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  #1  
Old 01-14-2013, 06:41 PM
Sean Adams Sean Adams is offline
 
Join Date: Jun 1999
Location: Pennsylvania
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Monthly Package Pricing for Landscape Maintenance Clients

Years ago I posted on this forum that because it was so difficult to rely on snow removal services, we had moved our billing to a "monthly package format". At the time, the business owners who read my post were not exactly on board with what we were doing. A lot of people commented that their clients would not be willing to be billed this way and would prefer to be billed based upon the services they have done (and choose to have done).

I am sure this is still the case for many business owners - there are clients out there (both residential and commercial) who prefer to be billed each month based upon the services provided and nothing else. The opposition I got to the format mostly had to do with things like:

1.) What about when you lay out a significant amount of your own money in the spring for things like labor, mulch, etc....?

2.) What about in the middle of the summer when not as much time needs to be spent at a client's property?

The concept of creating a set price each month for a maintenance client is obvioulsy not black and white in every situation. But for the most part, if explained and sold properly, it becomes a win-win for you and the client.

Many business owners I speak with come to me with a similar dilemma - they tell me:

"Sean, I make all my money in the spring, summer and some in the fall. If it doesn't snow here I have to make my money stretch until the spring. It's very difficult and each season I feel like I am starting all over again."

I understand. In fact, I have been there. No matter how efficient, organized and prepared you are, if there is a lapse in services, money starts to find its way out the door without any money coming back in.

The reasoning is simple. Take the following example:

The client wants the following services performed - mowing, trimming, edging, mulching, aeration, seeding, fertilizing, weed control, spring clean-up, fall clean-up, leaf removal, irrigation maintenance. You figure out your price for each service and how many times each service will be performed in a year's time. You figure out the total cost of this maintenance package for the client is going to cost $6,240.

If you allow the client to pay you based upon when (and if) the work is done, you could see a windfall in the spring and less the other times of the year. In the grand scheme of thing, the client wins in this scenario....well, sort of.

Let's say that there is a drought, or an excessive amount of rain, or something else occurs out of your control that ends up limiting the number of service trips you make to the client's property. Now instead of the client spending $6,240 in a year, it looks more like he is only going to spend $4,950. Problem is, much of this money is due in the spring and the client may have to cut a big fat check for $2,000+ in one month. Sometimes that is a hard pill to swallow for a lot of clients.

Now, instead you say to the client the following:

"Mr. Smith, for everything you have chosen to have done at your property this year, the total price will be $6,240. What we can do is break that total amount down into 12 equal monthly payments of $520. That way you know exactly how much you will be spending and there will never be any surprises come invoice time. In exchange we will make no less than 50 visits to your property, more if necessary to ensure that the irrigation system is functioning properly and the turf and bed areas remain weed and disease free."

Let's assume these 50 intended visits break down in the following manner:

30 mowing visits, 1 mulch visit, 1 aeration/seeding visit, 7 fertilizing/weed control visits, 1 spring clean-up visit, 1 fall clean-up visit, 5 leaf removal visits and 4 irrigation maintenance visits = 50 visits total.

Mr. Smith has now reserved 50 visits to his property. Now your service changes as well - you actually have 50 visits to make sure the client's property is getting done what needs done versus you showing up just to try and squeeze in another mowing or leaf removal visit, etc.

From a business and accounting perspective, life becomes a little easier. Money is coming in month after month - money you can count on in amounts you have prepared for.

This scenario doesn't work in all situations for all businesses and clients, but something to consider.

To read this blog post and more like it go HERE
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  #2  
Old 01-14-2013, 07:11 PM
grandview (2006)'s Avatar
grandview (2006) grandview (2006) is online now
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I just scanned this. I have a few that want this. Contract price divided by set number of months. Yes,you have to lay out a little more in the spring but you make it up in summer when it might get dry out and cutting goes to every other week but your still bringing in the same amount. Only difference is,I break up the summer/winter season.
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Old 01-14-2013, 07:20 PM
Sean Adams Sean Adams is offline
 
Join Date: Jun 1999
Location: Pennsylvania
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It can be even more effective if you can sell the client on putting a debit or credit card on file so you can automatically bill on the first of each month. Yes, there are some service/credit card fees associated with this, but if you save time and money and the hassle of chasing accounts for money, it's well worth the minimal expense.
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Old 01-14-2013, 07:40 PM
grandview (2006)'s Avatar
grandview (2006) grandview (2006) is online now
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Quote:
Originally Posted by Sean Adams View Post
It can be even more effective if you can sell the client on putting a debit or credit card on file so you can automatically bill on the first of each month. Yes, there are some service/credit card fees associated with this, but if you save time and money and the hassle of chasing accounts for money, it's well worth the minimal expense.
The problem with this is you need to really have a tight ship,hacking employees stealing numbers and you need to have extra insurance to cover the above.
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Old 01-14-2013, 07:57 PM
yardguy28 yardguy28 is offline
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I guess part of its because I'm solo but I just don't get this "stretching" money during the winter the months.

lets say you have a client who spends $5,000 a year. it's the same $5,000 whether it comes in 6, 9, or 12 monthly payments or all at once in one payment.

I always feel it has to do with how you manage your money.

my billable months for the most is may (sometimes april if I'm lucky) through november. I spend the same amount of money whether I receive my money all up front and its sitting in the bank or during my billable months.

when people say they have to stretch there money I think of people living pay check to pay check. as I said its the same amount no matter how it comes.
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Old 01-14-2013, 08:09 PM
grandview (2006)'s Avatar
grandview (2006) grandview (2006) is online now
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Quote:
Originally Posted by yardguy28 View Post
I guess part of its because I'm solo but I just don't get this "stretching" money during the winter the months.

lets say you have a client who spends $5,000 a year. it's the same $5,000 whether it comes in 6, 9, or 12 monthly payments or all at once in one payment.

I always feel it has to do with how you manage your money.

my billable months for the most is may (sometimes april if I'm lucky) through november. I spend the same amount of money whether I receive my money all up front and its sitting in the bank or during my billable months.

when people say they have to stretch there money I think of people living pay check to pay check. as I said its the same amount no matter how it comes.
What your saying is people are paying themselves more then they should based on how much the company is making.
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Old 01-15-2013, 08:12 AM
yardguy28 yardguy28 is offline
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Quote:
Originally Posted by grandview (2006) View Post
What your saying is people are paying themselves more then they should based on how much the company is making.
I don't know that I'm necessarily saying that.

what I'm trying to say is let's use $100,000 as an example number. lets say you gross $100,000 a year. you gross that same amount whether clients pay it to you up front in one payment, over the course of season, 6, 9, or 12 months. when the year is said and done you still gross $100,000.

so if you receive all of that $100,000 by let's say august for example how can you still have to stretch your money the remaining months? the money should be sitting in the bank ready and available.
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Old 01-15-2013, 06:53 PM
Will P.C. Will P.C. is online now
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Quote:
Originally Posted by yardguy28 View Post
I don't know that I'm necessarily saying that.

what I'm trying to say is let's use $100,000 as an example number. lets say you gross $100,000 a year. you gross that same amount whether clients pay it to you up front in one payment, over the course of season, 6, 9, or 12 months. when the year is said and done you still gross $100,000.

so if you receive all of that $100,000 by let's say august for example how can you still have to stretch your money the remaining months? the money should be sitting in the bank ready and available.
The more money you have coming in, the more you spend. This allows you to make do with what you have.
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Old 01-15-2013, 08:31 PM
yardguy28 yardguy28 is offline
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Quote:
Originally Posted by Will P.C. View Post
The more money you have coming in, the more you spend. This allows you to make do with what you have.
not necessarily......

if you manage your money correctly you should NEVER need to stretch your money.

if you were to say to me you have the same amount coming in but spending more, then yes you might need to stretch your money.

it all evens out though when your income and expenses both increase. lets use easy numbers for examples.

income $10,000 expenses $5,000

income $20,000 expenses $10,000

I see no need in either of those to stretch your money. your making more and spending more.
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  #10  
Old 02-10-2013, 10:24 AM
205mx 205mx is online now
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Quote:
Originally Posted by Will P.C. View Post
The more money you have coming in, the more you spend. This allows you to make do with what you have.
Budget = telling your money where to go instead of wondering where it went. On paper. On purpose. Every dollar.
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