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View Full Version : Mowing prepay pricing


wolfe04
01-30-2012, 02:45 PM
I have been giving customers a 10% discount if they prepay the mowing season. I base thier price off of how many cuts they needed the previous season. I have NOT based it off a 30 week mowing season because most of my customers do not water during drought time and alot of them dont fertilize. I mow most of my customers 18-25 times per season. Is 10% too much of a discount? Does anyone else give this discount? Thanks alot.

lawnman24949
01-30-2012, 02:51 PM
I would say 10% is about right. Around here they will give you between 20 to 25 cuts depending on the company and if they go over the 20 to 25 cuts they bill you for the regular price it would be if there was no discount.

KeystoneLawn&Landscaping
01-30-2012, 03:11 PM
I would say 10% is about right. Around here they will give you between 20 to 25 cuts depending on the company and if they go over the 20 to 25 cuts they bill you for the regular price it would be if there was no discount.

Do those same companies issue a refund if they don't mow the max agreed to in the agreement? If I give a seasonal price, the price quoted is what the customer pays. If I didn't estimate the number of cuts correctly, that's my loss. I don't think any customer would sign a season contract if they could be charged more if over and not receive a refund if under. I will mow with a season price, but I always tell a customer a season rate favors the company. The fair way is to pay by the cut. We get paid for work performed and you don't pay for something you didn't receive. Most go with pay by the cut. Too late for long story short. LOL However, I don't offer prepay discount to season pay because I prefer to charge montly for services provided. That's just me.

wolfe04
01-30-2012, 03:53 PM
Some customers prefer to prepay for the discount plus the convenience of not having to write and send a monthly check. It gives me some money to get the season started to buy supplies. You should give it a try. I just would like to know if my 10% discount is more or less than other companies give?

Richard Martin
01-30-2012, 05:31 PM
I don't give ANY discount for prepay. I don't have enough profit to where I want to give a 10% discount.

Valk
01-30-2012, 05:48 PM
With last year's drought, are you sure you want to base your proposed total on a bad year?

Landrus2
01-30-2012, 05:49 PM
Some customers prefer to prepay for the discount plus the convenience of not having to write and send a monthly check. It gives me some money to get the season started to buy supplies. You should give it a try. I just would like to know if my 10% discount is more or less than other companies give?

What happens when you extra work do you wait for the money till next year :waving::waving::waving:

meets1
01-30-2012, 06:01 PM
We offer prepay on all fert/spray accounts. nothing more. Incentive for me, money upfront, purchase chemical, we have an idea of where we are in terms of accounts. Mowing, no way especially if you rate it at 20 mowings, and you mow 23 times, do the math - that discount is now costing you $$$$$

KeystoneLawn&Landscaping
01-30-2012, 07:01 PM
We offer prepay on all fert/spray accounts. nothing more. Incentive for me, money upfront, purchase chemical, we have an idea of where we are in terms of accounts. Mowing, no way especially if you rate it at 20 mowings, and you mow 23 times, do the math - that discount is now costing you $$$$$

Those accounts differ from mowing, in that you know how many times you will service the account.

JimLewis
01-31-2012, 04:29 AM
10% is too much. It's not necessary.

For years, we used to give 10% off for a 1-year pre-pay and then about 8 years ago, I finally realized I was simply giving away too much of our profit. Soon after, I decreased our pre-pay discount to 5%. And you know what? We have just as high of a % of customers pre-pay these days as we used to at 10%.

The thing is usually people pre-pay for one of two reasons. Either 1) It's tax time and they usually get a big refund each year. So they would rather just write one check once a year. It's less hassle for them. or 2) They will do anything for a discount. Some people - especially rich people - will just do about anything for a discount. And 5% is incentive enough to get the people in this category to go ahead and pre-pay. 5% is still quite a lot of money, most of the time. People look at what that equates to over a year and they decide they'll do it!

You guys that are giving 10% for pre-pay are leaving money on the table. If you changed it to 5%, I bet you would still get just as many of your [new] customers pre-paying as you did before.

It's the same reason people write me checks on large landscape construction jobs we do. I'll offer a 3% "cash" discount if a customer pay by check vs. credit card. It saves me the hassle and charges associated with credit cards, I get my money sooner, and they like the sense that they are getting a discount. I had a customer put down their credit card and write me out a $20,000 check last summer (that was the 50% deposit) just because it saved them 3%.

It doesn't take as much as you guys think to incentivise people.

JimLewis
01-31-2012, 04:34 AM
One other bit of advice - if you do pre-pays - don't let them pay by credit card. Credit card charges vary depending on the type of credit card the customer pays with (e.g. regular Visa vs. Rewards Visa). But on average it's around 3%. So if you are already giving 10% and then you take their payment by credit card, you might as well be giving them 13% off! Now you're really starting to give away your profits.

Explain to your customers that to qualify for the full pre-pay discount, it needs to be paid by check. They will do it. We do dozens of these each year. Once they realize they aren't going to get the full discount if they use credit card they always quickly come up with a check.

lawnkingforever
01-31-2012, 08:07 AM
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lawnkingforever
01-31-2012, 08:25 AM
I agree with Jim. 10% is much too high of a discount. I was going to offer a prepayment discount for a few slow players this coming season. Even then the discount offered will only be 3%-5%. Eliminating the function of monthly billing for a small drop in revenue is not something I am willing to do. For others it may be helpful as to gain valuable income coming out of winter to help with expenses.
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wolfe04
01-31-2012, 08:50 AM
Thanks for all the input, guys. I think I will drop the discount to 5%. To answer some of the questions. I always charge for extra work. It is not included in the prepay. If I go OVER the amount of cuts named in the contract then I charge regular price for those.