Seasonal Contracts

[mattingly]

I have read Mr. Stone's post about changing his contracts and the many messages that have followed. I completely understand the spreading the revenue 12 months thing so please don't regurgitate that for me. What I don't see is how you get away with receiving money when you don't actually mow. For example, say there is drought for two weeks in July. How can you charge your normal monthly charge if you didn't work two weeks? The way I see it is if you say you will do maybe 30 mowings etc and spread the revenue the entire year but don't mow but 28 times you either refund the cost of two mowings or make additional mowings in late november december. Or maybe do some shrub pruning. I just don't see how ethically you can get away with not providing the service but charging for it because of a drought. Maybe I misunderstood what was said earlier. Say I was hiring a cleaning service for my rental property, well they charge me monthly for weekly service. This is spread out over the course of the year. Well say no one rents for a month. I wouldn't want to pay for the month that no one was there because it should already have been clean and no one was there to dirty it up. Can someone explain this because I am looking to offer incentives for those who sign up for a seasonal revenue spread contract and I want to get this right.<p>----------<br>Integrated Landscape Solutions<br>Lexington, KY

[Charles]

A contract is suppose to work that if you cut less one year due to a drought and charge the same. Then the next year and it rains alot and you have to cut extra. You need to still charge the same amount of money. One year the customer might come out ahead and the next you might. But you can't change the contract for that full year.

[HOMER]

I spell it out on my agreement that they will be paying for 30 mowings! If it takes a little more than 12 months because I fell behind or there was a drought, I will continue until the 30 mowings are complete. They will stop paying after the 12 months though. They don't get ripped off, they pay what they agreed and I do what I agreed. I make it clear that they are paying for 30 cuts, not 12 months of service. The rest is up to me to be on time every month and complete the agreement in the specified time.<p>Homer

[GroundKprs]

Hello mattingly, you've been awful quiet. My personal idea is that to be fair to a client and to myself, we will not do monthly flat rates until the third full year of service. By then, the client knows what your service provides, you know how the client pays, and you know the time necessary to perform all the duties on that property. By keeping an accurate history, you will learn within a couple of years where you are weak in estimating. After two years on any size property, I can judge within 30 min how much time we will spend for the year. (Off discussion, history also tells me that 15% of revenue from regular customers is from extra requests, and this is only 8-9% of the time spent on them.)<p>When I am ready to talk to a client about 8 mon or 12 mon flat rates, we are speaking about a continuation of a fixed relationship, not a gamble. If he pays for a mowing not done, or I have to spend an extra hour on spring cleanup, is not the question.<p>The idea of 12 month contracts is nice, but I have failed to see the need, even with all the discussion about it. If I am working for you for 8 months, I will bill you those 8 months. I know that I will have 4 slow months, so I must set aside 1/3 of the revenue during each of those 8 months, in order to survive the winter. If this is not possible, I have to raise prices or find a different way to make a living. The only 12 month flat rates we have are those including snow removal.<p>----------<br>Jim<br>North central Indiana

[Lee Homan]

This is the first year I will be offering service agreements as I like to call them. There's just something about that word contract that I don't like, besides my service agreements won't be legal binding and they can be cancelled by either party with a 30 day notice. Now I know there are some potential loop holes and I'm sure some unexpected problems will arise but I'll just have to deal with them as they come. Applying what I've heard other guys on this forum doing and adding some of my own things this is what I have come up with. You guys can tell me what you think.<br>First off I will be offering a Yearly or Seasonal agreement. A typical customer that I charge $30.00 to mow their yard on a &quot;pay as you go&quot; method will get a 10% discount on each mowing by signing a yearly agreement. This agreement will be based on a minimum of 35 cuts per year with additional cuts being billed at the discounted rate. I like to refer to these as visits instead of cuts that way if there is no mowing to be done some lite clean-up or a special request from the customer as long as it remains in the required time frame can be done. These 35 cuts or visits are based on last years averages for a typical mowing season of about 28 cuts plus 7 more for the winter months for a total of 35. The same customer signing a seasonal agreement will get a 5% discount on each cut and charged for a minimum of 28 cuts. This is how it would look.<p>Yearly<br>$30.00 x.10%=$3.00 discount <p>$27.00 x 35cuts=$945.00 per year or $78.75 per month over 12 months<p>Seasonal<br>$30.00 x .05%=$1.50 discount<p>$28.50 x 28 cuts=$798.00 per year or $66.50 per month<p>As for droughts, I will try to sell these agreements as, not so much a 35 or 28 cut package but a lawn maintenance plan that is available as needed, (I hope this makes sense) plus the incentive of the discount and the option of being billed on a 12 month cycle, I hope will be enough to sway them.<br> <p>By the way I pay $31.80 per month for cable whether I watch it or not. <p><br>

[Retro67]

Most kids I know eat whether it's been raining or not. Customers have to realize I need to earn a living independent of the weather. When I fix a price, it is the price that includes the variables of drought and heavy rain. <p>I've yet to have a customer tell me they wanted to pay me more because the grass was growing so quickly. I won't feel guilty if I don't mow a week in July or August because that is part of the rate I figure. I doubt the customer feels guilty in the spring when I have to slow down because the grass is so heavy and long.&lt;p&gt;John

[Dingo]

Do customers actually count the number of time you cut their yard OR do they just look to see if its been cut? Could you just say that you charge a X amount for the year and tell them the yard needs to be cut? That way they dont have a fixed number of mowings but their yard will still be cut and you will still get all your money. You could even go farther and say your yard will get cut when it reaches X amount of overgrowth. That way they cant say it needs cutting 2 days later. Would this work?

[Keith]

I don't think my customers count, they just like to see the lawn maintained. During the summer, if it is raining a lot, we may cut some lawns 6-7 times a month. During the winter I may cut wait 20 days to cut them. I really never enter into a resedential agreement that states a number of cuts per month and have never really had a customer to ask. <p>If you do state a number of cuts per year in a contract, it is usually a minimum. If you have a minimum of 30 cuts a year, chances are you will go over that number. If you are that good at estimating cuts per season, back your minimum off a couple of cuts, but not the charge.

[Charles]

What are you going to do. Go by and measure their grass every week to see how many inches it has grown? I ask the customer at the beginning of the year if they want it cut every week, 10 days, or every 2 weeks maximum. Unless there is a drought. At that time they should call me before I am suppose to come by and tell me that there yard doesn't need cutting. Now only under drought conditions can they move up the cutting. During heavy growth conditions they can call me to cut it sooner and I will try to fit them in. I get paid for every cutting. . Just means at sometimes I have to change my schedule and work faster. During droughts I get to rest a little. I get paid per cut. This way I can control how far someone may get behind on payments. Don't waste your time riding around and looking at yards just to see if they need cutting.

[jnjnlc]

This is a very interesting discussion. I have only been in the business for a short time. I thought everybody did maintenance contracts, so that is the way I started. I still do the single jobs as well. I try to set up the price so that it is fair to the customer and fair to me. Here in the south I mow almost every week from mid April to late November. Then maybe once a month in the winter months. That is plenty more than 35 times a year. Most of my clients water so I do not have to worry about drought. For those that do not water I will go to the site and if it does not need mowing I do other things that are required by the contract. The cool part is that I get paid the same amount each month whether I mow or not. <p>I just signed my first contract that is only 9 months. She will pay me for March to Nov. I do not even need to go to the site Dec through Feb. This is new to me, I am not sure if I like it or not. I will let you know.<p>I like the contracts. I get month year round whether I work or not.<br><p>----------<br>Jeff<br>

[Charles]

Lee, I don't know what your location is. Or the going rate on your area. But $30 is the bottom rate around in my area. I try not to even unload for less than $35. And to give a discount on the $30 would be really hitting on the profit margin. I think $45 should be my minimum but the competition keeps it low. Are you taking in account your gas for equipment, advertising,milleage and gas to get to the site, the seasonal part of the job, Your equipment maintenance cost, the cost of your time to maintain the equipment, insurance on your business and vehicles, any license fees??? Paying yourself out of all this. You health insurance, retirement? I know we go over this alot but it bares repeating. You can't even take a date to a nice restuarant for less than $35 anymore. You may be looking at volume, but volume without profit is a losing deal. Look at replacing all of your equipment at a maxium of 10 years if it is commercial grade to begin with.

[Lee Homan]

Charles,<p>I live in North Alabama. Most guys around here charge $30.00 for the average yard <br>approx. 75 x 100 and some even charge $25.00 (more of those guys around than you think.) <br>I have lost jobs bidding them at $35.00 which I feel is a good starting price but you can't always get that. When following up on bids people informed me that they gave the job to a cheaper company.<br>Only so many of them then you have to adjust your price. Besides I'd rather have a little less money in my pocket than none at all. I try to average no less than $30.00 per hour which I know I can do better when I get more efficient equipment. Besides those aren't the only jobs I have. In the higher end neighborhoods I have been bidding $40.00 and getting the work but they don't make up the majority of my business, plus I have a few commercial accounts that pay real well and help offset some of the lower paying accounts. All my equipment is paid for, business insurance is about $800.00 per year, I work out of a spare bedroom in my house instead of an office. Doing business in AL is pretty reasonable all you need is a business license $55.00 per year(varies slightly between cities) don't even need business insurance but I carry it, no sales tax to keep track of, it's pretty laid back down here plus it's all flat mowing. The most I drove in one day last year was 20 miles and a max of 10-15 minutes between customers. I can live with that. <br>I haven't crunched the numbers yet so I don't know what my profit was. I know it's not going to be much because most of my money was spent on major purchases like my truck, trailer mowers etc.. My intentions are to eventually get the higher paying jobs but I've got to find them first. As for the discounts, thats just a way to get money flowing all year round and try to bring some sanity to my schedule instead of waiting on people to call or driving around to check yards. Some of those people I have already weeded out and I'm sure with the letters I sent out yesterday there will be a few more.

[HOMER]

Kieth, when you say your cutting some of your accounts 6 or 7 times a month, is that in your agreement, are you getting paid for each mowing? If you aren't that would bring your rate down considerably. My accounts get cut 30 times period unless they request more and then we start over a ground zero, they are given an adjusted price or they get an extra per cut charge tacked on to their invoice at the end of the month.

[Turn key]

I am reviewing service contracts which do you think is best?

[Turn key]

:waving: I am reviewing service contracts which do you think is best?