of my expenses come from the hourly operational costs (over 80% of total expenses)..Does this seem structurally accurate? Are there other costs that should be factored in?


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## FredG

How come you think you can't figure the hours, Most know how many man hrs are involved in the bidding process. Maybe I'm not understanding your meaning. You no you have $42.00 off the top, You did not add a profit on top of the $16.00 per hr or the truck? Do you mean you paid man hrs but don't know where or how they occurred. I'm not trying to hassle you, I'm thinking I don't understand what your looking for.


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## FredG

Never mind Phil got me straight, I see what you were looking for.


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## OneManWithAPlow

FredG said:


> How come you think you can't figure the hours, Most know how many man hrs are involved in the bidding process. Maybe I'm not understanding your meaning. You no you have $42.00 off the top, You did not add a profit on top of the $16.00 per hr or the truck? Do you mean you paid man hrs but don't know where or how they occurred. I'm not trying to hassle you, I'm thinking I don't understand what your looking for.


$16/hr per person operating the truck as well as $10/hr for gas for the truck totals $42/hr cost of operating the truck. Ive been doing this for one storm thus far, so I have no idea how many work hours there are going to be throughout the year to spread out the total startup costs. I did not add a profit, it is a very rough figure more so used as an approximate example.


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## John_DeereGreen

Take your total overhead expenses and divide by the total number of man hours you expect to work per season. That's the easiest way to put it. 

You know the difference between overhead costs and variable costs, correct? In Philbilly's example above, our fuel costs aren't overhead in my pricing structure, it's part of an hourly cost for snow removal, and a per mile cost for landscape/maintenance work. 

Simply put, our overhead cost is insurance, shop mortgage, utilities, any salaries paid, tool costs, shop supplies, etc. That number is divided by the man hours we expect to work for the year. 

Hourly or per mile costs are labor, labor burden, fuel, vehicle, trailers, mowers, plows, skid steers, etc. Yes, it costs money to make payments on these items if they're not working. However, the way our pricing is structured, all those costs are covered hourly or per mile during our summer work season. 

There's a lot of math that goes into figuring all this, but that's a Cliff Notes version for a small operation. You're not going to be accurate at it your first few years either. It takes experience to know how many man hours you can sell per season, and things like that.


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## Philbilly2

OneManWithAPlow said:


> at $16/hr with $10 in gas/hr that alone is $42/hr,


I get $26?


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## John_DeereGreen

OneManWithAPlow said:


> $16/hr per person operating the truck as well as $10/hr for gas for the truck totals $42/hr cost of operating the truck. Ive been doing this for one storm thus far, so I have no idea how many work hours there are going to be throughout the year to spread out the total startup costs. I did not add a profit, it is a very rough figure more so used as an approximate example.


Ugh. It doesn't cost you $32 an hour to operate the truck. It costs you 32 an hour for labor.

What does the TRUCK cost you to run an hour? Maintenance, repair, depreciation/replacement and fuel. Take that number, then add your labor and labor burden cost per hour. Then figure your overhead per hour.

The way I used to figure for snow hours is to take your average seasonal snowfall and divide it by 2 (or whatever your normal trigger is).Then take that number and divide it by 2 again. Then multiply by 6 for a 6 hour route, 4 for a 4 hour route, you get the picture. This way, as long as you get half your average snowfall, all your overhead is covered. The problem with doing it this way, is that it inflates your cost per hour and could cost you work depending on your market. You need to sell some seasonal work to help with overhead. That's the easiest way to put it.


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## Philbilly2

John_DeereGreen said:


> You know the difference between overhead costs and variable costs, correct? In Philbilly's example above, our fuel costs aren't overhead in my pricing structure, it's part of an hourly cost for snow removal, and a per mile cost for landscape/maintenance work.


Jarrett is 100% correct here. My trucks are not a "tool" per say as they would be in a snow removal case. My trucks carry the tools and manpower to the site to preform the the work. That is why in my example it is part of my overhead. It is a variable though as he said. Depending on amount of work on the books and locations of the jobs.


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## John_DeereGreen

Philbilly2 said:


> I get $26?


He's figuring 2 people in the truck


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## John_DeereGreen

Damn Phil, apparently the AT&T and Centurylink gerbils are running well on their wheels today!


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## Philbilly2

John_DeereGreen said:


> He's figuring 2 people in the truck


ah... one two many for a first year company imo.


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## Philbilly2

John_DeereGreen said:


> Damn Phil, apparently the AT&T and Centurylink gerbils are running well on their wheels today!


like a top fuel hampster!


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## John_DeereGreen

I love these threads, because they quickly show who's got the business sense to scale a business, and who's better suited to staying small.

A former employer told me once that he had an MBA from the School of Hard Knocks. And I thought he was nuts until I started into the fun world of being a business owner. It took about a year to learn exactly what he was talking about, but that statement has stuck with me since I worked for him in high school. I have no business schooling, training or anything. I've learned it all the hard way.

And one thing is for damn sure, the bigger you get, the easier it is for one thing to crush you. I'm sure a lot of the 50-150k a year guys think I'm crazy saying this, but it's an entirely different world at 250k, then around 500k, then 750k, and the real headaches and stress starts around a million. The biggest problem at these steps is it takes management overhead that you aren't big enough to bill for, but can't grow without. It doesn't take more than a year in this zone to go under unless it's very well managed from an expense standpoint.

The fastest way to race to the bottom in this industry is having more overhead than you can bill for longer than you have cash to sustain the increased overhead. 

The view from the top isn't what you'd think most of the time.


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## John_DeereGreen

Philbilly2 said:


> like a top fuel hampster!


Amen!


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## FredG

School of hard knocks is a rough road, Meaning around here is learned from all your mistakes along the way and surviving, Some don't survive they go down and you see them pop up ready for action but all the mistakes behind him and become successful. Some guys don't experience this and are just natural good business people. Some people like me when I was young couldn't be told nothing, It was my investment and went with it.

Hard knocks makes you tough and if you been there are not likely to repeat those knocks again. Spending $200k $220k and struggling from mistakes is a nightmare. I bet your old boss was tighter than rubbing to nickles together accepted for partying. They work hard and play hard. LOL


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## Philbilly2

FredG said:


> School of hard knocks is a rough road, Meaning around here is learned from all your mistakes along the way and surviving, Some don't survive they go down and you see them pop up ready for action but all the mistakes behind him and become successful. Some guys don't experience this and are just natural good business people. Some people like me when I was young couldn't be told nothing, It was my investment and went with it.


Fred makes a good point here.

I think that getting stomped on a job makes a good man out of you. It makes you learn your numbers much faster. I was lucky. I only got stomped hard on one job before it made me sit down and figured out my hard numbers. I lost 12k on a 5 day job... Talk about getting punched in the gut.

So what do you do... you pay your guys, pay your subs, pay your suppliers, figure out what happened and were you took the loss at and learn from it. 
Now what you learn from it in many peoples cases is... "we are not going to do that type of work again", others like myself pick every aspect of the job apart and find the exact point when everything went to hell in a handbag.


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## OneManWithAPlow

John_DeereGreen said:


> What does the TRUCK cost you to run an hour? Maintenance, repair, depreciation/replacement and fuel. Take that number, then add your labor and labor burden cost per hour. Then figure your overhead per hour.


Any suggested methods on factoring in maintenance/repair/depreciation this early on?



John_DeereGreen said:


> The way I used to figure for snow hours is to take your average seasonal snowfall and divide it by 2 (or whatever your normal trigger is).Then take that number and divide it by 2 again. Then multiply by 6 for a 6 hour route, 4 for a 4 hour route, you get the picture. This way, as long as you get half your average snowfall, all your overhead is covered. The problem with doing it this way, is that it inflates your cost per hour and could cost you work depending on your market. You need to sell some seasonal work to help with overhead. That's the easiest way to put it.


Ballpark figures, roughly 50' annually. /4 = 12.5 * 7 (7 hour route) = 87.5 snow hours.


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## Philbilly2

OneManWithAPlow said:


> Any suggested methods on factoring in maintenance/repair/depreciation this early on?


Depreciation is a question for your tax man.


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## OneManWithAPlow

John_DeereGreen said:


> Simply put, our overhead cost is insurance, shop mortgage, utilities, any salaries paid, tool costs, shop supplies, etc. That number is divided by the man hours we expect to work for the year.
> 
> Hourly or per mile costs are labor, labor burden, fuel, vehicle, trailers, mowers, plows, skid steers, etc. Yes, it costs money to make payments on these items if they're not working. However, the way our pricing is structured, all those costs are covered hourly or per mile during our summer work season.


Simply put, overhead costs is any expenses that are incurred without actually running the trucks or performing services? As if the business is open, without any actual services being provided but are still ready to perform. tools, maintenance, etc is factored in. Than the hourly costs are factored on top of that..?

So,

Overhead + (Work Hours * Hourly costs) / Work Hours = approximate hourly income?

I know this is very rough, but how can I improve this starting point for a first year business?


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## OneManWithAPlow

Philbilly2 said:


> Fred makes a good point here.
> 
> I think that getting stomped on a job makes a good man out of you. It makes you learn your numbers much faster. I was lucky. I only got stomped hard on one job before it made me sit down and figured out my hard numbers. I lost 12k on a 5 day job... Talk about getting punched in the gut.
> 
> So what do you do... you pay your guys, pay your subs, pay your suppliers, figure out what happened and were you took the loss at and learn from it.
> Now what you learn from it in many peoples cases is... "we are not going to do that type of work again", others like myself pick every aspect of the job apart and find the exact point when everything went to hell in a handbag.


I made a similar mistake on a much smaller scale which is exactly what brings me here. Example, I was doing driveways for $50. Charging an extra $10 for the sidewalk..The sidewalks were taking the entire job nearly twice as long, with most of the required labor. This was poor practice on my part, but I want to get better with time, not settle for less.


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## ktfbgb

OneManWithAPlow said:


> How do I factor operational costs and overhead into my pricing?
> 
> Weve had one plowable event this season in Central CT and through that I realized that my pricing didn't scale appropriately. I ended up charging too little for residentials that had also wanted walkways cleared as some customers only wanted their driveways done.
> 
> As this is my first year I understand my overhead is going to be exceptionally high and I cant pass that cost directly onto the consumer.
> 
> Say my total cost thus past year has been about 15k-17k including everything from insurance to trucks to plows to business cards etc.
> 
> I know it varies by location, but an example would be greatly appreciated. If I have two people out in a truck, at $16/hr with $10 in gas/hr that alone is $42/hr, than on top of that there is the cost of insurance and maintenance and overhead, how difficult is this to estimate without knowing the total amount of potential work hours?


Most new businesses operate at a loss for the first 2-3 years. You can write off the loss on your business taxes. Im not saying to go in the hole, Im just saying a loss on paper. The first year or so if you can bill enough to pay for all your labor, operating expenses, insurance expenses etc. you will be ok. You wont be able to recover the start up cost the first year, well most of the time anyway. Much less turn a profit on paper. Don't confuse profit with your pay as an owner. They are different.

If you financed the truck and plow, then add up monthly payments for those items and divide by estimated number of billable hours. If you paid cash for the truck and plow then you use depreciation, or cost to replace that equipment at the end of its service life. So If you have an equipment replacement schedule of like new truck every 7 years and new plow every 4, then you take the cost of the new equipment, divide that by the service life years, and divide that by yearly billable hours to come up with hourly cost. You can't take the full price of equipment and divide it up into an hourly cost that will be recovered in 1 year. The cost will be too high to be competitive.

You are in it now, just make sure to take good notes, so that you have data at the end of the season so that you can pull good numbers from it. You can't change the current contracts you have, but you can up prices on any new ones you may get. Also remember that there is a ceiling and you can only charge what the market will bear. If that number is lower than what you need then you have to find a way to increase productivity so that more work can be billed per hour to make up for it.

May I ask why you have two guys in a truck your first year? Are you strictly doing residential? Are you one of the two in the truck? If so you may need to decide to do all the work yourself and cut the other guy loose if you underbid the work you currently have.


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## Philbilly2

OneManWithAPlow said:


> I made a similar mistake on a much smaller scale which is exactly what brings me here. Example, I was doing driveways for $50. Charging an extra $10 for the sidewalk..The sidewalks were taking the entire job nearly twice as long, with most of the required labor. This was poor practice on my part, but I want to get better with time, not settle for less.


I think you need to separate the truck from the shovler when you come to figuring costs.

A shoveler has an outlay cost of $16 per hour plus an overhead of WC insurance and the actual shovel itself. So unless it is taking more than 1/2 hour to shovel a sidewalk he is more profitable than the truck.

Why can the guy in the truck not shovel the walk? The two guys in the truck thing is what is getting me here.


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## OneManWithAPlow

ktfbgb said:


> May I ask why you have two guys in a truck your first year? Are you strictly doing residential? Are you one of the two in the truck? If so you may need to decide to do all the work yourself and cut the other guy loose if you underbid the work you currently have.


I am the only man in the truck. The 2 people @ $16/hr was a figure for an example. If theres heavy snowfall I will have 1 man help with me for the sidewalk heavy portion of my route and that's it.



ktfbgb said:


> If you financed the truck and plow, then add up monthly payments for those items and divide by estimated number of billable hours. If you paid cash for the truck and plow then you use depreciation, or cost to replace that equipment at the end of its service life. So If you have an equipment replacement schedule of like new truck every 7 years and new plow every 4, then you take the cost of the new equipment, divide that by the service life years, and divide that by yearly billable hours to come up with hourly cost. You can't take the full price of equipment and divide it up into an hourly cost that will be recovered in 1 year. The cost will be too high to be competitive.


For the truck it is a combination of the two. Truck was 5k, I took out a loan for 3k, and paid cash for 2k. Maintenance on the other hand...I made the stupid mistake of investing a bit too much into the truck and probably spent more on maintenance than I should have...(probably total about 3k on truck and plow maintenance)


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## OneManWithAPlow

Philbilly2 said:


> I think you need to separate the truck from the shovler when you come to figuring costs.
> 
> A shoveler has an outlay cost of $16 per hour plus an overhead of WC insurance and the actual shovel itself. So unless it is taking more than 1/2 hour to shovel a sidewalk he is more profitable than the truck.
> 
> Why can the guy in the truck not shovel the walk? The two guys in the truck thing is what is getting me here.


That was an example. I am one of the guys in the truck, the other is a shoveler (usually a buddy of mine who will help out for a few residentials)


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## ktfbgb

OneManWithAPlow said:


> I am the only man in the truck. The 2 people @ $16/hr was a figure for an example. If theres heavy snowfall I will have 1 man help with me for the sidewalk heavy portion of my route and that's it.
> 
> For the truck it is a combination of the two. Truck was 5k, I took out a loan for 3k, and paid cash for 2k. Maintenance on the other hand...I made the stupid mistake of investing a bit too much into the truck and probably spent more on maintenance than I should have...(probably total about 3k on truck and plow maintenance)


Ok so you need to add up all those numbers, I get 8k, but you didn't put cost of plow in. Its a 5k truck so depending on how much you use it, how much snow you get etc. will determine the remaining service life on it. I would say a couple years tops but I don't know your situation. So divide the 8 by 2 years, thats 4. If you divide that by the 2000 hours a year, I would half that for your first year to be safe, you get 20 per hour for the truck. I would say 40 per hour because you probably wont bill 2000 hours your first year. these are just examples of course and wont represent your actual numbers.


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## OneManWithAPlow

ktfbgb said:


> Ok so you need to add up all those numbers, I get 8k, but you didn't put cost of plow in. Its a 5k truck so depending on how much you use it, how much snow you get etc. will determine the remaining service life on it. I would say a couple years tops but I don't know your situation. So divide the 8 by 2 years, thats 4. If you divide that by the 2000 hours a year, I would half that for your first year to be safe, you get 20 per hour for the truck. I would say 40 per hour because you probably wont bill 2000 hours your first year. these are just examples of course and wont represent your actual numbers.


My total overhead thus far has been about 17k. I have two trucks, three plows. Insurance is about 3k per year, registration alone was about 1k, 8k for trucks and plows. 3k on maintenance/parts for trucks/plows and about 1k on getting the actual business up and running everything from business cards to advertising to website to paperwork filings etc. 1k on snowblowers.

Total cost for trucks/maintenance including insurance has been about 15k (3ins +1reg + 8cost + 3maint = 15)
Im confident I can get at least 2 more years after this season out of each truck. That's a total of 3 seasons. 15/3 = 5. I doubt ill get 1000 hours this year with such weak snowfall, but I will also run them (at least 1) in the summer for lawns (and will have to get mowers) which complicates things a bit.

Also, I took your figure of 4000 per year, and billed at 2000 hours that comes out to 2, im not sure where you carried the 0 from to get 20 per hour before doubling.


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## ktfbgb

Sorry ya I added an extra 0 my bad.


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## OneManWithAPlow

ktfbgb said:


> Sorry ya I added an extra 0 my bad.


Gotcha, so youd factor in $2 per working hour to cover truck costs in that situation. What is a range of profit margin most of you guys are looking for if you don't mind me asking? My best guess would be 10% net, obviously slightly more for gross but these are relatively blind figures. Whats an approximate gross profit margin for this industry?


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## FredG

Philbilly2 said:


> I think you need to separate the truck from the shovler when you come to figuring costs.
> 
> A shoveler has an outlay cost of $16 per hour plus an overhead of WC insurance and the actual shovel itself. So unless it is taking more than 1/2 hour to shovel a sidewalk he is more profitable than the truck.
> 
> Why can the guy in the truck not shovel the walk? The two guys in the truck thing is what is getting me here.


I understand the threads above but isn't moving snow a little different for estimating. If your giving your shovel man $16 you are not going to estimate him for $40.00phr. You got your truck out for $42.00 don't you want to get $80.00 to a $100.00. I'm not saying bid by the hour but you have to know about how much each job is going to take you to complete and you need to be close on completion.

I'm basically bidding my construction jobs by sq ft. Relatively simple providing you knock it out in a reasonable amount of time. I agree one man should handle the walks to. I do. Whats it take 10min 60' of walk.


OneManWithAPlow said:


> I made a similar mistake on a much smaller scale which is exactly what brings me here. Example, I was doing driveways for $50. Charging an extra $10 for the sidewalk..The sidewalks were taking the entire job nearly twice as long, with most of the required labor. This was poor practice on my part, but I want to get better with time, not settle for less.


You just went to hard knocks. I bet that won't happen again. Never think that's ok I will make it up somewhere. It don't come back, Funds lost are gone. You will get it down.


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## ktfbgb

And ya the 1000 hours for the year is billable hours for the year. Not for the season. We were going off you saying that you planned to work the trucks all year. There is no way your going to get 1000 hours billed for 3 trucks for a snow season. I don't know of anyone with a small operation like yours or mine that could just run snow removal and be profitable. To do that you have to have a rather large organization selling close to the 1M gross sales to be a strictly snow only operation that can support itself and turn a profit for the owner. For the smaller guy you have to work the trucks all year, have insurance for the biz year round etc. to make it worth it.


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## alcl1

OneManWithAPlow said:


> How do I factor operational costs and overhead into my pricing?
> 
> Weve had one plowable event this season in Central CT and through that I realized that my pricing didn't scale appropriately. I ended up charging too little for residentials that had also wanted walkways cleared as some customers only wanted their driveways done.
> 
> As this is my first year I understand my overhead is going to be exceptionally high and I cant pass that cost directly onto the consumer.
> 
> Say my total cost thus past year has been about 15k-17k including everything from insurance to trucks to plows to business cards etc.
> 
> I know it varies by location, but an example would be greatly appreciated. If I have two people out in a truck, at $16/hr with $10 in gas/hr that alone is $42/hr, than on top of that there is the cost of insurance and maintenance and overhead, how difficult is this to estimate without knowing the total amount of potential work hours?


i will by no means take credit for this spreadsheet, but this is something that i found highly useful when i was looking for the same thing. it is a little complicated to use at first but once you play around with it - it automatically breaks down jobs in simplest form based on how many hours you operate per season or year (i use actual work hours). simply put, factor in YOUR numbers in the clear areas above, employee wages etc... then below in the green areas i put in how long i am at the job and depending on what i am doing and what equipment i need there i bill everything for the same time... i do lawn care in summer and as an example say i have a cutting job that takes an hour, i bill the trailer, insurance, truck, mowers and trimmers out at 1 hour.. it calculates the total, you factor in your employee as an hour at this wage then it give you a base price as in at cost pricing... then alittle beside you can calculate what you want for profit enter that number and it will display what to charge... i hope that make sence, its a simple tool and can greatly help if used correctly.. it looks like this but i cant upload the file because its on excel.. if interested i can always send via email.


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## ktfbgb

FredG said:


> I understand the threads above but isn't moving snow a little different for estimating. If your giving your shovel man $16 you are not going to estimate him for $40.00phr. You got your truck out for $42.00 don't you want to get $80.00 to a $100.00. I'm not saying bid by the hour but you have to know about how much each job is going to take you to complete and you need to be close on completion.
> 
> I'm basically bidding my construction jobs by sq ft. Relatively simple providing you knock it out in a reasonable amount of time. I agree one man should handle the walks to. I do. Whats it take 10min 60' of walk.
> 
> You just went to hard knocks. I bet that won't happen again. Never think that's ok I will make it up somewhere. It don't come back, Funds lost are gone. You will get it down.


That's what I do. I pay $15-$18 per hour for shovelers. Bill out at $40 per man hour on the shovelers.


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## FredG

These situations in these threads is exactly what john deere green X boss was talking about.


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## ktfbgb

FredG said:


> These situations in these threads is exactly what john deere green X boss was talking about.


Honestly my shovel crew pulls in almost as much as my plow truck does per storm. OP getting shovelers that can do work while you are plowing without your needing to be there is a way to bill for more hours of work in the same amount of time. Example, my sidewalks billed out at $1,300.00 last storm. Wages for the shovelers was just under $300. That's an extra $1000.00 for the storm for me essentially spending a few minutes on the phone with the foreman.


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## OneManWithAPlow

FredG said:


> These situations in these threads is exactly what john deere green X boss was talking about.


For the next newb who stumbles upon this with a similar question, we can only hope that it will be infinitely useful. I viewed about 3 other similar posts on plowsite asking a similar question that only had about 3 -5 responses that weren't nearly as helpful as you guys have been.


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## Philbilly2

ktfbgb said:


> That's what I do. I pay $15-$18 per hour for shovelers. Bill out at $40 per man hour on the shovelers.


Bingo... your shovler just became your most profitable item to your company... even at $20 an hour he is making the company big margins!


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## Philbilly2

OneManWithAPlow said:


> For the next newb who stumbles upon this with a similar question, we can only hope that it will be infinitely useful. I viewed about 3 other similar posts on plowsite asking a similar question that only had about 3 -5 responses that weren't nearly as helpful as you guys have been.


All depends on the the time of year and how the mood strikes the fire that day!


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## ktfbgb

Philbilly2 said:


> Bingo... your shovler just became your most profitable item to your company... even at $20 an hour he is making the company big margins!


Exactly! And that offsets the cost of me being dry in a truck for the storm lol.


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## OneManWithAPlow

Philbilly2 said:


> Bingo... your shovler just became your most profitable item to your company... even at $20 an hour he is making the company big margins!


Exactly what I was thinking for residential with 2 guys in the truck. One obviously needs to operate the truck, but you can find snowblowers dirt cheap in my area and even if you made them more efficient with blowers, maintenance is pretty cheap/simple, and the way im going it would cut the time in half for some of my properties not necessarily decreasing costs from a truck but nearly doubling productivity (with the exception of travel time which is something im working on)

Those little snow blowers with a 18 inch path and a 5hp motor do work on some of the lighter stuff, can take out a sidewalk in minutes and tidy up edges and spots the plow cant get to real nice...also light enough for one man to get out the truck if need be


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## ktfbgb

OneManWithAPlow said:


> Exactly what I was thinking for residential with 2 guys in the truck. One obviously needs to operate the truck, but you can find snowblowers dirt cheap in my area and even if you made them more efficient with blowers, maintenance is pretty cheap/simple, and the way im going it would cut the time in half for some of my properties not necessarily decreasing costs from a truck but nearly doubling productivity (with the exception of travel time which is something im working on)
> 
> Those little snow blowers with a 18 inch path and a 5hp motor do work on some of the lighter stuff, can take out a sidewalk in minutes and tidy up edges and spots the plow cant get to real nice...also light enough for one man to get out the truck if need be


Do you do any commercial or only residential. My sidewalks are for HOA's. But city walks, or sidewalks for schools etc would be the same. The money comes from large amounts of sidewalk on a single account where the crew parks and is there for a while, not wasting time driving from residential to residential sidewalk. I have a blower for back up, but honestly they usually just get shovels and shovel with the storm.


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## ktfbgb

What I'm getting at is a couple shovelers working for a few hours per site per storm is a lot more money in your pocket vs a couple shovelers handling the shovel aspect of a bunch of residential accounts. Too much time is wasted driving around. You want commercial work for shovelers because the commercials want the walks clear through the storm, not just at the end when it's over.


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## FredG

OneManWithAPlow said:


> For the next newb who stumbles upon this with a similar question, we can only hope that it will be infinitely useful. I viewed about 3 other similar posts on plowsite asking a similar question that only had about 3 -5 responses that weren't nearly as helpful as you guys have been.


Some guys may think make your way on your own. Because they did. Some may think why are you doing this without knowing what your doing. Just saying. Different personality's.


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## Philbilly2

OneManWithAPlow said:


> Exactly what I was thinking for residential with 2 guys in the truck. One obviously needs to operate the truck, but you can find snowblowers dirt cheap in my area and even if you made them more efficient with blowers, maintenance is pretty cheap/simple, and the way im going it would cut the time in half for some of my properties not necessarily decreasing costs from a truck but nearly doubling productivity (with the exception of travel time which is something im working on)


Yeah, that is going to be an issue. You cannot expect a guy to ride along in the truck and only get paid for 15 minutes here, then 20 minutes there, then 10 minutes over there netting him a grand total $9.50 for a 4 hour tour. I think until you can make a route that keeps the truck going every minute that a shovel monkey shoveling also it will be tough to have a 2 man crew be profitable.

You need to bust your ass your first years in business. You need to be the truck driver, snowblower operator, mechanic, salesman, you know all hats. Any additional overhead that you carry will leave you that much further from making money.


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## OneManWithAPlow

ktfbgb said:


> Do you do any commercial or only residential. My sidewalks are for HOA's. But city walks, or sidewalks for schools etc would be the same. The money comes from large amounts of sidewalk on a single account where the crew parks and is there for a while, not wasting time driving from residential to residential sidewalk. I have a blower for back up, but honestly they usually just get shovels and shovel with the storm.


I subcontract all my commercial currently at 80/hr. I do not hold the contracts, just do the labor. nothing that requires getting out of the truck so there is no need for shovelers on these commercial. But yes, you are correct. However having one shoveler on hand definitely helps facilitate drives, taking at least 1/3 of the time off per contract. The rate does not change based on the help I have with me at the clients property. If they are paying me $50 for their property to be serviced, and I can do two properties an hour by myself, a shoveler allowing me to get in a third property they are giving me nearly 150% profit(50/hr) at the cost of 15/hr.


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## OneManWithAPlow

Philbilly2 said:


> Yeah, that is going to be an issue. You cannot expect a guy to ride along in the truck and only get paid for 15 minutes here, then 20 minutes there, then 10 minutes over there netting him a grand total $9.50 for a 4 hour tour. I think until you can make a route that keeps the truck going every minute that a shovel monkey shoveling also it will be tough to have a 2 man crew be profitable.
> 
> You need to bust your ass your first years in business. You need to be the truck driver, snowblower operator, mechanic, salesman, you know all hats. Any additional overhead that you carry will leave you that much further from making money.


I understand, but I would be paying them an hourly amount. Not just for the time spent shoveling. The time theyre in the truck is the time they are working for me. they can spend it riding in the bed doing an oil change or cleaning the truck! Im not trying to pass on the labor, im trying to make the business more efficient. As of now I have been the mechanic, the salesman, the advertiser, the snowblower, the operator, the driver, and the customer service rep/HR department. on a 4 hour route, assuming you could hit your goal to cover costs and include a profit margin, (assuming you factor a shovelers labor at 12-16/hr in) I would think it only makes sense to have a shoveler as it adds a marginal cost to each contract and vastly increases productivity if you can find good help (and that's a whole other conversation)


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## Philbilly2

OneManWithAPlow said:


> $50 for their property to be serviced, and I can do two properties an hour by myself, a shoveler allowing me to get in a third property they are giving me nearly 150% profit(50/hr) at the cost of 15/hr.


No... not 150% profit...

You are making $1.66 a minute currently.

IF you add the shoveler for 1 hr and IF it allows you to service 1 more property at $50,

You now are making $2.25 a minute AS LONG as it scales that way. (Remember what Jarrett (John Deere Green) said back in the beginning of this thread)

So $100 of $100 is 100% profit
but $135 of $150 is 90% profit ($15 goes to shovel monkey)

So you are making 100% profit just you, but if you add a guy, you drop to 90% profit even if you pick up that one extra account.

What you are trying to pick up is volume margins not 150% profit.


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## FredG

Philbilly2 said:


> Yeah, that is going to be an issue. You cannot expect a guy to ride along in the truck and only get paid for 15 minutes here, then 20 minutes there, then 10 minutes over there netting him a grand total $9.50 for a 4 hour tour. I think until you can make a route that keeps the truck going every minute that a shovel monkey shoveling also it will be tough to have a 2 man crew be profitable.
> 
> You need to bust your ass your first years in business. You need to be the truck driver, snowblower operator, mechanic, salesman, you know all hats. Any additional overhead that you carry will leave you that much further from making money.


bingo bingo bingo !!


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## John_DeereGreen

This thread gives me a headache. 

Do not confuse profit with revenue. Our landscape and maintenance services provide about 75% of our revenue, but at only about 15% profit. Our snow removal provides about 25% of revenue but at about 60% profit. 

You also need to forecast your overhead for where you want to be in x years down the road (per your business plan, you do have one right?) and budget appropriately. 

This is where businesses are made and lost. This is where I ****ed up my first time around, calculating overhead costs and controlling them. Believe me, it was a learning experience. 

You should go to Lawnsite and read Procut's how to fail at the lawn care industry thread. It's accurate. How do I know? I've been down that road, just got it controlled before it put us under.


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## OneManWithAPlow

Philbilly2 said:


> No... not 150% profit...
> 
> You are making $1.66 a minute currently.
> 
> IF you add the shoveler for 1 hr and IF it allows you to service 1 more property at $50,
> 
> You now are making $2.25 a minute AS LONG as it scales that way. (Remember what Jarrett (John Deere Green) said back in the beginning of this thread)
> 
> So $100 of $100 is 100% profit
> but $135 of $150 is 90% profit ($15 goes to shovel monkey)
> 
> So you are making 100% profit just you, but if you add a guy, you drop to 90% profit even if you pick up that one extra account.
> 
> What you are trying to pick up is volume margins not 150% profit.


Yes!! Agreed!! Sorry guys I meant productivity, NOT a profit. Dam "P's" threw me off. I meant 150% productivity.


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## ktfbgb

OneManWithAPlow said:


> I understand, but I would be paying them an hourly amount. Not just for the time spent shoveling. The time theyre in the truck is the time they are working for me. they can spend it riding in the bed doing an oil change or cleaning the truck! Im not trying to pass on the labor, im trying to make the business more efficient. As of now I have been the mechanic, the salesman, the advertiser, the snowblower, the operator, the driver, and the customer service rep/HR department. on a 4 hour route, assuming you could hit your goal to cover costs and include a profit margin, (assuming you factor a shovelers labor at 12-16/hr in) I would think it only makes sense to have a shoveler as it adds a marginal cost to each contract and vastly increases productivity if you can find good help (and that's a whole other conversation)


I'm really trying to help you out here so please don't think I'm coming across as a Richard. Tone and inflection don't come out over the internet. So I'm saying this nicely lol. You said you are doing 2 drives per hour, and three with a guy shoveling. You then said a 4 hour route. So I deduct from that you have between 8 and 12 drives. I dont see a way to turn a profit especially if your paying another guy. How much snow do you get per year? And how many times average do you need to service the client?

Let's say it's 10 drives because it's easy math and in the middle of my deduction from you post. Please correct me and tell me if the number of accounts is wrong. You said that you are charging $50 per drive including shoveling if I remember right. So that's $500 every time through the route. I don't know how many times you Service the route per year. Let's be generous and say 20. We get over 100" a year and I don't service that many times, but I'm set up different and only contract second homes so that I can just provide second day service and only service them once when the storm is done. Ok so let's say 20 times through. That's $10,000 for the residential route for the year. The numbers just aren't there to support the second shoveler. If you want to help make up for under pricing then you have to do the residential route by yourself.

Seriously I don't use help for my residential route. Our last storm we got 12-16 inches of snow depending on which side of town you were on. My Residential's are all on the Westside of town which gets more snow. So I had between 14-16 inches of snow on the ground depending on Tree cover, plus a 30" tall city berm to clear by the time I hit the residential accounts. Even with this amount of snow I was plowing the driveway and then shoveling the walk to the house and the city sidewalk in front of the house by myself in about 20 min. When it's a normal 3-6 inch storm I'm in and out in 10 total. These are just standard two car wide, two car deep drives. I think you could probably go faster than you are right now to make up the difference, but I don't know that as fact. I do know that for the Residential's I just suck it up and bust my ass as fast as possible so I'm not having to share that revenue with anyone else. I charge $75 per service for these standard drives, so with the big storms I average about $150 per hour on residential, and with normal storms about $225. I'm not patting myself on the back I'm just saying sometimes to make it worth it you gotta go fast and do it on your own.

I also have a mix of seasonal contracts, and per service on the residential which helps with cash flow early in the season. I just have 6 Residential's right now to bust out when the storm is over. If you want to turn profit in residential you need to double the drives and then I would send the shoveler out in his own vehicle to bust out the shovel portion of the Residential's on his own.


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## JMHConstruction

If this has already been brought up, I apologize. I didn't actually read through all 3 pages on here.

Go out and buy this book. It was suggested to me after I had been in business for over a year, but it changed the way I ran my business (I would have failed the way I was doing it). I recommend it to anyone one starting a business like this. Buy it, and read it. You'll learn a ton.


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## JMHConstruction

JMHConstruction said:


> If this has already been brought up, I apologize. I didn't actually read through all 3 pages on here.
> 
> Go out and buy this book. It was suggested to me after I had been in business for over a year, but it changed the way I ran my business (I would have failed the way I was doing it). I recommend it to anyone one starting a business like this. Buy it, and read it. You'll learn a ton.
> View attachment 169421


And since I was going through my bookcase now, here is another good read. The one above is the best I have read for my business, but this one gives you some ideas how to build your business. I'm not sure how far along you are, but both are worth the money.


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## OneManWithAPlow

ktfbgb said:


> I'm really trying to help you out here so please don't think I'm coming across as a Richard. Tone and inflection don't come out over the internet. So I'm saying this nicely lol. You said you are doing 2 drives per hour, and three with a guy shoveling. You then said a 4 hour route. So I deduct from that you have between 8 and 12 drives. I dont see a way to turn a profit especially if your paying another guy. How much snow do you get per year? And how many times average do you need to service the client?
> 
> Let's say it's 10 drives because it's easy math and in the middle of my deduction from you post. Please correct me and tell me if the number of accounts is wrong. You said that you are charging $50 per drive including shoveling if I remember right. So that's $500 every time through the route. I don't know how many times you Service the route per year. Let's be generous and say 20. We get over 100" a year and I don't service that many times, but I'm set up different and only contract second homes so that I can just provide second day service and only service them once when the storm is done. Ok so let's say 20 times through. That's $10,000 for the residential route for the year. The numbers just aren't there to support the second shoveler. If you want to help make up for under pricing then you have to do the residential route by yourself.
> 
> Seriously I don't use help for my residential route. Our last storm we got 12-16 inches of snow depending on which side of town you were on. My Residential's are all on the Westside of town which gets more snow. So I had between 14-16 inches of snow on the ground depending on Tree cover, plus a 30" tall city berm to clear by the time I hit the residential accounts. Even with this amount of snow I was plowing the driveway and then shoveling the walk to the house and the city sidewalk in front of the house by myself in about 20 min. When it's a normal 3-6 inch storm I'm in and out in 10 total. These are just standard two car wide, two car deep drives. I think you could probably go faster than you are right now to make up the difference, but I don't know that as fact. I do know that for the Residential's I just suck it up and bust my ass as fast as possible so I'm not having to share that revenue with anyone else. I charge $75 per service for these standard drives, so with the big storms I average about $150 per hour on residential, and with normal storms about $225. I'm not patting myself on the back I'm just saying sometimes to make it worth it you gotta go fast and do it on your own.
> 
> I also have a mix of seasonal contracts, and per service on the residential which helps with cash flow early in the season. I just have 6 Residential's right now to bust out when the storm is over. If you want to turn profit in residential you need to double the drives and then I would send the shoveler out in his own vehicle to bust out the shovel portion of the Residential's on his own.


For all intensive purposes the figures are close, except it's an average annual snowfall of about 50''. I think what's really holding me back from seeing this is that this is my part time job for now. It isn't my main source of income, which is really skewing my point of view. Unfortunately I literally have 14 hours of plowing experience, so at the moment I'm VERY slow. The drives you do in 10 minutes probably take me 30. Partially the area, and heavier traffic with drives that don't have much space for navigating the truck, but mostly because I've plowed so few drives. Than once I finish all that, to get out and take 15 minutes to do the sidewalk walkways to the house and than the mouth of the driveway. I'm in pretty good physical shape, no ailments, and relatively young at 24, maybe I need a new shovel:laugh:

No but in all seriousness maybe I'm just too slow for now. And to the gentleman who recommended the book, thank you. I will order it tonight. With our next store I will pay careful attention to time spent at each property performing each task.


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## OneManWithAPlow

JMHConstruction said:


> And since I was going through my bookcase now, here is another good read. The one above is the best I have read for my business, but this one gives you some ideas how to build your business. I'm not sure how far along you are, but both are worth the money.
> View attachment 169424


Any chance they're both for sale?


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## ktfbgb

JMHConstruction said:


> And since I was going through my bookcase now, here is another good read. The one above is the best I have read for my business, but this one gives you some ideas how to build your business. I'm not sure how far along you are, but both are worth the money.
> View attachment 169424


I have both as well.


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## Philbilly2

I only have the first, but trying to find the second as cheap.... lol


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## ktfbgb

OneManWithAPlow said:


> For all intensive purposes the figures are close, except it's an average annual snowfall of about 50''. I think what's really holding me back from seeing this is that this is my part time job for now. It isn't my main source of income, which is really skewing my point of view. Unfortunately I literally have 14 hours of plowing experience, so at the moment I'm VERY slow. The drives you do in 10 minutes probably take me 30. Partially the area, and heavier traffic with drives that don't have much space for navigating the truck, but mostly because I've plowed so few drives. Than once I finish all that, to get out and take 15 minutes to do the sidewalk walkways to the house and than the mouth of the driveway. I'm in pretty good physical shape, no ailments, and relatively young at 24, maybe I need a new shovel:laugh:
> 
> No but in all seriousness maybe I'm just too slow for now. And to the gentleman who recommended the book, thank you. I will order it tonight. With our next store I will pay careful attention to time spent at each property performing each task.


You'll get there. Some tips for drives. Obviously plow the city berm out of the way first. If you are having problems with tire tracks pull part way in, backdrag pull forward backdrag again. If you do it in two chunks you will get less tracks but if it's dry snow it doesn't really matter and you can usually get your tracks good enough. Soon you will be able to plow the city berm with two movements, and then pull in, back drag the drive in 2-3 passes, and then clear the snow you pulled out in two more passes. The truck part literally will take you 90 seconds to 2 min once you are familiar with it. And then if there is 3-6 inches of snow on the walks you can literally run with a pusher shovel. Keep it angled to spill off one side, run down, turn around run the other direction done. Clean up with one shovel swipe in front of garage and hit the walk. Run to the truck, off to the next.


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## ktfbgb

Also if you are having packing snow issues after backdragging, then drop the plow at the beginning of the drive, push till about 3-4 feet from the garage, lift the blade pull forward and back drag the stuff you scraped up.


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## OneManWithAPlow

Philbilly2 said:


> I only have the first, but trying to find the second as cheap.... lol


Walmart has the second one for $10


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## OneManWithAPlow

ktfbgb said:


> Also if you are having packing snow issues after backdragging, then drop the plow at the beginning of the drive, push till about 3-4 feet from the garage, lift the blade pull forward and back drag the stuff you scraped up.


thank you. In that scenario it sounds like you are most likely pushing into the street and packing against the curb, correct? What holds me up in that situation is mostly heavy traffic. That, and a few of my driveways are "triangle" shaped which gets tricky for a beginner to backdrag. Another aspect that holds me up, is I try to clear every square inch of driveway. Grass to grass. Curb to curb. Not just a plow width. Which in turn gives me lines that I have to repeatedly go over. Do you guys just do a plows width for a standard 1 car wide driveway?


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## ktfbgb

OneManWithAPlow said:


> thank you. In that scenario it sounds like you are most likely pushing into the street and packing against the curb, correct? What holds me up in that situation is mostly heavy traffic. That, and a few of my driveways are "triangle" shaped which gets tricky for a beginner to backdrag. Another aspect that holds me up, is I try to clear every square inch of driveway. Grass to grass. Curb to curb. Not just a plow width. Which in turn gives me lines that I have to repeatedly go over. Do you guys just do a plows width for a standard 1 car wide driveway?


Yep I pull it out into the apron and then push it into the city berm. On driveways where I have room obviously pushing forward if there is somewhere to stack that is obviously the way to go.


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## JMHConstruction

Philbilly2 said:


> I only have the first, but trying to find the second as cheap.... lol


It was at our used book store.


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## ktfbgb

I got mine on amazon Philbilly.


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## JMHConstruction

OneManWithAPlow said:


> Any chance they're both for sale?


I sent you back a PM, but not for sale, sorry. I go back to them too often.


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## OneManWithAPlow

ktfbgb said:


> I got mine on amazon Philbilly.


Amazon has it for 9 and some change as well!
https://www.amazon.com/gp/product/1448679982/ref=ox_sc_act_title_1?ie=UTF8&psc=1&smid=ATVPDKIKX0DER


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## JMHConstruction

Well I got ripped off for my used book!:laugh: I don't think anyone ever touched it before me though.


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## OneManWithAPlow

JMHConstruction said:


> Well I got ripped off for my used book!:laugh: I don't think anyone ever touched it before me though.


Hey, you saved a few bucks and got the immediate satisfaction!


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## OneManWithAPlow

ktfbgb said:


> I got mine on amazon Philbilly.


If you dont mind me asking, what do you do for the spring/summer?


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## ktfbgb

I'm a handyman/remodeling contractor. I have a residential remodeling license and I'm in the process of obtaining my dual license so I can do both residential and commercial remodeling.


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## OneManWithAPlow

ktfbgb said:


> I'm a handyman/remodeling contractor. I have a residential remodeling license and I'm in the process of obtaining my dual license so I can do both residential and commercial remodeling.


Im seeking advice in regards to doing lawns in the summer and anticipated messaging you, but that doesnt sound like grass to me!


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## ktfbgb

Lol nope. But there are a lot of guys on here that do landscaping/lawn maintenance. Many of the guys on here are also on lawn site which is a sister site and has a ton of info from what I understand.


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## Philbilly2

ktfbgb said:


> Lol nope. But there are a lot of guys on here that do landscaping/lawn maintenance. Many of the guys on here are also on lawn site which is a sister site and has a ton of info from what I understand.


never been over there either?


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## FredG

Philbilly2 said:


> never been over there either?


Me either, I don't do lawns, I don't think my opinion would qualify, LOL


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## ktfbgb

Philbilly2 said:


> never been over there either?


Ha no I haven't checked it out yet.


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## Philbilly2

FredG said:


> Me either, I don't do lawns, I don't think my opinion would qualify, LOL


Oh... I got opinions about cutting grass... forget cutting grass. Burn it all down with roundup and paint the yard green is my option...


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## FredG

Philbilly2 said:


> Oh... I got opinions about cutting grass... forget cutting grass. Burn it all down with roundup and paint the yard green is my option...


Maybe we should do some trolling over there. LOL


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## Philbilly2

LOL...

No... I don't think that is a good idea...


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