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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
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grandview (2006) grandview (2006) is offline
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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
 
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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
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grandview (2006) grandview (2006) is offline
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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
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grandview (2006) grandview (2006) is offline
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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 01-14-2013, 08:16 PM
Isenberg Lawn Care Isenberg Lawn Care is offline
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Ok Sean, I like this. I had it on my mind some but reading this and how you broke it down seemed to explain it better. My only thought is if we have a slight drought...what do you do if you show up a week and it doesnt need mowed/trimmed? I know I could tend to the flower beds and other odds and ends, but what if a house doesnt have such things? Am I wrong to say that sometimes you dont end up doing a service a week here and there but still get paid for it in the end?
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  #8  
Old 01-14-2013, 08:24 PM
Sean Adams Sean Adams is offline
 
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Quote:
Originally Posted by Isenberg Lawn Care View Post
Ok Sean, I like this. I had it on my mind some but reading this and how you broke it down seemed to explain it better. My only thought is if we have a slight drought...what do you do if you show up a week and it doesnt need mowed/trimmed? I know I could tend to the flower beds and other odds and ends, but what if a house doesnt have such things? Am I wrong to say that sometimes you dont end up doing a service a week here and there but still get paid for it in the end?
Years ago when I first implemented this pricing structure, I had that concern as well, but I honestly in all these years have never come across a situation where a visit did not end up being beneficial - re-edging the beds, weeds/grass removal from hardscape areas, beds weeded, a few shrubs trimmed, some weeds spot-sprayed, some dead-heads removed from plants, small branch pruning, mulch overturned, and even an overall analysis of the property to make suggestions of the owner moving forward (hey Mr. Smith, that old retaining wall in the back is really falling apart, probably time to consider replacing it....)
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Old 01-14-2013, 08:53 PM
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cpllawncare cpllawncare is offline
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What I ran into last season was no matter how you put it to the customer I even had it in writing they had a copy and I had a copy, when it would rain and you didn't show up they would call and want a discount put on their bill for the missed service, I would gently ever so gently explain that it is a monthly service not a per service account, then they would go to pieces and say oh ok well cancel my account. I lost a few like this last year, the other issue is how do you put this on your invoice's, I always try to be completly above board on my invoices and put the service dates, again when the invoice comes in and they see a missed service I always get "that" call. It's an extremely hard sell, even after you sit there face to face with the client and go into detail with them about it, and they say OH OK that makes perfect sense, but once those invoices start coming in they FORGET about the conversation you had.
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Old 01-14-2013, 09:03 PM
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grandview (2006) grandview (2006) is offline
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Quote:
Originally Posted by cpllawncare View Post
What I ran into last season was no matter how you put it to the customer I even had it in writing they had a copy and I had a copy, when it would rain and you didn't show up they would call and want a discount put on their bill for the missed service, I would gently ever so gently explain that it is a monthly service not a per service account, then they would go to pieces and say oh ok well cancel my account. I lost a few like this last year, the other issue is how do you put this on your invoice's, I always try to be completly above board on my invoices and put the service dates, again when the invoice comes in and they see a missed service I always get "that" call. It's an extremely hard sell, even after you sit there face to face with the client and go into detail with them about it, and they say OH OK that makes perfect sense, but once those invoices start coming in they FORGET about the conversation you had.

I've picked up a few people because of that thinking. But on the other end they will pay for a seasonal plowing contract and not even think about a refund if it don't snow.


Commercial work you can get away with a skip.
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