Discounts to customers?

Discussion in 'Lawn Mowing' started by jpp, Feb 6, 2005.

  1. jpp

    jpp LawnSite Silver Member
    Posts: 2,128

    Hi all,

    Got a questions on discounts to the customers. I have been in business since 1998,the gentleman I bought the business off of gave a 10% senior discount and 10% prepay discount to his customers. Senior is self explanatory.But on the prepay discount you pay for 25 cuts at say 25 dollars. Bill is 500.00 less 10% for paying up front. Bill is now 450.I still offer this discount to the customer base I got from him. I do not offer it to the new clients that I picked up myself. My question is do you guys offer anything like this? If so what percentages do you use? I am thinking of dropping the percentages back to 5 percent. Oh and if you are wondering If we go over the prepay cuts of 25 they do get billed for the remaining cuts in each of the last month or two.

    Thanks in advanced for the replies,

  2. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    Just do what most companies in the world do when they offer you that type of discount.....

    Mark it up the amount of the discount...

    Example: Bill previously $500
    Bill Now $550

    10% Customer discount $500

    You show them the $550 bill and them give them the discount...they are happy and kaboom new customer and they fell as they got something when you know better...

    Thats how most car dealers and discount stores do it.
  3. stumper1620

    stumper1620 LawnSite Bronze Member
    Posts: 1,889

    Have you been honoring that since 98 or is this a bussiness you just accuired?
    If you have been honoring it then it will be hard to faze out.
    or do away with all & offer something else, like Seniors receive credit for one mowing on final bill or something like that.
    I know I wouldn't want to different methods or you may get in problems with the ones not receiving the same.
    word of mouth ain't always a good thing! :eek:
  4. jpp

    jpp LawnSite Silver Member
    Posts: 2,128

    Yes I have been honoring since I required the business. So instead of phasing it all out that is why I was going to offer the 5 percent. On the new customers that I got from the discounted ones they ask about the discounts, I tell them that that is grandfathered in due to a agreement I had with previous owner. They seem to be fine with that I still get a customer out of it.
  5. jpp

    jpp LawnSite Silver Member
    Posts: 2,128

    I was going to do an increase because of gas prices anyway so this is one way I could do it. Thanks for the information.
  6. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Posts: 2,128

    I don't currently offer any sort of prepay discounts to clients but I might in the future. If I did, I would make the discount only 5%. If you do some rough math, at 10% on 30 or so cuts a year, thats at least 3 free services. At least at 5% you are only showing up at their place for free once or twice. The only current incentives I run are for clients who successfully refer new clients to me. I normally send a client who referred someone to me a gift card to a restaurant.
  7. General Grounds

    General Grounds LawnSite Senior Member
    Posts: 902

    payup i offer prepay for my chemicals only, 10% if paid in full for the year by march 1, and 5% up to the 15th of march. i have a few that prepay evrything and i offer them 10% on 32 cuts if paid in full. helps start the season with some green. Tony
  8. MYS

    MYS LawnSite Member
    from DC
    Posts: 5

    This season since I am really just starting out I am thinking about giving seniors 60 and over a $5 discount.
  9. mastercare

    mastercare LawnSite Senior Member
    Posts: 289

    I won't offer discounts to poeple in most cases. So, here's a good way to get rid of your discount system and "phase it out" if that's what you want to do.

    Send out letters in the spring to sign up for lawn care again. Inform your customers that you are no longer offering a discount. However, you have evaluated your increasing costs of doing business, and in lieu of the discount, you will be keeping their price the same for the upcoming year.

    This way, they got the same price (which is discounted) and next year they'll be expecting a price increase. That way, nobody is surprised next year when they get back to paying full price. Nobody will be expecting discounts, and you're free to raise your prices, and the customers will be expecting it.

    Also, if you're going to mark up prices, only to reduce them....check your math. One of the threads above reads:

    $500 = regular price.
    $550 = raised price
    10% off = $500.....THIS IS WRONG!

    10% off of $550 = $55. New discounted price will be $495.

    To determine the mark-up price, you need to take your base price ($500) and divide it by .9 (1-10%). This gives you a price of $555.55. Take 10% off that and you're back at $500. Adding 10% and then taking off 10% actually causes you to lose money! You need to calculate it correctly, because some people will actually read your bill, and figure out that they're not getting the full discount you promised.
  10. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    I do a 10% discount for prepays. Yep, you lose that 10% up front. BUT, you also get the money all at once, and can stick it away and earn interest on it. Additionally, you save time in billing, the expense of billing, and it illiminates the worries and hassels of late payers. I have thought of rolling that back ton 7% or 5% even.

    I don't do a senior discount.

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