12 month contracts in Michigan

Discussion in 'Business Operations' started by dr grass, Sep 12, 2002.

  1. dr grass

    dr grass Banned
    Posts: 242

    I want to set up most, if not all of my clients on a 12-month billing schedule. this drought has done its damage on us. (and i just bought a house in july!!!) i am in Michigan and was wondering what type of information should i include in these contracts. i know i can win most people over with this idea, because ill explain that they will be paying just a little more for the year than they are now. But, ill be able to offer alot more services for them with this method, because the cash flow will be constant and steady ( big load off my shoulders) ill set up package deals, and give insentive for signing a multi - year contract. or just offer a yearly one, with knowledge by both parties that the price could change at the end of the contract. here are some simple figures. take an average lawn ... lets say you charge $30 a week (who wouldnt pay that for complete grounds maiintenance) well that would be $120 a month. $1440 for the year. if you get 100 people on this system (how hard would that be??) that would put your gross at 144,000/year. not to shabby. that would be fair to both the client and us. just throwing around some ideas. any input would be greatly appreciated. thanks in advance!!


    Shep :cool:
     
  2. wojo23323

    wojo23323 LawnSite Senior Member
    Posts: 608

    So can you mow lawns 52 weeks per year in Mi.
     
  3. dr grass

    dr grass Banned
    Posts: 242

    i dont get it??? 12 monts with 4 weeks for each month is 48 weeks. where do you get 52???? we mow all year but maybe 3 months. in the winter we will do their snowplowing service. that is another thing i can bring to the table. no matter if we get 4 snow storms all year or we get hit hard. theprice will be the same. a gamble for both, but we will still be alot further ahead with this method.





    Shep
     
  4. wojo23323

    wojo23323 LawnSite Senior Member
    Posts: 608

    There are 52 weeks in a year. In VA there are about 32 mowings per year.
     
  5. dr grass

    dr grass Banned
    Posts: 242

    wow. as i always say. "ya learn something new every day" never too old to learn in my opinion. thanks for the info


    Shep
     
  6. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Posts: 1,847

    Dr Grass,

    Im hoping you had a brain fart.

    As you get closer north, here in OH, we are good for 28-30 mowings per year. I base all my annual contract prices on 28 mowings. I would think that you would be arround 24-26. You ought base your annual calcs on 2? cuttings.
     
  7. dr grass

    dr grass Banned
    Posts: 242

    no brain farting here. what are you not getting? i am well aware that i do not cut grass year - round here. i simply want to get paid every month in the year for the work we do in the summer (and snowplowing) if the client is paying slightly more per year than they were, getting alot more service, than why wouldnt they want to pay year round. it would be cheaper every month for them, and their lawn care needs would be met. furthermore, they would realize that this would ensure their lawn care guy doesnt go out of business. works out great for both parties. sounds real simple to me!!!



    Shep
     
  8. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    Instituting this 12 month rate after a drought year is obvious to the customer: you want to get paid whether you work or not. Chances are you will lose quite a few.

    Would be a better idea to phase in the 12 month contracts, starting with those with irrigation that you will mow rain or shine.

    And what extra services are you going to offer for charging for 50% more mowings than you will actually do? One I remember right off, was $4600+ a year, each mowing was $65. (65x4x12= 3120); your formula would have been a real loser in this case.

    Snow is utterly unpredictable. The first year I did 6 people on 12 month contracts, I used the average times for snow removal for the previous four years. And guess what, did 50% more time on snow on each property that year!!

    12 month contracts don't gaurantee income, they just even out the cash flow. You need to know how much actual service you will provide over the 12 months, and divide the total by 12 for a monthly rate.
     
  9. dr grass

    dr grass Banned
    Posts: 242

    ground - ok lets say you have a yard that you get $65.00 a week . were mowing around here 28 times a year .... yearly bill would be $1820.00. now explain to the client that your dropping their weekly price to $45.00. $180.00/month vs. $260.00/month.
    total for the year $2160.00. a mesely $340.00 more for the year! and for this ill maintain along with the lawn care, the edging, hedges, tree trimming, round - up application, and spring and fall cleanups. i also dont agree with your statement that ill loose clients because i want to get paid year round. i think they will realize that i have bills to pay no matter what the grass is doing. or the snow. but i know they will realize that for not much more money they will be getting alot more services, and helping me out at the same time. fair for both!

    Shep :dizzy:
     
  10. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    Sorry, dr g, you are looking at it too simplistically. And like I said, it will be taken by the customers that you want to be paid even if you don't need to cut.

    And you definitely need to plan better. In above example, $340 covers all that extra stuff??? As I indicated, my $65 mowing for 28 cuts a year ($1820) was a $4500 a year job (far cry from your $2160), and that did not include plowing the parking lot. I humbly submit that you are trying to promise more than what you can deliver at that price. That is, unless you like to give away your labor.
     

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