When we think about negotiating with a prospective customer, we usually think about negotiating on price. However, contracts for snow and ice management services are filled with other terms as well. While you may not be able to negotiate price to your satisfaction, you may be surprised to learn that other terms may, in fact, be negotiable, sometimes flipping a less favorable contract into a winner. In this article, we will discuss three categories of potential terms to be negotiated: scope of work, liability and payment terms. Before we do, let’s address the obvious “elephant in the room” regarding this discussion.
Today’s snow professional has a much deeper understanding of fair and mutually beneficial contract terms than most customers. Negotiating terms would be unnecessary if every contract were signed on the contractor’s documents, using the contractor’s terms. Unfortunately, that will never happen. Contractors end up signing the contract prepared by their prospective customer, using the customer’s terms. As they do, the contractor may not even attempt to negotiate terms, believing it’s not worth the effort. Like many things in life, it depends on the situation. However, it’s always worth an attempt. If you’re going to strike out, do so swinging.
Think about the contract
To begin with, let’s consider the scope of work terms. Which terms, if you could alter them in your favor, would you recommend changing? Would it be beneficial to remove or reduce that trigger depth? If you’re unfamiliar with the term, this is the amount of snow required in many contracts to have fallen before work may begin. For example, a 2-inch trigger means that work may commence when a fresh snowfall reaches a depth of 2 inches at the customer’s property.
To begin negotiating this term, simply ask what the customer expects to happen at 1.99 inches. This will generate a discussion that often leads to the removal of this requirement. Customers often have no idea why such terms are in their contracts to begin with or who included them. Nobody has ever questioned it before, so there it remains.
Other scope of work items to negotiate include pretreating with liquids or treated materials, daytime operations, property inspections between storms, dealing with drifts, snow dislodging from rooftops days after a storm, ice storms, blizzards, operations during dangerous temperatures and managing runoff from snow piles or roof drains. You may have the best language to address each of these situations in your contract, but most customer contracts remain eerily silent on these matters. Because they are all likely to occur, there is great danger in not negotiating them upfront. A reasonable customer will appreciate the professionalism and detail-mindedness of you doing so.
Think about the terms
Next, let’s look at liability terms. Which terms, if you could alter them in your favor, would you recommend changing? Would it be beneficial to remove an approval process that requires the customer to provide permission to begin working during a snow or ice event? Customers may have legitimate reasons for wanting to approve work before it commences. However, what they are not aware of and need to become educated about (by you) is how an approval process shifts liability from the contractor to the customer.
Removing an approval process creates more liability for the contractor but also gives the contractor more control. Leaving the approval process intact creates more liability for the customer, but only if you require a release of liability statement. Requiring a release of liability statement is necessary because the customer is stepping into your shoes and is taking on the primary responsibility and power of determining when to begin operations. The liability is directly related to that responsibility and power.
Other liability-related terms to negotiate include reporting of damages, damage remediation and many of the scope of work items listed above. For example, who is responsible for monitoring the conditions of the customer’s property between snow and ice events, especially when thawing and refreezing occurs? If the answer is the contractor, how are you being compensated? Another example of how negotiating terms may work in your favor.
Think about the payment
Finally, let’s discuss payment terms. Customer payment terms are most likely dramatically different than those listed in your contract. Is your customer open to discussing changes? In my experience, many are. Moving up payments to earlier in the season is often possible after the customer has a thorough understanding of the upfront investments required by the contractor. Faster payment terms are beneficial for paying service partners, restocking materials, covering payroll expenses and buying fuel. Reasonable customers understand these basic realities.
Another payment-related term to discuss is late payments. What happens when the customer’s payment is late? The contract says payments will be made within 30 days of service. What happens on day 31? Is that a conversation for today or in the moment when there is no response to your emails or phone calls? I would argue that it’s better to have that conversation upfront. Again, you are the professional and are proactively addressing things that have the potential to happen based on your years of experience. A reasonable customer will appreciate this approach.
Negotiating terms is not only something to consider doing. It is an essential step to developing a mutually beneficial, long-term relationship. Remaining silent on important terms and hoping for the best only leads to a lack of trust, unmet expectations and unnecessary risk for both parties.
Now go forth.
