# New business – sub rates seem off



## lukepighetti (Jan 8, 2017)

Hello all,

I am working the numbers on hiring subcontractors to do residential. I've done a bit of research on here and I would really appreciate a bit of a sniff test.

I will be handling all customer service, finding accounts for subs, condensing routes to small areas (4 mile radius), and eliminating check chasing for subs.

I would like to pay subs per push. This somehow seems easier and more honest.

Accounts per sub: 70
Time per push: 5 min
Hours per day: 6 hours
Cost per push: $6.25

So here's the part I don't get. This comes out to $75 an hour, but $6.25 per push seems way too cheap. My gut says I am overlooking something in my numbers.

Even at 60 accounts and 8 hours a day and $10 per push that is still $75/hr.

Additional details: 1.5" trigger, 6" max, 66" per year, all driveways are short 1-2 car drives.


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## leigh (Jan 2, 2009)

I'd go back to the drawing board on this one ,no offense.


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## lukepighetti (Jan 8, 2017)

leigh said:


> I'd go back to the drawing board on this one ,no offense.


I agree, that's why I'm here.

All my numbers are taken from discussions on plowsite.com but the per-push rates are so low I cannot imagine any subcontractor agreeing to them. The only thing I can figure is to switch to hourly rates ($75/hr) as that seems more acceptable, even though the numbers work out the same.

What am I missing, leigh?


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## lukepighetti (Jan 8, 2017)

Is it because $75/hour is for commercial and subs want more on residential?


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## ktfbgb (Jan 31, 2016)

What are you expecting them to use to hit 10 driveways per hour? Is a back blade or tractor with an inverted blower going to be a requirement to be a sub?


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## ktfbgb (Jan 31, 2016)

And I'm guessing at those times there is no shoveling in front of the garage or the walk from the driveway to house?


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## JMHConstruction (Aug 22, 2011)

How much are you making on each site? They're not for snow, but I usually make around 50-30% on my subs that I hire.


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## ktfbgb (Jan 31, 2016)

I can already see where this is going. 

Here's a few questions to consider.

1. Is it normal in your area to sub out residential contracts? It doesn't happen around me. Typically only commercial work is subbed in my area for snow. But that may not be the case in your area.

2. To achieve the numbers you are proposing it seems to me that you are going to need guys with a set up that is more than a truck with a front plow. Maybe not if the accounts are seriously right on top of each other. But typically the guys running mass residential are running pull plows or a tractor blower combo. The problem I see with this is getting guys to sub this equipment. If guys have this much money invested in a plow rig with the front back combo, or the tractor blower, I doubt that they will sub for 1/3 the price they can make on their own. Again maybe this is a different story in your area. This could be accomplished though if you buy the rigs yourself and pay operators to run them.

3. If you are expecting these numbers out of any set up, then you will be leaving snow in front of the garage, on the walk from the drive to house and the sidewalk in front of the house. What is the plan to deal with snow, or is it normal to just do the drive and nothing else. I know a lot of guys do driveway only, it just depends on what's normal for your area. But just know you won't hit 60 drives in 6 hours if the operator has to step out of the rig.

4. Is it normal to pay piece work in your area or hourly. Both work out the same, and as a business owner, obviously piece work is better on your pocket book. Then it doesn't matter how fast or slow they go. But if no one does piece work and only subs hourly in your area you may find guys are hard to find just because they don't understand the other way of doing it.

I think the reason that your numbers are confusing you is because normally guys don't sub for residential. Again I could be wrong. It's easy for me to say hey I'll pay you $75 an hour with a 1 hour minimum to plow this lot. It would be a totally different conversation on the residential with most guys saying no thanks I'll just do Residential's on my own time for $40 a pop or whatever the going rate is. Barriers to entry a limited for guys in residential. Not so much in commercial as a lot more is involved so that's why subbing is common for that sector of snow removal. Maybe others will have differing opinions but I think you may end up finding that you need to purchase your own equipment and pay operators to run them.


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## lukepighetti (Jan 8, 2017)

Typical around here to plow a drive, not clean up walkway or in front of the garage for about $25 a push without a back dragging blade. These are guys who slap on a plow and do it for cash while they collect winter unemployment. If you want plow and walk and salted walk from a pro team it's more like $50.

A lot of these guys have 15 mi radius mixed city and rural areas and about 30-40 accounts. My angle is to take care of customer service and remove the hassle of chasing checks, give them a route that lets them do 60-70 in the same amount of time, and pay them closer to $15 a push which is like $120/hr.

There are other options but subbing is obviously enticing for many reasons, but it looks like cost is not one of them.

I can see why subbing is more common for commercial, but I think I can swing subbing for resi in my area as long as I can make the economics work for all parties.


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## FredG (Oct 15, 2012)

Luke, Go to the mega drives threads, Read though that, There some good conversation there about drives. LOL it was on Friday, A few of us where impaired. Never the less good reading. Then come back to your post. ktfbgb pretty mushed summed it up. Again things could be different in your area. You will see it's the equipment you will need.


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## allagashpm (Sep 29, 2012)

In my opinion you are over looking a lot more than just your numbers. 
I am not trying to be rude here. 
Have you ever plowed snow? I am just curious, you have 4 posts so I don't know anything about you. 
60-70 driveways in a 4 mile radius per sub is a huge goal. It is obtainable in the right area, but that kind of route density takes years, or very cheap pricing and very aggressive advertising. 
Are you saying 6.25 is what you would charge for a driveway or what you would pay the subs I don't understand.
Do the payment by the hour, and they'll milk the clock. Do it by the driveway and they'll be rushing like crazy and do a ****ty job. 
Why would they want to work for you? You mention chasing checks or customer service but they're beating themselves and their equipment up for you for 450 bucks (75x6 hours). 
There just isn't much incentive, when they could get 10 or 20 driveways on the side for a few hundred.
Sorry I'm just rambling a bit, but I think you really need to do some more homework


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## lukepighetti (Jan 8, 2017)

Hey allagashpm,

I'm up in Bangor, what pricing structure do you guys use a lot in Bowdoinham? Pretty much everyone up here is on a tiered system. IE: $30, $45 for 6"+, $60 for 12"+

Either that or they just wait until the snow stops and slam it all for about $30.

I have never plowed a day in my life. Just doing market research and trying to see if snow removal is something I want to get into, subs or not.


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## ktfbgb (Jan 31, 2016)

allagashpm said:


> In my opinion you are over looking a lot more than just your numbers.
> I am not trying to be rude here.
> Have you ever plowed snow? I am just curious, you have 4 posts so I don't know anything about you.
> 60-70 driveways in a 4 mile radius per sub is a huge goal. It is obtainable in the right area, but that kind of route density takes years, or very cheap pricing and very aggressive advertising.
> ...


All good points!


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## lukepighetti (Jan 8, 2017)

This is my latest pricing structure which is closer to reality but not quite there yet.

I'm still trying to find a good model for push pricing that is fair to everyone. We have guys in Bangor who charge $50 per push, guys who charge $30 per storm, and guys who charge a tiered system based on how much snow has fallen in the last 24 hours.

This is assuming a <1000 sqft drive and <100 sqft walk, a sub doing 5 drives per hour. Price is per push.

Any thoughts?


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## Freshwater (Feb 28, 2014)

Salt shouldn't go up, your salting after you plow. Shouldn't matter how much fell, it been plowed away. 

1 guy driving plowing shoveling and salting, will be able to physically do about 30 maybe 40 before he wants to quit. Thats realistically an 8-10 hour route.
Getting out of the truck takes time and energy, guys need breaks.


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## lukepighetti (Jan 8, 2017)

Yeah I changed it to a $10 salt walk. 5 per hour too much? Should I expect closer to 4 per hour, even if the entire route is within a 4 mile radius?


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## JMHConstruction (Aug 22, 2011)

It is great you're figuring these things out BEFORE you start. You also need to make sure your costs will be covered. Are you planning on plowing also? I think your biggest struggle is going to be getting work. You think you'll be able to keep all these subs busy, and you don't even have jobs lined up. You will probably have to wait until next year and get your customers to sign a contract. Then you'll have to make sure you have backup help available, figure out who you can have where if someone doesn't show or breaks down (it will happen). Good luck getting a plan figured out.


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## lukepighetti (Jan 8, 2017)

Thanks for the help and the kind words. Enjoy your (hopefully snowy!) week.


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> This is my latest pricing structure which is closer to reality but not quite there yet.
> 
> I'm still trying to find a good model for push pricing that is fair to everyone. We have guys in Bangor who charge $50 per push, guys who charge $30 per storm, and guys who charge a tiered system based on how much snow has fallen in the last 24 hours.
> 
> ...


Those numbers are much more realistic in my opinion than what you started off with. If you offer paying subs those rates I can see people jumping on board to try it.

That being said, your ultimately going to have trouble getting subs to cover the routes. I'm not being a jerk here and I'm not trying to persuade you to quit as I think this structure is more than fair considering the profit ranges you are posting above. They are in line with construction profits I charge on top of my subs.

Ok here is where it becomes difficult. Getting and keeping subs to run your routes. Your not going to get the kind of guys that post on here regularly. We are all business minded folks so we would never leave those kinds of profits on table when we could do it ourselves. But....., not all guys are chiefs and are perfectly happy being the Indians. Usually the Indians are the shovel monkeys, or the guys operating other people's equipment. You are by the nature of what you are offering, looking for the guy in between. He thinks he's a chief, but couldn't make it on his own and now he's stuck with equipment and not enough work. There's nothing wrong with this, lots of reasons guys can't make it on their own, and lots of times it's circumastances out of their control, like family medical issues or something taking up too much time whatever. But, they are smarter than the average Indian so eventually they are going to figure out that they are back on their feet and they can do it themselves for full price. Then they will steal your customers from you. You can help with this by having subs sign noncompete clauses for a certain number of years. But that's not going to prevent high turnover rates. You should have subs sign contracts for the season to try and make sure you at least have their route covered for that season.

Other hurdles are going to be back up plans for your route. You will be the contract holder so you are ultimately responsible for the driveways being cleared in the event that 2 out of your 5 subs call off sick or breakdown or whatever. Also I think your number of driveways is too high to person like was mentioned above. Guys can go really fast for a certain number of drives, but then they will fade. Even the hardest workers get tired and slow down, even when it's not intentional.

I would start out small. Whatever your idea of small is. If you were planning on routes of 50-60 drives per guy break that in half and assign 30 each to two subs. So effectively running one full size route with two guys the first year. That way you can get real life data and not screw yourself overpromising and underdelivering on your customers. Because let's face it, you can do all the preplanning, research, and math in the world and it will never go exactly as planned out in the real world. Good luck!


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## ponyboy (Dec 19, 2006)

So you want to be a regional management company


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## ktfbgb (Jan 31, 2016)

ponyboy said:


> So you want to be a regional management company


thats what it sounds like. Figure he's gonna do it anyway so might as well try and help him not become like one of the Nationals.


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## ponyboy (Dec 19, 2006)

There is nothing wrong with it just think the title is wrong 
I think about doing the same thing only on commercial side 
The legal side might get in the way 
Any hungry guy with a truck can get 30 house and make the same money and do half the damage to his truck 
To me the number game is higher price less houses 
One truck does 13 houses at $1000 a season 
When I was younger I'd do 70 houses at 200ish a house life is better now 
I also have other trucks for commercial work but point is I think the op is living in la la land not reality


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## BUFF (Dec 24, 2009)

When I started oot I had a few of my own accounts and was a sub. As a sub I was paid by the job not hour. When the guy I was a sub for got oot of the bizz I bought his contact list and found oot he was making on average 35% oof of me which isn't oot of line IMO. He made some money, and so did I. Paying hourly there's no initiative for the sub and you get what you pay for which will typically be a guy with a beater truck with a small plow that is also a beater. Paying per job you'll be more likely to have sub mulch better equipment and takes pride in his work. Yes you do run the risk paying by the job and getting substandard work but they'll be discovered as being douchecanoes during the interviewing process or with in the 1st couple storms. 
As the contractor you're name and reputation is on the line and you need to have subs you can count on to represent your bizz in a positive way. As the contractor you have to provide you subs detailed expectations of what the customer and you want. You also have to go out and check your subs work until you're level of comfort with your subs ability's no longer requires regular monitoring. Since you're the contractor you should create a LLC and carry a G/L policy to protect/ cover yourself if needed. Your subs should have a 2m G/L policy and request proof they have insurance.
Route that take more than 5-6hrs to run for the average snowfall is realistic, more than that there's no down time to rest or make repairs as needed. Fatigue is when problems / issue's happen, quality of work goes down and risk of property damage go up, all pisses oof customers.
Since you have limited to no experience in the snow bizz I'd suggest you hire on with a contractor for a season or two to get a better understanding of the bizz before you get in over your head.


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## lukepighetti (Jan 8, 2017)

Hold on, doing a big edit...


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## lukepighetti (Jan 8, 2017)

I will be on hand with plow, blower, shovel to provide quality control, customer support, and labor elasticity.

I believe that:

The customer will pay 20% more if I can solve these problems

Clear expectations for pricing
Online contracts, flagdowns, billing
Fast customer support
Text/email service alerts
Reliability of service

Subs will charge 20% less if I can solve these problems

No advertising
Tight route already set
Adjusting route size to fit their needs
No customer relations
No check chasing

Main concerns for me at this point are

A residential pricing structure that is CLEAR, CONSISTENT and FAIR and allows partial prepay.
Subs receiving good pay for their work minus my services
Subs reliability of service


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## SnoFarmer (Oct 15, 2004)

as a new businessman you should familiarize yourself with the laws are they a employee or a contractor,
IE a (sub) 
https://www.irs.gov/businesses/smal...ependent-contractor-self-employed-or-employee


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## lukepighetti (Jan 8, 2017)

Yep! I'm using the IRS specifications for designing the labor force.


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## ponyboy (Dec 19, 2006)

So let's get this straight you're on a plow site asking guys to snowplow for a living if you think it's smart to pay them half of what you're getting for doing the job that they do normally yeah sounds like I'd want to do that


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## SnoFarmer (Oct 15, 2004)

^ wouldn't that be up to the sub to take the job at the amount offered?.

if it doesn't pay enough don't work for them.

if he is offering $30 an hr, and you need $50 an hr then, its time to move on.


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> Yep! I'm using the IRS specifications for designing the labor force.


What Sno is getting at, I think, is the IRS makes it clear that if you have the ability to oversee, and provide quality control, then you are technically acting as an employer. Obviously lots of guys do this with independent contractors, but technically it makes them classified wrong. You have to be careful. You can absolutely tell them the exact parameters of the job, and what qualifies as quality. You are also free to go behind them and clean up, which defeats the point, or call the, and say the job doesn't meet spec, but if you are there with them directing operations, technically speaking, they become employees.


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## ponyboy (Dec 19, 2006)

I think his theory is good but in reality most people would just do it for cheaper and do it for themselves


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## lukepighetti (Jan 8, 2017)

That is a really good point that you've made, ktfbgb. It seems like it's the difference between a checklist and follow up as compared to being on site telling guys how to do it.

ponyboy, I wouldn't expect a career plower to sub for me, but to instead compete with me. No matter how good the business plan, it will never be a monopoly.

Unless he's having issues with any of the things I mentioned, then he might be interested.


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## SnoFarmer (Oct 15, 2004)

some do drives for $10, and then they say they can do 10-15 or more in a hr...


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## allagashpm (Sep 29, 2012)

lukepighetti said:


> Hey allagashpm,
> 
> I'm up in Bangor, what pricing structure do you guys use a lot in Bowdoinham? Pretty much everyone up here is on a tiered system. IE: $30, $45 for 6"+, $60 for 12"+
> 
> ...


I do a similar tier, depending on the customer. About half of my accounts are seasonal homes so I do them after the storm, and charge a flat rate up to a foot for them.

So now knowing you're in Bangor that changes things. 60-70 drives in a 4 mile radius is just not going to happen. I was thinking you were in a densely populated region of the US with a ton of subdivisions.

How much if any market research have you done? The problem with plowing in Maine is that every other guy has a plow truck and is looking to make a buck on the side (which could help you finding subs), but it is just saturated with "plow guys".
What are you going to do to make them drop their existing plow guy to use you?
If I were you I would consider as someone else said either working for someone for a year, or buying your own setup and getting your own accounts first, then have someone take over that route etc.

Few things to consider. What happens when the subs truck breaks down?
What happens when we have a mild winter like last year and the subs don't want to work for you any more?


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## lukepighetti (Jan 8, 2017)

I have a 2000 cherokee with studded snows and a 2" receiver. I'd like to be able to handle 20-30 residential accounts with a versatile setup that can handle a variety of tasks, making it good for overall support of a crew in the future.

I can think of a few options:

blower on a cargo carrier
pull plow
7 foot straight blade with drag edge

It would seem to me that blower wouldn't handle so many accounts, pull plow would be nice but not versatile, and the 7 foot straight blade with drag edge would be the most versatile.


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## FredG (Oct 15, 2012)

It could be a good plan, It will take time and substantial investment to play out right. Without being a landscaper and clients looking for your services because your mowing etc. It takes time to establish a decent route. Jmo


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## BUFF (Dec 24, 2009)

lukepighetti said:


> I have a 2000 cherokee with studded snows and a 2" receiver. I'd like to be able to handle 20-30 residential accounts with a versatile setup that can handle a variety of tasks, making it good for overall support of a crew in the future.
> 
> I can think of a few options:
> 
> ...


You'll run that Cherokee into the ground before the 1st season is over.
You'll get a better scrape and use oot of a back blade than a blower. Back drag edges work ok but with a light weight plow you'd have on the front it's not going to do mulch.


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## lukepighetti (Jan 8, 2017)

Would you ever consider running only a back blade for residential?


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> Would you ever consider running only a back blade for residential?


It would be very difficult to maintain productivity gains of the back blade if you don't have a front plow to push the snow into the pile after pulling it out to the road.


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## BUFF (Dec 24, 2009)

lukepighetti said:


> Would you ever consider running only a back blade for residential?


Yes, they are very efficient for doing resi.


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## ktfbgb (Jan 31, 2016)

BUFF said:


> Yes, they are very efficient for doing resi.


Interesting. So they would be pretty good backing up to push the pile? From what I saw it looked like hydros were on the outside of the moldboard to operate the wings. You don't think it would mess them up having to push big piles in reverse? Not being snarky here, if I was to add another truck the possibility of adding a backblade only to handle residential accounts and also with some of the wider open lots, would be financially more appeasing than having to add front and back at the same time. Eventually it would get a front too, but I might be able to swing another truck and one plow front or back next season.


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## JMHConstruction (Aug 22, 2011)

I think that would get frustrating, even if it worked. Without being able to angle it, you'd have to get your truck at the correct angle every time.


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## lukepighetti (Jan 8, 2017)

I wondered if you could pull it to the street, then as you were leaving pull it to the shoulder.


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> I wondered if you could pull it to the street, then as you were leaving pull it to the shoulder.


As far as I know the eblings can open up each wing but I don't think they have an angle function. I'm gonna look them up again right now. If you can angle them then yes you could do that easy same as with the front plow at that point.


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## lukepighetti (Jan 8, 2017)

I'm not a plow guy, I've made that clear, but I am a manufacturing guy, have spent a lot of time making tools do work for me. I envisioned a pull plow mounted on the front of the Cherokee with an angle function. Pull in, pull snow out, then pull it up into the yard. Like I said, never plowed before, but that's my inclination for finding a cheap and effective way to plow all the single car driveways that are in my city, while making it comfortable to operate.


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## ktfbgb (Jan 31, 2016)

ktfbgb said:


> As far as I know the eblings can open up each wing but I don't think they have an angle function. I'm gonna look them up again right now. If you can angle them then yes you could do that easy same as with the front plow at that point.


OP I just watched two videos on Eblings site. Obviously they are not the only manufacturer of pull plowed but seem to be preferred on this site. It shows them windrowing a big it with it. Keep one wing in containment and open up other wing. So the windrow, but don't angle. They never show what they do with the huge pile once they lift the backblade up though. They just leave the huge pile where it sits and then back up. So not sure if you could windrow the box clear in a short residential situation but there are a lot of guys on here with them. They will have insite on running one without a front plow to manage the piles.


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> I'm not a plow guy, I've made that clear, but I am a manufacturing guy, have spent a lot of time making tools do work for me. I envisioned a pull plow mounted on the front of the Cherokee with an angle function. Pull in, pull snow out, then pull it up into the yard. Like I said, never plowed before, but that's my inclination for finding a cheap and effective way to plow all the single car driveways that are in my city, while making it comfortable to operate.


Pull plows mount to the back of a vehicle. You back in pull out then you clear your pile. They don't mount to the front.


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## BUFF (Dec 24, 2009)

ktfbgb said:


> Interesting. So they would be pretty good backing up to push the pile? From what I saw it looked like hydros were on the outside of the moldboard to operate the wings. You don't think it would mess them up having to push big piles in reverse? Not being snarky here, if I was to add another truck the possibility of adding a backblade only to handle residential accounts and also with some of the wider open lots, would be financially more appeasing than having to add front and back at the same time. Eventually it would get a front too, but I might be able to swing another truck and one plow front or back next season.


 No a blade on front and a blade on back, back in, pull oot to curb, then push with front blade into lawn or windrow depending on property.
Ebling from what I understand are the way to go since you get them 16' wide. For a little resi rig a Daniels would be fine and much less oot of pocket.


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## BUFF (Dec 24, 2009)

http://www.danielsplows.com/products/pull-plow/


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## lukepighetti (Jan 8, 2017)

ktfbgb said:


> Pull plows mount to the back of a vehicle. You back in pull out then you clear your pile. They don't mount to the front.


I know that's how they normally go, but they just bolt to a 2" receiver, right? Is there any mechanical reason why you couldn't put one on a front 2" receiver?


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## lukepighetti (Jan 8, 2017)

Hey BUFF, how much does that daniels run?


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## BUFF (Dec 24, 2009)

lukepighetti said:


> Hey BUFF, how much does that daniels run?


I had a 90" quote aboot 2 yrs ago and with freight to Colo it was aboot $2,200 where an Ebling can be well over 2x that depending on the size and choice of hyds.


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## ktfbgb (Jan 31, 2016)

BUFF said:


> No a blade on front and a blade on back, back in, pull oot to curb, then push with front blade into lawn or windrow depending on property.
> Ebling from what I understand are the way to go since you get them 16' wide. For a little resi rig a Daniels would be fine and much less oot of pocket.


Ok that's where I got confused sine he asked about running a pull plow only with no front blade. I figured you needed both. I still considering one for my current truck. There is not a single person in town with one but from videos and what other have said it seem S like a no brainer. I could either keep my current commercial account and do it probably 30 percent faster or keep the same hourly route time and add a couple more lots.


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## ktfbgb (Jan 31, 2016)

BUFF said:


> I had a 90" quote aboot 2 yrs ago and with freight to Colo it was aboot $2,200 where an Ebling can be well over 2x that depending on the size and choice of hyds.


If they are still at that price or close, I can pay for the Daniels in one storm. Was thinking they were all in the 6K range.


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## BUFF (Dec 24, 2009)

ktfbgb said:


> If they are still at that price or close, I can pay for the Daniels in one storm. Was thinking they were all in the 6K range.


$6k is Eblings range.


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## lukepighetti (Jan 8, 2017)

That's a great price.


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## lukepighetti (Jan 8, 2017)

I can see how adding a pull plow is a no brainer for resi.


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## JMHConstruction (Aug 22, 2011)

Ktfbgb, if you added this would it make all your accounts under an hour? If not, I don't feel like you should charge your customers less, because you are more efficient. Maybe I misunderstood what you meant?


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## BUFF (Dec 24, 2009)

ktfbgb said:


> Ok that's where I got confused sine he asked about running a pull plow only with no front blade. I figured you needed both. I still considering one for my current truck. There is not a single person in town with one but from videos and what other have said it seem S like a no brainer. I could either keep my current commercial account and do it probably 30 percent faster or keep the same hourly route time and add a couple more lots.


You incurred the expense of being more efficient, add more to you route and reap the benefits.


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## lukepighetti (Jan 8, 2017)

How do you guys determine your rates? From a manufacturing standpoint I would use efficiency as a way to undercut the competition and take more market share. But I understand plowing is a little different since you're not working with commodity level supply, and there are guys collecting unemployment and doing it for pennies for cash.

I suspect I would find a good fair price, charge it, and then collect as many accounts as I could handle, and keep collecting and start hiring. Main reason I want to use subs is because I don't want to lay off 10 people every April.


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## ktfbgb (Jan 31, 2016)

JMHConstruction said:


> Ktfbgb, if you added this would it make all your accounts under an hour? If not, I don't feel like you should charge your customers less, because you are more efficient. Maybe I misunderstood what you meant?





BUFF said:


> You incurred the expense of being more efficient, add more to you route and reap the benefits.


Sorry if I said that poorly. Meant that I could keep the same route and do it faster, for the same price, and be home sooner. I would never give a break for being more efficient. Or I could add a couple more lots and stay at my current 7 hour route time, and squeeze more money out of the same number of hours. The majority of my lots are minimum charge lots, so even though they may only take a half hour my min is one hour. So with the pull plow I could do three of these small ones in an hour instead of two bumping my effective hourly rate from$170 per hour to $255 per hour.


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## ktfbgb (Jan 31, 2016)

lukepighetti said:


> How do you guys determine your rates? From a manufacturing standpoint I would use efficiency as a way to undercut the competition and take more market share. But I understand plowing is a little different since you're not working with commodity level supply, and there are guys collecting unemployment and doing it for pennies for cash.
> 
> I suspect I would find a good fair price, charge it, and then collect as many accounts as I could handle, and keep collecting and start hiring. Main reason I want to use subs is because I don't want to lay off 10 people every April.


Laying off folks in seasonal businesses is par for the course and everyone expects it. So I wouldn't weigh heavily on that. And classify them as seasonal, then your not laying them off.


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## BUFF (Dec 24, 2009)

lukepighetti said:


> How do you guys determine your rates? From a manufacturing standpoint I would use efficiency as a way to undercut the competition and take more market share.


 Rates vary due to operating expenses just like Mfg expenses. Geographic location, operating expenses and market saturation all play into it. Since you say you have experience running a mfg operation you should be able to figure oot what you need to make an hour for plowing.


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## JMHConstruction (Aug 22, 2011)

ktfbgb said:


> Laying off folks in seasonal businesses is par for the course and everyone expects it. So I wouldn't weigh heavily on that. And classify them as seasonal, then your not laying them off.


Yes sir. I wouldn't worry about "laying off" employees you hire for a part time, season snow removal position. Advantage on hiring subs for what you're thinking is they have their own equipment, make their own repairs, and pay their own expenses. You'll still have to make sure you have insurance, and make sure they carry insurance as well.

Biggest difference is this is a service business, not a commodity business (just like you said). With a commodity, you can build like an assembly line. Not the case with service. It will have A LOT of dealing with the customers. It will also prevent you from just pumping out driveways, because you are limited to what you can sell before hand, and not what you can sell after they're finished (like in manufacturing). On paper, you can figure out that if you get X amount of driveways within an X mile radius, you can produce them at a cost for X amount of money. With a service business, you're limited to what you can actually sell, and therefore it is hard to put together a plan like this before you sell your service.

Not sure if any of that makes since to anyone else or just myself, it has been a long day and I haven't really stopped. Longer weekend ahead with up to 3/4" of ice. My mind is a little spent at this point.


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## ktfbgb (Jan 31, 2016)

JMHConstruction said:


> Yes sir. I wouldn't worry about "laying off" employees you hire for a part time, season snow removal position. Advantage on hiring subs for what you're thinking is they have their own equipment, make their own repairs, and pay their own expenses. You'll still have to make sure you have insurance, and make sure they carry insurance as well.
> 
> Biggest difference is this is a service business, not a commodity business (just like you said). With a commodity, you can build like an assembly line. Not the case with service. It will have A LOT of dealing with the customers. It will also prevent you from just pumping out driveways, because you are limited to what you can sell before hand, and not what you can sell after they're finished (like in manufacturing). On paper, you can figure out that if you get X amount of driveways within an X mile radius, you can produce them at a cost for X amount of money. With a service business, you're limited to what you can actually sell, and therefore it is hard to put together a plan like this before you sell your service.
> 
> Not sure if any of that makes since to anyone else or just myself, it has been a long day and I haven't really stopped. Longer weekend ahead with up to 3/4" of ice. My mind is a little spent at this point.


Na it made perfect sense.


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## lukepighetti (Jan 8, 2017)

Got it.

OK, my pricing structure has changed since my last post. I have two subcontractors interested and my pricing to customers is well within the norm for the area.

Now for the part I am unsure about... the human element.

How do you guys vet subcontractors?
Is it time for me to become SIMA member?
Do they have resources for understanding the legal side of things?

And also, I need to get my Cherokee ready for a support role. 7 foot straight plow with back drag and a good shovel?


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