economics. Give great annual price to one area to entice new clients?

Discussion in 'Business Operations' started by IMAGE, Dec 23, 2007.

  1. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134

    Ok here is what I am thinking. One neighborhood, every lawn/drive almost identical. One or two stops max to do all, one days work. I want give a discount to entice 30 new customers from one neighborhood, which would "pay the bills".

    Normal price for each lawn (seasonal price):
    Per Cut would be ~$30. (x 21avg =630yr)
    Snow plowing would be ~$35. (x 20avg =700yr)


    Maybe $90/month year round service with lawn care/snowplowing and free fall cleanup, (really there is not much fall cleanup, because no trees in ND, but good advertising) and aeration ($50).

    So really the customer is saving about $250-$300 a year in a average year. BUT I am getting a garunteed income that will cover my fixed yearly expenses and the variable expenses associated with the accounts, and leave me open to make profit the rest of the week. Seems worth it to me, but I dont want to be known as a lowballer.

    So does that seem like something that would make sense to you guys? Would you offer a 20% discounted rate if it could get you all your stops for one day in one neighborhood, and they would pay all your annual bills in one day?


    Give me your thoughts please. Thanks
     
  2. GreenT

    GreenT LawnSite Fanatic
    Posts: 43,014

    Steve, the question is: Does it make sense to you?
     
  3. P.Services

    P.Services LawnSite Fanatic
    Posts: 6,322

    that sounds like a very good idea to me!! i asked a question like this a week or so ago and got my a$$ beat over it so get ready. but i say go ahead i like the way you think.

    and green t rotate that pic for us.
     
  4. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134

    Yes I think it makes great sense. Like I said it would pay my annual fixed bills(business related) and cover the variable expense of those accounts. So the rest of the week my profit is higher off the rest of the accounts, because the fixed expenses were allready covered.

    Thinking about it alittle more, I would be saving time and money getting them all in one or two stops, and could make the same $$ as having them spread out but charging more. So really its just passing the efficiency on to the customer, and paying my bills. Now to pick the right neighborhood... :D
     
  5. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    So say that fills monday up and you probably made more money on the monday by charging less... you will probably do the same for tuesday etc.
     
  6. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134


    I went back looked at the post you mention.... your talking about a 60%+ discount... that would not work for me, that covers my variable expenses barely, definately not coving my total costs (fixed plus variable costs).
     
  7. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134

    So your saying go for it? Cut prices across the board? or only when I can get alot in one close neighborhood?

    Maybe work hard to come up with neighborhood pricing that will get me all my monday clients in 1-2 stops, tuesdays in 1-2 stops, wed.. etc? Its not a bad idea.

    I am not going after cheapskate customers here, just trying ideas out.
     
  8. Desertdweller

    Desertdweller LawnSite Member
    Posts: 159

    What if you advertise this deal but only get 5 or 10 to sign up? Can you then go back and say, "Sorry I have to go to regular pricing since not enough signed?" Or the first year you get 30 and half don't sign up next year. Is it still a money maker with 1/2 the discounted customers?
     
  9. cpel2004

    cpel2004 LawnSite Bronze Member
    Posts: 1,415

    Why dont you do this.... instead of having a bunch guys who know nothing about you your business or your area guess on what is or isnt a good idea, why dont you figure out your business cost, and then make a business decesion. Since your are a business owner. I hope this helps you.
     
  10. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134


    Thanks for bringing this up, because this was the first I ran it at that low of a customer number.
    Yes it is still profitable.
     

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