By Collin Corso
According to this year’s State of the Industry results, many contractors plan to purchase a variety of equipment for their snow operations. Whether large, big-ticket units like wheel loaders and tractors, or smaller purchases such as spreaders, plows and snowblowers, every year contractors consider replacing equipment or adding to or upgrading the existing fleet.
For many, a common goal in making large or heavy equipment selection and purchasing decisions is finding a unit that can be utilized year-round, which can sometimes limit the options. While that mindset makes good business sense, purchasing equipment that will be used only for snow operations can have advantages - even if your company doesn’t focus solely on snow.
Snow-only contractors retain sizable fleets that have the sole purpose of snow removal; however, the thought of making such an investment can be intimidating for many contractors.
Seeking units that are as efficient as possible for snow & ice management operations is most frequently the initial reason snow-only equipment is purchased.
A piece of equipment that only has four to six months to earn its keep is much more expensive to operate than one that helps generate income 12 months of the year. However, the unique demands of large parking lots, or small but highly complex snow management situations, may dictate the need for specialized equipment that has no useful purpose during the summer. This might include large wheel loaders, dedicated salt trucks set up for maximum capacity, specialized sidewalk clearing units, or uniquely outfitted agricultural tractors.
When deciding whether to buy a piece of snow-only equipment, budgeting is a huge consideration. In my Northeast market, a snow-only equipment unit may see 100 to 150 hours of actual run time in a season (sometimes less), whereas a multiuse unit will see 500+ hours per year. This reduces the amount of billable hours, and thus raises its hourly cost significantly.
For example, if a piece of equipment costs $15,000 per year to own (note payments, insurance, wear, etc.) and you can realistically budget 150 billable hours for the season, $100 an hour will be needed just to cover the cost of ownership. This does not include labor costs, overhead, fuel and profit. This often puts the concept of snow-only equipment out of the realm of possibility for contractors that bill hourly on all their accounts.
However, various methods of overhead recovery, especially when combined with seasonal accounts or equipment retainer fees, can make budgeting snow-only equipment more feasible. The most important point is to ensure that the additional hourly operating cost will not push your pricing outside the limits of what your market will bear or limit your ability to competitively price your services.
Effects of year-round work
I have found that most of the multiseason equipment (dump trucks, pickups, skid steers, etc.) experienced significantly more wear and tear and rougher treatment during the landscaping season than in the snow season. Utilizing snow-only equipment can lead to lower maintenance and repair costs, which can significantly lengthen the useful life of a unit. Dedicated snow-only equipment that is properly cared for can also increase reliability during a storm.
For my company, the advantage of lower maintenance costs and fewer in-storm breakdowns became quantifiable through careful maintenance record keeping. Over time, this might even be factored into the overall financial justification for owning a snow-only piece of equipment, but with so many variables involved, it should not carry the majority of the weight in the decision-making process.
Before purchasing snow-only equipment, all options and considerations should be weighed carefully. Every company’s business model is unique, and the option of building a snow-only fleet is not a one-size-fits-all approach. However, if done correctly it can provide significant advantages.
Pros & cons of snow-only equipment
- Snow-only equipment experiences significantly less wear, which extends its service life greatly. This can allow many more years of high reliability and lower maintenance costs based on less overall yearly usage.
- There is only one opportunity to earn income with snow-only trucks or heavy equipment. Your budget must be set up to ensure profitability can be met across all seasonal snowfall scenarios. This can be achieved with a combination of per-service, per-event and seasonal contracts.
- Snow-only heavy equipment can be uniquely equipped and spec’d for snow operations during the purchasing process. Multi-use equipment, in some situations, is like a jack-of-all-trades but a master of none. Consider if this advantage will increase efficiency.
- Ensuring that your market can bear the heavier pricing that snow-only heavy equipment will sometimes bring to your bids is a very important factor. While costs are almost always the same, average contract values can swing greatly from region to region.
- Consider if seasonal leasing options better fit your company’s structure. This is often a better alternative if your equipment needs are not too unique or specific.
Colin Corso is CEO of Driveway Snow Blowing, Inc.