56 Blizzard Avenue, Wolfville, NS

B4A 3L6
902-282-6153

6 April 2023

Dr. Paul Arnold, MBA, PhD, P.Eng.

Ivan Curry School of Engineering Acadia University
Wolfville, NS

Subject: Economic Evaluation – Purchasing a Gas-Powered Snow Blower or Contracting a

Plow to Clear a Residential Driveway in Nova Scotia
Despite Nova Scotians experiencing below-average snowfall in the winter months of 2023, the
province is traditionally exposed to an average of 221 centimetres annually (The Canadian Press,
2023). To some businesses, such as ski hills, snow is a determinant of economic success,
however, many property owners find excessive accumulation to be a burden. Large snowfall
comes with the task of clearing residential driveways, which can be physically demanding, time
consuming and pose as a financial stressor. Individuals who are responsible for clearing their
driveway typically choose one of the following methods: shoveling by means of physical labour,
purchasing and using a snowblower, or contracting an exterior party to shovel or plow the
driveway; the larger the driveway, the greater the effort and financial means required. This report
specifically evaluates the economic difference between purchasing a snowblower and contracting
a third party to plow a residential driveway – purchasing a snowblower will be considered
Option 1, while contracting a plow will be considered Option 2. The intent of the report is to
offer financial clarity to Nova Scotian homeowners in dealing with snow removal.
To maintain a manageable number of variables throughout the report, assumptions were made
and stated. All monetary amounts are assumed to be in Canadian currency (CAD). It was
assumed that the theoretical driveway used for the analysis was too large and physically
demanding to shovel; 41% of Nova Scotia’s population lies within rural regions where
driveways can be long with varying grades (Storring, 2021). There are multiple models of
snowblowers on the market, each with a different purchase price. Snowblowers can also be
purchased as gas-powered, or electric-powered. This analysis focused primarily on gas-powered
snowblowers as electric-powered blowers are less capable of handling larger snowfalls and are
also limited by cord length on longer driveways. Using Canadian Tire as a reference, three gas-
powered snowblowers with three separate purchase prices were selected and averaged to yield a
single purchase price. The three snowblowers and purchase prices were: Troy-Bilt XP 420cc 3-
Stage Snowblower ($2,399.99), BriggsStratton 250cc 2-Stage Gas Snowblower ($1,599.99) and
Yard Machines 208cc 2-Stage Snowblower ($999.99). The average cost of the three gas-powered
snowblowers was found to be $1,666.66, which was assumed to be the initial cost associated
with opting for a snowblower. Operating and maintenance costs of the snowblower were also
considered, including fuel consumption, oil changes and additional spark plugs. Canadian Tire
was also used to estimate that oil changes and spark plugs for the snowblower would cost
$15/year (“Canadian Tire Small Engine Spark Plugs”, 2023). Based on the three models selected,
the average fuel consumption used for the analysis was 5 litres of low-grade gasoline per hour of
use; it was also assumed that each snowfall would require approximately 1 hour of operating
time. Fuel prices fluctuate daily, so it was assumed that price of low-grade fuel would remain at
$1.49/litre, which may not reflect the cost of fuel on the publication date of this report. Finally,
an assumption needed to be made regarding life expectancy of the snowblower, and its salvage
value; based on snowblowers listed on resale sites like Facebook Marketplace, it was assumed
that the snowblower would be resold after ten years for a value of $500.

Table 1. Cost Outline of Option 1 (Snowblower)

Purchase Price $1,666.66

Fuel Consumption 5 litres/hour
Operating Time per Snowfall 1 hour/snowfall
Fuel Cost $1.49/litre
Maintenance Costs (Oil Change, Spark Plugs) $15/year
Life Span 10 years
Salvage Value $500

The table above summarizes the assumptions and costs associated with Option 1. With respect to
Option 2, the rate at which the snow removal company charges per visit is essentially the only
cost. A typical snow removal company charges approximately $50 per visit (Stout, 2021), but
occasionally they charge more if demand is high following a significant storm. For this analysis,
the cost per visit was set at $55; the extra five dollars accounts for instances where fees are
increased. Given Nova Scotia’s average annual snowfall of 221 centimetres, it was estimated that
the snowblower and plow would be operational ten times per year, with the snowblower
consuming one hour worth of gas per use. Based on the costs outlined above, a total annual cost
can be generated for each snow removal option; this annual cost does not include the purchase
price and salvage value of the snowblower, and only considers the operating and maintenance
costs.
Option 1 Annual Costs (Snowblower):
10 Operational Uses 1 hour 5 litres $1.49 $15.00
[( )×( )×( )×( )] + [ ] = $89.50/year
Year Operational Use hour litre year

Option 2 Annual Costs (Plow):

10 visits $55
[( )×( )]= $550.00/year
Year visit

The annual cost for Option 1 was calculated to be $89.50/year, while Option 2 was found to be
$550.00/year. Using the calculated annual costs for each option, and the known purchase price
and salvage value of the snowblower, two cash flow diagrams were generated.

2 Economic Evaluation
 Figure 1. Cash Flow Diagram for Option 1 (Snowblower)

Figure 2. Cash Flow Diagram for Option 2 (Plow)

Using the two cash flow diagrams, the Net Present Worth (NPW) and the Annual Equivalent
Cost (AEC) was calculated and compared for each option. An interest rate of 3% compounded
semi-annually (3.023% effective annual rate) was applied to the cash flows.
Option 1 Net Present Worth (Snowblower):
NPW1 = -$1666.66 - $89.50(P/A,3.023%,10) + $500(P/F,3.023%,10)
NPW1= -$2057.82
Option 1 Annual Equivalent Cost (Snowblower):
AEC1 = -$2,057.82(A/P,3.023%,10)
AEC1 = -$462.24
Option 2 Net Present Worth (Plow):
NPW2 = -$550(P/A,3.023%,10)
NPW2 = -$4686.11

3 Economic Evaluation
Option 2 Annual Equivalent Cost (Plow):
AEC2 = -$4,686.11(A/P,3.023%,10)
AEC2 = -$550
The calculations show that based on an annual rate of 3.023%, the NPW and AEC for Option 1 is
favourable. If Option 1 is selected, there is an annual equivalent savings of $87.76 and an overall
savings of $2,628.29, which is the difference between both AEC values and both NPW values,
respectively. The interest rate for this analysis was assumed to be 3% semi-annually, which made
Option 1 favourable, however, it was possible to find an interest rate that resulted in the projects
becoming economically indifferent. The calculations below show that an effective annual interest
rate of 23.4% would render the two options economically indifferent, meaning both options
would cost the same over a ten-year period.
Economically Indifferent Interest Rate, i:
NPW1 = NPW2
-$1666.66 - $89.50(P/A,i,10) + $500(P/F,i,10) = -$550(P/A,i,10)
i=23.4% (compounded annually)
As previously stated, fuel prices fluctuate daily. In effort to improve the accuracy of the report,
NPW and AEC calculations were completed again for Option 1 using a higher fuel price. A
higher fuel price increases the operating cost of the snowblower and subsequently decreases the
NPW and AEC. The new NPW and AEC calculations were conducted with a fuel price of
$1.65/litre instead of the $1.49/litre formerly used. Using the higher fuel price, it was found that
the NPW and AEC decreased from -$2057.82 to -$2126.16 and -$462.24 to -$477.59,
respectively.
Option 1 Annual Costs with Increased Fuel Price:
10 Operational Uses 1 hour 5 litres $1.65 $15.00
[( )×( )×( )×( )] + [ ] = $97.5/year
Year Operational Use hour litre year

Option 1 Net Present Worth with Increased Fuel Price:

NPW1 = -$1666.66 - $97.5(P/A,3.023%,10) + $500(P/F,3.023%,10)
NPW1= -$2126.16
Option 1 Annual Equivalent Cost with Increased Fuel Price:
AEC1 = -$2,126.16(A/P,3.023%,10)
AEC1 = -$477.59
In conclusion, the evaluation results prove that based on a 3.023% annual interest rate, it is
economically beneficial for a Nova Scotian property owner to purchase a gas-powered
snowblower opposed to contracting a third party to plow their driveway. This was determined by
calculating and comparing the NPW and AEC for each option, which led to a net present worth

4 Economic Evaluation
difference of $2628.29 and an annual equivalent cost difference of $87.76, both in favour of
purchasing a snowblower. To test the sensitivity of the initial results, the NPW and AEC of
Option 1 were recalculated using a higher fuel price, which still resulted in Option 1 being
favourable. It was also determined that if a situation arises where the effective annual interest
rate is 23.4% and fuel prices remain at $1.49/litre, the projects would be economically
indifferent. Since both options do not generate any revenue, an IRR calculation was not useful in
the evaluation. It should also be restated that the evaluation was based on a series of assumptions
that are subject to change depending on specific details that relate to an individual property
owner (size of driveway, gas-powered or electric-powered snowblower, snowfall based on
geographic discrepancies) or the economic forecast (interest rate, fuel prices, snowblower costs,
contracting costs). Regardless of the variability, it can be confidently stated that a Nova Scotian
is at a financial advantage by purchasing a snowblower opposed to contracting a third-party
plow. If specific costs vary significantly for individual property owners, then at the very least,
this report will serve as an accurate template for a similar economic evaluation with differ ent
input values, providing additional flexibility for decision-making.
Some references and additional calculations follow as an enclosure. The team at Snow Solution
Inc. hopes this evaluation proves to be useful and are willing to answer any additional questions.
Regards,

Mechanical Engineering Student, Acadia University

Enclosure(s)

5 Economic Evaluation
 References
“Canadian Tire Small Engine Spark Plugs.” www.canadiantire.ca,
www.canadiantire.ca/en/pdp/firstfire-small-engine-replacement-spark-plug-by-e3-ff-10-
0607513p.html?&&&&ds_rl=1283573&ds_rl=1283573&gclid=Cj0KCQjwla-
hBhD7ARIsAM9tQKvRxNkdpR3_2yk2JefFwXS-ifVJszg6YcKDntSL1_-
MUUN9noSA9uUaAj9TEALw_wcB&gclsrc=aw.ds#store=224. Accessed 5 Apr. 2023.

PLC Warmup. “The Average Cost of Snow Removal and a Great Solution.” Warmup, 12 Sept.
2022, https://www.warmup.ca/blog/average-cost-to-remove-snow-from-
driveway#:~:text=The%20price%20depends%20on%20where,%24250%2D%24500%20p
er%20visit.

Storring, Thomas. “Nova Scotia Department of Finance - Statistics.” Government of Nova

Scotia, Canada, 2021,
https://novascotia.ca/finance/statistics/archive_news.asp?id=17529&dg=&df=&dto=0&dti
=3#:~:text=In%20Nova%20Scotia%2C%2058.9%25%20of,was%2041.1%25%20in%20N
ova%20Scotia.

Stout, Dan. “How much does Snow Removal Cost?” The Family Handyman, 2021,
https://www.familyhandyman.com/article/snow-removal-cost/.

Snowblowers | Canadian Tire. https://www.canadiantire.ca/en/cat/outdoor-living/snow-removal-

equipment-tools/snowblowers-DC0001699.html.

The Canadian Press. “N.S. Is on Track for below Average Snow Season despite 30 Cm
Overnight Snowfall.” Halifax | Globalnews.ca, Global News, 3 Mar. 2023,
https://globalnews.ca/news/9526091/ns-snow-season-below-average/amp/.

6 Economic Evaluation
 APPENDIX

Effective Annual Interest Rate Calculation:

Effective Annual Rate =
𝑖
[1+ # 𝑜𝑓 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑖𝑛𝑔 𝑝𝑒𝑟𝑖𝑜𝑑𝑠/𝑦𝑒𝑎𝑟](# 𝑜𝑓 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑖𝑛𝑔 𝑝𝑒𝑟𝑖𝑜𝑑𝑠/𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 ) - 1

Effective Annual Rate =

0.03 (2)
[1+ ] -1
2

Effective Annual Rate =

3.023%

7 Economic Evaluation