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Jimbo
01-07-2004, 11:13 AM
I know there have been many discussions about monthly vs yearly rates. I have always billed just for the months I service and I am happy in doing it that way. However, I have made some pretty hefty increases this year and I am trying to decide if I should offer a "budget plan"?

My reason to consider offering what I like to call the budget plan is to let the customer spread the monthly cost over a 12 month period vs the typical 7-8 month season.

Example: 4 cuts per week for 7 months = 28 cuts per year
4 cuts per week x $80.00 per cut = $320 per month
Total per year $2240.00

If the example customer above chooses the budget plan they would now pay $186.67 per month for 12 months.

My question for those of you who offer payment over a 12 month period is how do you price it out the unknown?? In my area the typical season is April-October but this year I mowed through November.
If the same thing happens next year I stand to give away 1 months worth of cutting if I offer the 12 month plan at the same price as the monthly plan.
I could tell them it will be extra during the last 2 months if the season is extended, but I want this to be simple if I offer it.

Any thoughts?

newmanfan
01-07-2004, 11:18 AM
In your contract specify how many cuts you are doing and when, and how much additional visits are. That should clear things up for you and your customer.

Jimbo
01-07-2004, 11:53 AM
As a general rule of thumb thats a fine idea. The one account I raised the most (client I am mainly considering this for), is a commercial customer who's headquarters will not let them sign a contract, which makes this more difficult.

Anyone doing this that doesn't have a contract?

Cutters Lawn Care
01-07-2004, 08:03 PM
I have 9 Arby's that their district office won't let them sign a contract. It's good and bad. For work that's not included in their monthly maintenance price I always remeber those times when we did little extra things for them for nothing. then I add it in the next time they need mulch, seasonal color , etc.

LB Landscaping
01-07-2004, 08:17 PM
Jimbo I'm looking at doing the same thing!! How are you guys charging the extra mow's?? Do you just up the total for that month?

Cutters Lawn Care
01-07-2004, 08:25 PM
My experience is that you need to go by property even in winter even it's just to pick up sticks and blow driveway. If you are sending them a bill for 12 months and only there 7 months out of the year then they will complain about paying for 5 months you not coming around. I would make up a spread sheet and include all the services you offer on the left side and the months on top. mark everything that you are going to do in jan,feb and so on. Give them a copy this way they can look at it and see what is gonna be done each month so there is no debating over what is to be done and for the price.

Jimbo
01-08-2004, 09:29 AM
LB Landscaping- Currently I bill all accounts monthly during the months I provide service. Since I don't have an official contract I specify on the quote that service is from April - October and it is XXX dollars per month. Any service required after October will be billed on a per cut (weekly) basis at a rate of XXX.

Thats how I currently handle it. I am not sure how to spread the payments over a 12 month period when I am not sure if I will be mowing in November (thats the reason for the thread).

All I am trying to do it offer a budget plan like the Electric companies do. Plus it helps the client because they don't have a spike in overhead during the summer.

Cutter Lawn Care- I understand what your saying. I however am not willing to visit the account just to pick up some sticks, etc. I am only offering the budget plan to help the customer average out their payments, and reduce the per month fee.

This is only an option, so if the customer chooses this method of payment they need to understand that I am still working only 7 months, but they are spreading the payments over 12. If they dont like that they need to continue paying as they go.

I might just specify in the quote that they can call me to discuss a budget plan. When they call I will explain the per month fee breaks down to XXX over a 12 month period but if service continues into November I will have to bill them separately. Thats the only way I can think to do it. This somewhat defeats the budget aspect so I dont think it would work very well. I might want to consider figuring the budget plan on 30 weeks. Yes they could be paying for two weeks I didnt mow, or I could end up mowing two weeks I wont get paid for? JUST THINKING OUT LOUD. I dont know how to make this work.

I probably wouldnt even offer this but it could help in a competitive situation. Sometimes people only think of the per month cost which would be alot less on a 12 month plan.

Jimbo

Kelly's Landscaping
01-08-2004, 01:36 PM
Sounds like your going in to the banking business to me I fail to understand how getting your money slower is a good thing for you. Can you not control your spending does your wife go oh wow is that for me Zonk! Its bad enough I have customers that still owe me for lawn cuts and its January but I would be a lot more sickened if they were late on top of the sweet payment plan you offer.

If you have a monthly plan and they are current and there is a falling out your mower throws a rock and kills fluffy. And they fire you and decide not to pay you and refuse all collection attempts what are you out 1 months cutting but if you have the lawn services in a 12 month plan you may still be out that month but you may also have another 2-4 payments you wont be seeing now either.

I donít like credit cards and I really hate to become what I despise so extending credit is something I think ill try to avoid. Also you only work 7 months out of the year? It says youíre in central Maryland. Iím way north of you and my season is clean ups March and April lawn cuts May June July August September October. Clean ups November and December thatís a 10 month season and with clean ups its at least 8-9 months a year per customer.

Jimbo
01-09-2004, 09:23 AM
Kelly's Landscaping- If you didnt have anything to offer then there was no point in responding. I think your over analyzing things a bit.
I gave a good bit of info if you read it, but there is much you dont know.

1. This thread pertains to one customer, but is something I would consider for others if I had all the details worked out. This particular customer has me quote the mow, blow, and go as one bid, but there is alot more business to be had at this location, so its not as easy as saying screw you.

2. No, I dont only work 7-8 months per year. I normally work from late February through November (this year through December), and I even service this customers other needs (non mowing- such as clean-ups, mulching, pruning, seeding, etc) during these months.....everything is billed seperate from the mow blow and go.

I know you still dont agree with the payment plan and thats fine, but I kind of like to see money coming in during the off months. I dont need it but its nice. As far as getting shafted with this particular customer I dont believe it will happen. I have a good relationship with them and thats the only reason to offer such a plan. Its not for everyone and I would never even suggest it to every customer. If they did stop paying I would be taking action against their Corporation and I bet I would get paid.

BTW- I can control my spending fine, and you can leave my family out of this discussion.

Jimbo

NCL
01-09-2004, 09:34 AM
Jimbo check out TJ's Lawn Care,LLC site and try to hook up with him on your budget question he seems to have a handle on it.

Kelly's Landscaping
01-09-2004, 12:56 PM
Jimbo I made a few points that I wanted answers on and you did exactly what I wanted. You gave me some info you had not posted that I was curious with. I kind of like to see money coming in during the off months. I donít need it but its nice. ok I can accept that I apologize if my general comment on a spending wife was thought as a attack as I have no way of knowing if you were married. I was just trying to understand why you would want the income to come in slower.

On that point you did not sell me but you have sold yourself so go with it. I just was trying to understand why that system would be a benefit and unfortunately I still cannot see one. Sorry if I upset ya Jimbo ill leave your thread be.

GrassBustersLawn
01-09-2004, 01:32 PM
JIMBO - I was asking myself about the same thing KELLY said. Why would you want to get into banking business, especially if you aren't going to get any INTEREST for the LOAN you are making to the client? If you do the work over 7 or 8 months and allow the client 12 months to pay, you are MAKING A LOAN to the client.

I agree with the idea of helping the client budget. I make a "Budget Plan" available to my clients and spread the payments over 8 months, but they have to PAY ME UP FRONT on the 1st of each month. That way I am never behind with them and don't have to worry about collecting on work I've already done! If they want a 12 month pay plan (to spread cost evenly over entire year), I'd definitely make them pay AHEAD not BEHIND!

MIKE

ZEKE
01-09-2004, 02:38 PM
Jimbo- I have considered doing it also...the benefit being that if you do have more than a month or two of no work at the start and end of the seasons, the set monthly price or averaging out of what a customer will pay over the course of a season would help me keep money coming in on those months of no work. Being small, not bad budgeting, is why money is scarce in the winter for me. Every year since the first I try and offer more things to help keep busy in the non-mowing months and bring in money. I can usually mow 9-10 months a year here. The formula that was suggested to me was to count how many mows you would be doing each month for the customer. If you count 4 mows for each month that you are in full swing..say april-october (28) and the rest something like..january (1)...february (1)...march (2)...november (2)....december (1). You may not actually mow some of those non 4 mows months, but they will cover your 5 mow months you have. As far as summer months where you may skip a mow...I may slip in a comparable time of work in the beds or exchange it for some fertilizing when the time comes. Sooo you end up with 35 mows for the season on a $30.00 yard = $1138.20 (including my 8.4% tax) divided by 12 months = $94.85 a month. This is obviously for just mowing services. If I had yards of full service (mow, beds, fertilizer..etc.) I would use the same formula just change the price of each visit to include all expected services. I really wouldn't see it as "banking" just trying to offer the best possible scenario for you and your customer. Not every customer is going to agree to pay for services not yet performed and on the other hand some type of agreement should be in place to insure the death of Fluffy doesn't leave you short changed for the remainder of the year. Z

jamesrgr1
01-09-2004, 05:36 PM
Jimbo, I have about a 1/3 of my accounts on yearly contracts. I am working on gettting more to switch.I figure 40 times per year,some mowing ,some just quick blows. I can figure it anyway that makes them happy(mow,fertilizer,seed, aerate,pruning,etc)as much or as little.My thoughts are I never have to be concerned if I miss a week because of weather.I can always think whats best for the property,not wheather I'm going to lose $ for a per cut, and try to mow ayard that is to wet and make a mess. Also expenses go down in the winter. But $ money keeps coming in. Just some thoughts , always open to new ideas. James