Grounds, Landscaping & Snow

Price Models (Snow)

BID

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Billing Method

General Description

Challenges

Time and Materials

• Set hourly rates for different pieces of equipment, operations and materials

• Pay only for services received
• Easy to compare rates between providers
  

• Administratively burdensome, tracking time and equipment
• Harder to gauge the efficiency
• Can become expensive in heavy snow seasons
• Can be hard for providers to cover equipment, material and startup expenses in light season
  

• Set rates for plowing different snowfall accumulations, usually with set per application rates for deicing services 

• Client has a clearer understanding of the cost per event 
• Restricts some of the wilder swings that can be experienced with Time & Materials 
• Encourages efficiency and less administratively burdensome than Time & Materials
• Removes perceived “gray” areas as billing is based on third-party certified snow totals 

• Pricing is based on snowfall inch totals and does not always reflect the work required for blizzards or events that have a long duration 
• There may still be event pricing fluctuations, although not as drastic as Time & Materials, depending on the number of deicing applications that may be required (daytime weekday storm versus overnight weekend event) 
• Depending on the service start trigger, some services may be considered out of scope and require additional billing if requested 

Lump Sum / Fixed Price

• A single fixed price for snow removal services (in scope) 

• Clear budget planning and awareness 
• Some financial protection during heavy winters 

• A minimum of a 3-year contract is required to “balance out” the negative effects of a heavy winter to the provider and / or light winter to the client 
• Any ambiguity about service level and / or scope items can strain relationships during the season 
• Pricing can lean towards above average seasons when priced to reduce risk to the provider 
• Depending on the service start trigger, some services may be considered out of scope and require additional billing if requested 

Lump Sum with Cap & Floor

• A set rate for the season with a “cap” or “maximum” seasonal inches that the pricing covers before additional billing is triggered as well as a “floor” below which the customer pricing is rebated 

• Better budget planning than some other methods but not as concise as Lump Sum Fixed 
• Cost savings in below-average seasons 
• Creates more of a win-win relationship 

• Greater fluctuation is possible than Lump Sum / Fixed 
• Once the cap is reached, Per Inch pricing typically is triggered 
• In an extremely heavy season, there is still potential for billing above budget
• Depending on the service start trigger, some services may be considered out of scope and require additional billing if requested 

Tiered Pricing

• Set tiered pricing based on cumulative accumulation as the season progresses
• Supplier typically frontloads Tier 1 with upwards of +/- 65% of seasonal snowfall average or 28" utilizing below example:
• Tier 1: 0"-14"
• Tier 2: 14.1" - 28"
• Tier 3: 28.1-42"
• Cap: 42" (Time & Material rates beyond the cap) 

• Customer pays for the service tier they are in until the total season accumulation “trips” the next tier level 
• Limits fluctuations in above average season compared to Lump Sum with Cap pricing 
• Allows payments to more closely align with how the operations are being performed 
• Client budget for Tier 2 (seasonal snowfall average for last 15 years preferred)
• Client only pays for Tier 1 and will roll into Tier 2 once exceeding 14" of snowfall
• Supplier has covered their costs on the outside chance there is less than seasonal snowfall average

• Although there can be many tiers, wild fluctuations in pricing is more restricted 
• Administratively, slightly more complicated than Lump Sum w/Cap pricing (true-up billing required) 
• Depending on the service start trigger, some services may be considered out of scope and require additional billing if requested, including hauling and relocating snow

Customer Advantages

Per Inch