Budget plans?

Discussion in 'Lawn Mowing' started by Jimbo, Jan 7, 2004.

  1. Jimbo

    Jimbo LawnSite Bronze Member
    Posts: 1,093

    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?
     
  2. newmanfan

    newmanfan LawnSite Member
    Posts: 56

    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.
     
  3. Jimbo

    Jimbo LawnSite Bronze Member
    Posts: 1,093

    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?
     
  4. Cutters Lawn Care

    Cutters Lawn Care LawnSite Senior Member
    Posts: 314

    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.
     
  5. LB Landscaping

    LB Landscaping LawnSite Bronze Member
    from Maine
    Posts: 1,309

    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?
     
  6. Cutters Lawn Care

    Cutters Lawn Care LawnSite Senior Member
    Posts: 314

    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.
     
  7. Jimbo

    Jimbo LawnSite Bronze Member
    Posts: 1,093

    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
     
  8. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,414

    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 don’t 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 you’re in central Maryland. I’m 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 that’s a 10 month season and with clean ups its at least 8-9 months a year per customer.
     
  9. Jimbo

    Jimbo LawnSite Bronze Member
    Posts: 1,093

    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
     
  10. NCL

    NCL LawnSite Member
    from NJ
    Posts: 132

    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.
     

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