# CALCULATING MY COSTS... an excercise.



## BeastMaster (Nov 19, 2005)

I have used the book from Profits Unlimited, _De-Icing and Snow Removal, Don't Let Your Profits Melt Away_ to caculate my labor, plow and truck costs, to know what my actual costs are.

The three totaled, I find I have to charge $88 per hr. for plowing (1998, 3/4 ton Dodge, 8' Boss Super Duty). This is not a break even cost, but rather what the bohow you how to calculate your true costs, along w/ whatever labor rate you wish to put in.

I took my hourly _labor rate_ (not counting the cost of running the truck and plow) from area self-employed types, such as HVAC men, plumbers, Union Boilermakers etc.

Anyway, if a lot takes me 1/2 hr. to clear (plowing only), I should charge no less than $44.00. I was charging this much and more all along when using just my ATV plow. So...I was close already. Now, the 8' blade will allow me to clear these same drives and lots quicker, yet keep my same rates, as I don't intend to lower my rate. Why, when the customer is already accustomed to paying an established price.

This approach falls under selling the value of your service, not selling your price alone.

I did not see a lot on how to charge for de-icing, X% over the pice paid for the "salt" plus labor time and equipment ? Is this how it is done ?

I'd like to hear pricing ideas and formulas for de-icing if you all would chime in.

Thanky,,,


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## BeastMaster (Nov 19, 2005)

I goofed the above...I hit some key that I can't find and couldn't type as I wanted. Anyway, you can get the jist.


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## buddy4781 (Oct 24, 2010)

I'm hearing prices from $12-$25 per 50# bag with bagged salt $4-$5 per bsg. Need to include storage and handling cost.


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## BeastMaster (Nov 19, 2005)

I don't really like salt on concrete driveways as I've noticed a fair about of chipping the last few seasons.


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## TPC Services (Dec 15, 2005)

If applied within reason an depending on the condition of the concrete we you should n't really be having problems. heck over applying Pot/ cal will make the concrete pop to. therre are alot of concrete contractors on here that can explain it better then I can. need to know your product and the proper appling about per sqft.


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## pongow26 (Dec 19, 2008)

Ive posted this in other threads but here ya go. Take your lbs amount times 16 (16 ounces in a lbs)to get your total ounces. Take "your cost" for the de-icing material and divide that by the total ounces and you will get a per ounce amount. Multiply the per ounce amount by 3 and you will get the cost per ounce you need to charge. For example say you you have 2000 lbs of salt for $500. Thats $500/32000ounces = .015 (round it to .02). so it costs you .02 cents per ounce and .06 an ounce is what you charge. so if you apply 50lbs to one location thats $48 - $16(your cost) = $32 above and beyond what you paid to cover other expenses. If you apply this method to your total inventory of salt you will make $1420 off the entire inventory of salt. I know it seems lengthy but its fairly accurate and some places will use a X4 multiple instead of X3


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## Advantage (Nov 7, 2007)

Why would you ever want to convert it to ounces?


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## NFDDJS (Sep 22, 2009)

I know a bunch of my friends that do some salting for me on some of my jobs and other jobs do a 100% make up.... So if the parking lot takes one ton and they buy it at $90 a ton they would charge $180.


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## Brant'sLawnCare (Jun 29, 2007)

It really just depends on knowing how competitive I have to be. If it's a job where I am going to spread around 100lbs per app, then I need to be fairly expensive per pound in order to make it worth it. I usually just give a per app price for little salting jobs. For big jobs, I give a per pound price, usually about 2-3x what I pay for the salt. Depends on the simplicity of the job.


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## pongow26 (Dec 19, 2008)

Advantage;1121484 said:


> Why would you ever want to convert it to ounces?


By doing so you get a very accurate per cost price. Although I will admit this method is used in restarunts more than here but it works the same. When I am pricing a menu item at work I have to account for the product cost, the labor to prep that product, the wear and tear on equipment to prep the product, the labor to cook the product. It is the same process here, we have several things to factor in that determines what price to charge and this is a very accurate way to determine that. Plus, once you have the conversion done, it makes no difference if your salting a large commercial acct or a small residential acct. your price stays the same your just dealing with bigger or smaller numbers. If I know what my per ounce cost is I can use that to determine if I am getting the best use of my product, how much waste I have such as salt that gets damaged cause of ice or salt the spreader throws off target. if you use lbs do determine this then how will you get accurate numbers unless you have a waste avg of a lbs at a time


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## pongow26 (Dec 19, 2008)

NFDDJS;1121549 said:


> I know a bunch of my friends that do some salting for me on some of my jobs and other jobs do a 100% make up.... So if the parking lot takes one ton and they buy it at $90 a ton they would charge $180.


They should be getting about $320 per ton with the the numbers you are giving


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## cretebaby (Aug 23, 2008)

pongow26;1121633 said:


> They should be getting about $320 per ton with the the numbers you are giving


How many ounces are in a ton again? :laughing:


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## Luther (Oct 31, 2007)

cretebaby;1121806 said:


> How many ounces are in a ton again? :laughing:


Not sure...I do know there are 16 oz's in a lb though.

An ounce is a lot....takes a while to go through it. Therefore I advocate converting to something more reasonable such as a dram, as there are 16 drams per ounce. This number ~ 16 ~ it's easy to remember, as there are always 16 oz's per each pound.

16 drams x 16 ounces = 256 drams per pound. 256 drams x 2000 lbs (ton) = 512,000 drams in each ton of salt.

Our Canadian friends use tonnes. So for them to understand all this, they must use a constant of 564,383.3912 drams per tonne of salt.

Unfortunately there are not a lot of UK snow fighters on here.....but there are a few. For those blokes to understand this, they must use a constant of 573,440 drams per long (UK) ton.

So ~ Let's say one of your guys spreads 126,782.69 drams of salt on his first stop. Divide 126,782.69 by 16 (remember, this is an easy number to recall) to find the number of ounces you will need to bill your customer. The answer is 7,923.92 ounces of salt went down on this site.

Pongow has already well established that salt costs .02 cents per ounce. Therefore, multiple .02 cents x 7,923.92 (the amount of drams of salt that was applied on your first lot) and you will quickly find that your material cost for this one lot comes to $158.48.

I agree that 3x you material cost is the most scientific way to capture your handling costs and profit margins. Now we're ready to see how much we are charging for this work........

.06 x 7,923.92 (drams of salt that went down) = $475.44 to bill the customer.

If you really want to sharpen your pencil, use dekagrams as your measure. There are 2.8349523125 dekagrams per each ounce of salt. Which brings us back to the commonly know fact that there are 16 ounces in each pound.

Hope this helps!


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## buddy4781 (Oct 24, 2010)

Now Im confused, how much does a bag of salt cost me?


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## cretebaby (Aug 23, 2008)

TCLA;1122032 said:


> Not sure...I do know there are 16 oz's in a lb though.
> 
> An ounce is a lot....takes a while to go through it. Therefore I advocate converting to something more reasonable such as a dram, as there are 16 drams per ounce. This number ~ 16 ~ it's easy to remember, as there are always 16 oz's per each pound.
> 
> ...


I just fell out of my chair. :laughing::laughing::laughing:


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## pongow26 (Dec 19, 2008)

2000 lbs per ton
16 oz per lbs
2000 x 16 = 32,000
$90 / 32000 = .0028 (round up to .003)
.003 x 3 = .01
32,000 x .01 = 320 or .16 per lbs

Any restraunt you go to, and grocery or department store you go to or any place that sells a product that is shipped in will use this method to price their products. You can laugh all you want but I consider my service a business and will treat as such. Just look at the post that says he knows a person that charges 180 per ton. Why charge only 180 when you can get twice that based on the same math that your local grocery store uses.My point of all this is this, people in your area already pay a 3X mark up for everything else so by using this your price will be inline with your other area services


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## Luther (Oct 31, 2007)

pongow26;1122094 said:


> 2000 lbs per ton
> 16 oz per lbs
> 2000 x 16 = 32,000
> $90 / 32000 = .0028 (round up to .003)
> ...


You've just proved my point...see how many times this number appears?


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## Matson Snow (Oct 3, 2009)

TCLA;1122032 said:


> Not sure...I do know there are 16 oz's in a lb though.
> 
> An ounce is a lot....takes a while to go through it. Therefore I advocate converting to something more reasonable such as a dram, as there are 16 drams per ounce. This number ~ 16 ~ it's easy to remember, as there are always 16 oz's per each pound.
> 
> ...


Wait a Minute...I missed somthing...Can you go over this one more time....Im almost back asleep...This is better than a sleeping pill.....Thanks for the lesson....


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## Luther (Oct 31, 2007)

Sorry to bore you...

It's the quickest way I know to find 3 times your material costs.


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## cretebaby (Aug 23, 2008)

pongow26;1122094 said:


> 2000 lbs per ton
> 16 oz per lbs
> 2000 x 16 = 32,000
> $90 / 32000 = .0028 (round up to .003)
> ...


Why break it down to the ounce instead of just the pound? Your math would be_ mulch _more accurate by the pound. The excessive rounding skews your numbers.

$90 divide by 2000 = 0.045

0.045 x 3 = 0.135 per pound you came up with 0.16.

Do you charge the same per pound for a 100 pound job as a 4000 pound job?

ps The local gracery store is not tripling their cost on a gallon of milk.


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## pongow26 (Dec 19, 2008)

TCLA;1122101 said:


> You've just proved my point...see how many times this number appears?


I dont see your point. .16 is only there because I was being descriptive.


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## Matson Snow (Oct 3, 2009)

Beyond Bored...:laughing:...Atleast i learned somthing today..What it is...I really don't Know...


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## Matson Snow (Oct 3, 2009)

cretebaby;1122114 said:


> Why break it down to the ounce instead of just the pound? Your math would be *mulch *more accurate by the pound. The excessive rounding skews your numbers.
> 
> $90 divide by 2000 = 0.045
> 
> ...


Did you say Mulch..........Might wanna check your spelling there AJ


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## cretebaby (Aug 23, 2008)

Matson Snow;1122127 said:


> Did you say Mulch..........Might wanna check your spelling there AJ


Sorry I forgot to italicize it. :laughing:

ps Fuzzy math is my third favorite subject. LOL


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## Matson Snow (Oct 3, 2009)

cretebaby;1122128 said:


> Sorry I forgot to italicize it. :laughing:
> 
> ps Fuzzy math is my third favorite subject. LOL


CDL is #1...Whats #2.......Ya.. fuzzy Math...TCLA the Math wiz cleared it up for me..


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## cretebaby (Aug 23, 2008)

Matson Snow;1122134 said:


> ...Whats #2.......


Do you really have to ask?

Salt vs Concrete


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## Matson Snow (Oct 3, 2009)

cretebaby;1122137 said:


> Do you really have to ask?
> 
> Salt vs Concrete


:laughing:...What...Salt hurts Concrete...Did not Understand how Mulch that subject ment to you...:salute:


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## Luther (Oct 31, 2007)

cretebaby;1122114 said:


> ps The local gracery store is not tripling their cost on a gallon of milk.


Exactly. Grocery stores operate on 3%-4% margins due to volume.


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## pongow26 (Dec 19, 2008)

cretebaby;1122114 said:


> Why break it down to the ounce instead of just the pound? Your math would be_ mulch _more accurate by the pound. The excessive rounding skews your numbers.
> 
> $90 divide by 2000 = 0.045
> 
> ...


YOu charge the same no matter how much the poundage applied is because your cost is the same. And no they are not tripling their cost they are tripling the consumer cost. I can guarantee this as I compare the products I order for the restarunt I work at to our local grocery store and walmart and yes they up charge 3X and sometimes 4X.


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## cretebaby (Aug 23, 2008)

Matson Snow;1122144 said:


> :laughing:...What...Salt hurts Concrete...


I didn't say that.



Matson Snow;1122144 said:


> id not Understand how Mulch that subject *ment* to you...:salute:


What's that AJ? :laughing:


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## Luther (Oct 31, 2007)

Oh man, sorry for the delay......I just spent way too much time cleaning my gutters and didn't realize this second page of post's were even here. My bad...



pongow26;1122116 said:


> I dont see your point. .16 is only there because I was being descriptive.


Yes


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## cretebaby (Aug 23, 2008)

pongow26;1122160 said:


> YOu charge the same no matter how much the poundage applied is because your cost is the same.


What is your largest salting job?


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## LoneCowboy (Jan 2, 2007)

pongow26;1122160 said:


> YOu charge the same no matter how much the poundage applied is because your cost is the same. .


that makes no sense at all.
none.

volume always gets a discount.
someone needs a few bags, they pay X
someone needs a few tons
a. you aren't getting it in bags
b. the price is much less (no transport, etc)

this is what is known as ECONOMY OF SCALE.

Econ 101


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## pongow26 (Dec 19, 2008)

what you are referring to is the sale of salt to the reseller IE the local hardware store buying a pallat of salt from the manufacture. The dynamic of pricing changes there because places such as a hardware store are purchasing straight from the manufacture so the markup is much less based on production cost. That isnt the same as us selling for application purposes. Although, if a customer needs a "ton" applied then of course adjust the price, that's why there is a margin. But you still need your base cost to stay within your magin. Also, The largest area I salt is a small 
Commercial lot only about 40 cars worth. But I dont supply the salt the place does I just apply it


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## Tubby's Snow Plowing (Dec 13, 2009)

LoneCowboy;1122278 said:


> that makes no sense at all.
> none.
> 
> volume always gets a discount.
> ...


Who says the discounts have to be passed onto the customer?

If I usually buy salt for $0.25/lb, but this time I buy a little more to get a small discount and pay $0.20/pound, I'm not discounting my price to the customer. I just make a bit more profit by lowering my costs by purchasing in larger quantity. I take that increase profit and bank it for maintenance and emergency cash.

If the customer price remains the same and they are satisfied, you make more money, I don't see the problem. Customers don't care what profit you make, they care about the price they will pay.

Market will dictate the price. Your purchasing power will provide your margin. Volume purchasing will dictate your cost. The more you buy the more you save. You pass that onto your customer and you will make the same margin but less money. I'm in it for money, not margins.


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## Luther (Oct 31, 2007)

pongow26;1122296 said:


> Also, The largest area I salt is a small
> Commercial lot only about 40 cars worth.


So you're saying your largest site uses about 16,000 ounces?


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## ajslands (Sep 3, 2009)

Matson Snow;1122127 said:


> Did you say Mulch..........Might wanna check your spelling there AJ


Y U ! Iam gong to com ovr their nd teAch you a lessen!

J/k

:laughing:

This is thread is very humorous. Especially the post that brought up "drams"!


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## cretebaby (Aug 23, 2008)

ajslands;1122324 said:


> Y U ! Iam gong to com ovr their nd teAch you a lessen!


Obviously not a spelling lesson. :laughing:


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## ajslands (Sep 3, 2009)

pongow26;1122094 said:


> 2000 lbs per ton
> 16 oz per lbs
> 2000 x 16 = 32,000
> $90 / 32000 = .0028 (round up to .003)
> ...


*Okay, it's spelled restaurant*


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## ajslands (Sep 3, 2009)

pongow26;1122160 said:


> YOu charge the same no matter how much the poundage applied is because your cost is the same. And no they are not tripling their cost they are tripling the consumer cost. I can guarantee this as I compare the products I order for the restarunt I work at to our local grocery store and walmart and yes they up charge 3X and sometimes 4X.


How many times are you going to spell it wrong?! Here sound it out restaurant


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## BeastMaster (Nov 19, 2005)

I don't see it. If you buy salt at $10 per 50 lb. and want to mark it up three times. Then charge $30 and have that include your labor and machine cost to. Or 4x, or whatever to make your profit. Seems a damn site easier.


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## Tubby's Snow Plowing (Dec 13, 2009)

Dumbing down to the ounce makes for unnecessary math. Use pounds and round to nearest pound.


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## Wayne Volz (Mar 1, 2002)

*Selling Price*



BeastMaster;1121106 said:


> I have used the book from Profits Unlimited, _De-Icing and Snow Removal, Don't Let Your Profits Melt Away_ to caculate my labor, plow and truck costs, to know what my actual costs are.
> 
> The three totaled, I find I have to charge $88 per hr. for plowing (1998, 3/4 ton Dodge, 8' Boss Super Duty). This is not a break even cost, but rather what the bohow you how to calculate your true costs, along w/ whatever labor rate you wish to put in.
> 
> ...


 There are a couple things you missed after calculating your break-even cost per hour for your plow truck. Our manual shows you to calculate your break-even costs per hour. It does not tell you what to charge for your services. Let's assume your $88 per hour is right, we also suggest that you have at least an hour minimum for your services. That's why we show you how to calculate break-even points and not selling price. Our manual also suggests that you sell for what your particular market will bear but certainly not below your minimum costs per hour. It is up to you to set your selling price based on who you are servicing and the trigger points for those accounts.

Your deicing services should be calculated the same way.

Remember, you can't put a price on Safety! Charge accordingly.


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## BeastMaster (Nov 19, 2005)

The bad thing is, my $88/hr. is about what the mkt. will bear here-there's no room to tack on a % profit.

Now, I, unlike many others (I'm assuming), I DID put into the equasion my liberal retirement I contribute to ea. month (basically, investment real estate I pay a mortgage on besides my own home) my life ins. health ins., dental costs etc. and so on. 

So...you could say my "break even" cost is padded in that I have the insurance and "forced retirement acct"...my other mortgages, that a lot of self-employed types don't have.

But,,,if the competition wants you to,,,,in any small business...you WILL and are FORCED to come to their level of pricing or go out of business. You may keep some loyal customers, but you won't grow, esp. in a tiny area like mine where a few ph. calls or a chat on Facebook will tell everyone around a 20 mi. area if you're higher or lower than the competition. ....people look at the new business and what they are charging. After all, they just want the snow/ice gone and don't care if you're actually making a profit or not. Really, the customer prefers you NOT make a profit b/c it will cost them more.

It is the self-employed person that doesn't know his actual brk. even pt. that kills you blindly, not so much b/c he wants to under-cut anyone, but b/c he isn't a businessman AND a journeyman in his trade. You never get the two.

My pest business stays about steady in sales year to year. Doesn't grow, doesn't shrink much. People will only pay so much, period. So...as I've always said, the public dictates how successful you are. You have to decide if you can live on what the public pays you or not.

Commercial accts will keep you afloat longer than residential. I stopped in a quickie mart the other day to drop off a snow plowing flyer. The first words out of Ha-Beebs mouth was "OW much choo charge me plow snow ? " Damn the service or timing, just how much is it and they don't care how you're better or diff. Just, "How much is it ? "
It's hard to fight that one.


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## Wayne Volz (Mar 1, 2002)

*You know your market*

At least now you will not under-sell you service. You know you need a minimum of $88.00 per hour, sell it at that rate or above or move on to the next client. You mentioned other industries that get away by charging a higher rate. WHY do they get away with it? Because they ask for it and don't do the work otherwise.

If your market will not pay your required rate due to a lack of under educated competitors not understanding their costs, I would certainly consider one of two options. Look at a different market, or get out of the snow & ice business in your area and do something different if you can not sell at the rate you know you need. Nobody cares about service, until it's not offered.

There are only two ways to separate your business from your competitor; price or service. My 31 years of experience tells me that if I am hired for price I will be fired for the same reason. If we are hired due to our reputation, and we follow through with that same service to our new clients, it may create a little LOYALTY. We have surrounding areas here that will not pay the rate we want/need to charge also. We decided to move on to other markets within our market. I feel confident McDonald's is charging what it takes to make a profit or they are not in a certain market regardless of what Burger King or Hardee's is charging. If people want something less they will always find it. This may seem like a crazy comparison, but one thing for sure, McDonald's knows what it cost to build a Big Mac and they do not sell it for less.

Good luck and I hope whatever you decide works out for you. Thanks also for using our information and taking the time to know your costs per hour. It's not always what we want to see, but certainly what we need to see!


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## Tubby's Snow Plowing (Dec 13, 2009)

Wayne Volz;1124375 said:


> There are only two ways to separate your business from your competitor; price or service. My 31 years of experience tells me that if I am hired for price I will be fired for the same re see!


Access to superior knowledge.
Access to superior technology.
Access to superior distribution.
Possessing superior quality product or service.
Access to superior supply.
Access to superior process execution (efficiency/volume).

There's more than two ways to be better than the competition. I'll let someone else be the cheap SOB. That business model never works in the long run.:laughing:


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## Wayne Volz (Mar 1, 2002)

*And the beat goes on*



Tubby's Snow Plowing;1124457 said:


> Access to superior knowledge.
> Access to superior technology.
> Access to superior distribution.
> Possessing superior quality product or service.
> ...


You are exactly right. My reference was to the post with concern to price being his main issue. That they would not pay the price in his market.

Your point is very valid and there are many many ways to beat your competition. Your list certainly contains a few more. Another fun thing to consider adding to the list is "Picking your lane" as a business. How many business's go years without first defining who they are. Oh well, that's another subject. Keep up the positive thoughts. Because I agree 100%. It's the Vince Lombardi things (the little things we must do better) to separate our company from our competition.

Winning is a habit. Positioning ourselves to do so is the challenge.


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## BeastMaster (Nov 19, 2005)

Over-all, pest and urban wildlife control have kept me leading a pretty free life since 1995, not punching a time clock....my worst fear, ever, worse than the dentist !

Snow plowing is just a fill in on winter days, plus, I like the snow. I'm simply not in an area where snow work will ever amnt to much. Plus, there's a guy here w/ nearly every acct. around here already sewed up. He charges fair to cheap and hires subs.

The bad thing about snow in my area is,,,if it lays for a week, that's really something. Usually, it's all melted off within 48 hrs. of falling. I'm just in a weird area is all. People know this and aren't scared of snow enough to know they MUST have snow removal like northern areas. So..to those that arean't already sewed up by a contract, who ever comes along w/ a rusted out truck and a plow on the morning of a snow gets the job if he's cheap enough.

HOWEVER, I've never been the cheapest at anything I do, thus, I don't have a gillion customers like Terminix. Their service isn't the best, I get Terminix customers all the time, it's just that their marketing dept. is MASSIVE.

If 3,000 customers quit Terminix nationwide today,,,,they don't sweat it b/c their sales/marketing team has signed up 5,000 new customers nationwide that same day. They don't chase un-happy customers. I do not have the luxury of a giant sales team and unlimited advertising budget. The numbers I state arent' right, but that's how it works fellers. Keep putting apples in your basket to replace the rotten ones that slipped thru your initial inspection.

The main hurdle you face, when you walk into the quickie mart or where ever is:

1) You only get to a counter person. If you ask to see the Mgr. they are trained to tell you he is busy or not in, but they'll "Give him your information when he comes in" It gets chucked as soon as you leave b/c most chains have their pest control, snow removal, maintenance etc. etc. already set-up for them when they bought the franchise years ago. 
2) If do happen to catch the Mgr. at the counter, you're just another face selling something..they get it all the time and don't want to mess w/ you. There are 3 PAYING customers behind you in line.

So...if you're in an area like I am, nothing sells like hot cakes, everything is mediocre at best. You live on what business is available or move on like Wayne said. I've chosen to stay and not "seek my fortune" in the big city, as the big town is about 50 min. east of here.


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