Equal monthly payment ?

Discussion in 'Business Operations' started by scottishmaximus, Mar 3, 2004.

  1. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    I have a few probs every year with people who send late payments for the last statement of the year, since I'm not doing work, etc. December is the Christmas month, and presents and gifts often come before the lawn man. Although I have to buy as well. I just don't want to spend my winters chasing down $$. And, waiting 4 months for payment for services seems a lot like financing to me, for free. It's not hard to save or budget for the winter, and $100 is $100 no matter if it's broken up 4 ways or 1. I'd rather have it all at once.

    :D
     
  2. swim

    swim LawnSite Senior Member
    Posts: 357

    Here is a way that I did it a few years ago.

    Dear valued customer,

    As of ( put in date change will take effect) ( your business name) will begin a 12 month payment plan to simplify your budgeting and payment needs. The plan will be based on your past lawn service needs as described on page 2. Payment will be due on the 12th of each month.

    We know as you do, grass does not have an exact growing rate and rainfall differs in each area. To help counter any dry spells in the late summer and fall we will include the following at no extra charge to you:

    Every 7-day customers: 2 visits in March and 4 visits in October

    Every 14-day customers: 1 visit in March and 1 visit in October

    We will also offer payment plans for landscaping and landscape maintenance, mulching, bed weeding aeration, lawn fertilizer, tree work, shrub trimming, and brush clean up. Please feel free to ask for your free quote on any of these services and any other services you may require.

    Thank you again for your business.

    This worked well for me had about a 50% approval rate and have been using it for several years now as a payment option. It really helps out in the winter to have some extra income.
     
  3. scottishmaximus

    scottishmaximus LawnSite Senior Member
    from ohio
    Posts: 286

    Thanks swim for the letter. Don't plan on using it, but it's food for thought. It is simple and not intimidating.
     
  4. Expert Lawns

    Expert Lawns LawnSite Silver Member
    Posts: 2,660

    I put on the service agreement how many cuts we will do. my first post just let you know how many cuts we average up here. I'm not that vague in the agreement. I believe this year I am going with 28 cuts. If not that many cuts are performed, I give them a choice of credit next year (for spring cleanup etc) or they will get the money back in the means of another service we provide. If neither of these please the customer, a cash reimbursement can be made.
     
  5. Tim Canavan

    Tim Canavan LawnSite Member
    from Houston
    Posts: 218

    I give 42 visits per year. Weekly March through October. Every other week November through February. So it goes like this: 42x the price of each visit divided by twelve (months). Pretty simple. If the customer asks why, and they will. I tell them it's just a pro-rated amount. This way you know how much to pay each month because it's the same. They are usaually o.k. with that. I won't take anyone unless the sign the annual agreement.
     
  6. billc

    billc LawnSite Member
    Posts: 119

    Here's an approach:

    Price per cut X # of cuts (estimated or firm) / # of months you want to spread out the payments

    IOW

    $35 per cut X 27 cuts / 8 months = $118.12 per month

    In the contract (I like swim's) you can say something like this:

    We plan to cut 27 times this year, but as you know the weather affects how your grass grows. This means 27 cuts is not a hard figure. If we end the season having cut fewer than 27x, we'll refund $35 for each cut not done. If we cut more than 27x, you'll be charged $35 for each additional cut.

    or

    The monthly contract price covers the season, and if we cut less than 25x, we'll refund $35 for each cut less than 25. If we cut more than 29 times, we'll charge you $35 per cut over 29.

    I would also suggest calling your service "weekly lawn maintenance" rather than "mow and trim all." Say you will visit the property weekly and perform any of the following services AS NEEDED - mow, trim, blow. This way you will be on the property each week, but some weeks will be just a few minutes to do a little trimming, whereas other visits will be longer than scheduled when you mow, trim and blow. This way your customer can't say "You were here and didn't mow" because they're paying you to be there and do what's NEEDED.
     
  7. scottishmaximus

    scottishmaximus LawnSite Senior Member
    from ohio
    Posts: 286

    It sounds like many of you prorate. Is this an industry standard with agreements.
     
  8. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    No, there's lots of people who don't prorate. I think it's just a matter of preference, and whether you can get your customers to pay no matter what.
     
  9. jajwrigh

    jajwrigh LawnSite Bronze Member
    Male, from Martinsville, IN
    Posts: 1,405

    I offered a similar program this year and everyone wanted to pay per cut still, so I left it alone. No one wants to take a chance on a drought or something.
     
  10. ElephantNest

    ElephantNest LawnSite Bronze Member
    from La.
    Posts: 1,878

    I've only been stiffed once in all my years in this. For a $40.00 camellia.
     

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