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View Full Version : 8 Month vs. 12 Month Contract


ReddensLawnCare
01-26-2011, 04:42 PM
Ok...So i have searched on here for quite a while and I have not found something on this yet so any help or references to a current/past thread would be appreciated.
I have an HOA that is wanting me to change my contract from 12 months to 8 months. The job is relatively simple but is around 1.3 acres of mowing. I told them I would do the job for 200 per month for 12 month. They came back and requested an 8 month contract at the same price...THATS A $800 DIFFERENCE!!! I have only been doing commercial properties for two years and I have never heard of a reputable Lawn care company only doing an 8 month. I make my best profit in the winter:usflag: So..if anyone else uses an 8 month rather than a twelve..i would love to hear your reasoning behind that as well as your pricing. My pricing, except PPM, is always for a year long service so that the homeowner pays me and me only for everything they need.
Thanks

JDUtah
01-26-2011, 04:51 PM
Tell them you could go 8 months, but for 300 buck a month. Then say that either way they pay your original price stands as it was calculated for the work that needs done divided by 12 months. If they want to divide it by 8 than good for them. (this assumes you are only doing work there for 8 months of the year)

ReddensLawnCare
01-26-2011, 05:05 PM
I will be doing the work there all year...mostly in the 8 month range...march-november...and they rejected the idea for now...someone said they know someone who will do it. I broke it down and if they find someone to do that at that price then they will be mowing 1.3 acres, in two different spots, trimming, edging, and blowing for 52 times per mow.

Richard Martin
01-26-2011, 08:50 PM
Then let them hire someone else. I had a HOA try to get me to do goofy stuff like that the year before last. They wanted me to throw in an extra 1/2 lot with a million little tree stumps about 2 to 3 inches tall all over it. I told them they'd have to clear it to the ground before I'd run my mower over it. Someone else is doing it. And they don't do the extra lot.

grassmasterswilson
01-26-2011, 09:54 PM
I would charge more for an 8 month cause you will be on a routine schedule and not spreading the cost over the 12 months. Also the leaves may not be completely down after 8 months so an additional charge for leaf clean up at the start up.

Just my opinion.

mowyo
01-26-2011, 10:46 PM
I work for commercials that want 8 mo. or 12 mo. also.It works out to be about the same money-wise . In my area there's not much to be done in the off-season except pick up trash and maybe some leaves .98 % of the work is done apr.- nov. I try to come up with an 8 mo. total, 26 mowings ,shrub trims , mulch etc , ect - divide by 8 . Same company wants 12 mo., I just figure maybe 2-3 hours a month for trash pick up and 4-5 more hours for leaves if any and divide by 12 . It's all about getting paid for what you do and making the customer happy .

Agape
01-26-2011, 10:58 PM
add the 12 months, divide by 8, don't spend all your money each month, go hunting in the winter.

ReddensLawnCare
01-27-2011, 01:18 AM
I guess i have a different approach to calculating my cost than most people do...here is what I have done in the past for my commercials and it works out great...
Houry Rate X Number of Workers = Cost for one mowing X 52= Total year costs/12 = monthly costs. I take my monthly cost and X 1.4( That 1.4 is a 40% profit margin) I know i wont do 52 mowings in a year but it covers leaf clean up, labor to do fert and squirt, and also the general upkeep/maintenance of the property.
When I do my hourly rate, I do not charge 45 like some people. I pay myself 15 per hour and help 10 per hour. So when i add them up i get 25 plus an additional 10 (35) for misc. expenses that will come up.
So a contract that will take two people two hours go like this...
35X2=70X52=3640/12=303(1.4)=425 per month. How does that sound to you veteran LCO's. And thanks for the advice so far posted!

BrunoT
01-29-2011, 02:19 AM
This is a great thread. It illustrates why so many posters complain of ridiculous quotes for commercial properties given by their competitors.

ReddensLawnCare
01-29-2011, 05:50 PM
What do you mean by that last part of your post?

BrunoT
02-01-2011, 01:40 AM
What do you mean by that last part of your post?

If you're charging $2400 for a service that is really required only say 32 weeks/visits a year (face it, you're not mowing grass, getting up leaves, or pulling weeds in the dead of winter) over all 12 months, that $2400 is really essentially a $75 charge every time you visit the property.

Another competitor, meanwhile, doesn't play pricing games and gives them a quote of $300/month for only 8 months (just an example) a year. They still get 32 visits and they still pay $2400 a year. The same amount of work gets done for the same total price. But he comes here to complain that you are doing the work for "only 2/3 the price" he is. Because the number they tell him is $200.

You're simply financing them for 12 months for 8 months worth of service. But they forget that and only remember the cheap $200 they paid in July to get the grass cut.

Eventually the customer tries to get the best of both. he wants the $200/mo price paid over only 8 months. Which is exactly what your customer is trying to do to you.

My conclusion is that this sort of pricing (asymetrical vs the work actually done) is a double-edged sword. It sounds better as a lower monthly payment, but cash-strapped businesses are tempted to not have any payments when no service is needed.

ReddensLawnCare
02-01-2011, 08:50 AM
I see what your saying. I never really offered to do it for 8 months just because it provides a steady stream of income all year long. When I talked to the HOA and broke it down for them..it basically would mean that someone would mow the 1.5 or so acres in two different locations for 52 per mow...If they want to price shop..they can...but it kills me..I try to give fair prices to cover my costs but I understand some people are hurting and will low ball the prices..but I cant do it that low and really make any money at it. When I first met with the HOA...the guy told me the last guy was doing it for 175 for 12 months..and it showed..the property looked like crap.

ReddensLawnCare
02-01-2011, 11:15 AM
ON another note though..i go to everyone of my full service properties once a week and pick up trash...blow off common areas...and pick up limbs and fluff needles...just sayin..

Frank's Lawn Care
02-04-2011, 12:22 AM
I Was told for monthly accounts here in fla. charge them for 38 cuts a yr divide by 12 and thats your monthly rate. The only problem. Yards without leaves only needed cut 8 months,so they dropped me and i lost the money. The others loved i was picking up leaves(mulching) that cheap. So this tread made me think. Thank you! I believe i need an 8 and 12 month plan this next yr.

ReddensLawnCare
02-04-2011, 01:08 AM
I Was told for monthly accounts here in fla. charge them for 38 cuts a yr divide by 12 and thats your monthly rate. The only problem. Yards without leaves only needed cut 8 months,so they dropped me and i lost the money. The others loved i was picking up leaves(mulching) that cheap. So this tread made me think. Thank you! I believe i need an 8 and 12 month plan this next yr.

So what about shrub trimming and fert. I guess if that's how it goes down there than great but I don't think I would like it to much. I like everything put in writings ahead of time and that includes other items at certain times of the year for x amount of materials
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Richard Martin
02-04-2011, 04:37 AM
I Was told for monthly accounts here in fla. charge them for 38 cuts a yr divide by 12 and thats your monthly rate. The only problem. Yards without leaves only needed cut 8 months,so they dropped me and i lost the money.

When you get into structured payment plans a contract is required. This is copied right out of one of my 12 month pay contracts:

If either party exercises their right to cancel this contract before June 30, 2011 then an audit of the account will be performed by Richard Martin. The audit will include all services performed by Richard Martin (at the prices outlined below) and all monies received for those services from David Rountree. If the account is deemed to have a negative balance then David Roundtree agrees to make an immediate payment of the negative balance. If the account is deemed to have a positive balance then Richard Martin agrees to issue an immediate refund of the positive balance. This contract may be verbally extended indefinitely. If the contract is verbally extended the dates contained within this contract will be adjusted accordingly.

David Roundtree agrees to pay Richard Martin 12 equal monthly payments in the amount of $199.00. These payments are due on the first day of every month beginning on August 1, 2010 and ending with a payment on July 1, 2011.

Next on the contract is the exact work I will do along with pricing on a per cut basis:

Basic Lawn Care Package - includes: Mowing, grass trimming, edging of concrete surfaces and blowing off of concrete surfaces. This service will generally be performed on a weekly basis during the growing season and on an “As Needed” basis during the off season. The growing season is defined as the period from April 1 until September 30. The price for the basic lawn care package is $60.00 per occurrence.

Shrub, Bush, Hedge, Rose and Plantings Service - includes: Richard Martin will prune and or shear the landscaping plants at the residence once a year. The price of this service is $35.00 per hour. This service absolutely does not include any tree trimming or removal.

Richard Martin will make every attempt to perform the lawn service on the same day of the week. If weather or other circumstances beyond Richard Martin's control prevent him from performing the service on the day of or the day after the regularly scheduled service day Richard Martin reserves the right to skip the lawn service until the same day on the next week.

This service agreement is limited solely to the above defined service(s) unless otherwise stated in this agreement. Any additional services outside of the above described are not included in the quoted prices.