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help with new subdivison

Discussion in 'Lawn Mowing' started by green boy, Jun 1, 2003.

  1. green boy

    green boy LawnSite Member
    from texas
    Posts: 18

    This is what happened to me yesterday while catching up on a couple of yards in a new subdivision.
    A woman drives up and wants me to come give her a bid on her yard, so after I get through with the yard I go to her house and speak to her husband, gave him a bid and he seems to be happy with it. He then tells me that he's the president of the home owners association of the subdivision and ask if he can get enough home owners to sign a contract with us could the owners get a discount. I told him that I would give a little bit of a discount. He told me there was over 100 homes in the subdivision right now and homes going up everywhere. Theres room for poss. 1000 or two in the subdivision.
    While I was mowing after I left I got to thinking what could be done. Maybe giving every customer 5% off of their current price for every 20 contracts signed up to 100 contracts. For example his yard at $40 per mowing. 20 customers 5% off of his price, that would make it $38. Next 20 customers 5% off the current price, now its $36.10. Next 20 another 5%, his price is now $34.30 now. Next 20 his price is $32.59 and the next 20 his price in now $30.97 for a total of 100 contracts singed. Now then if it keeps going to say 150 contracts all of the customers would get the same discounts. That would be about $10 off of every yard with the cheapest starting at $35.
    So what do yall think?? What do some of the larger company's do?? What ideas do yall have?? Yall run with this and help me and use these ideas for your selfs......
  2. I think at this rate, by the time you get all lawns in this subdivision, you'll be doing them for free. Seriously, you realize this service we perform is not mass-produced, don't 'cha? EVERYTHING you do should be for PROFIT.
  3. green boy

    green boy LawnSite Member
    from texas
    Posts: 18

    Thats why I said stop at 100 contracts. That means with a $40 yard I would discount up to about $10 to be mowing at least 100 yards with contracts. These are all just thoughts and Im trying to figure out what to do. And no I wont be mowing for free, if I make $30 thats $30 more then I started with.
  4. Do a search on Home Owner Associations (a.k.a. P.I.T.A.). Take note on issues like profit, loyalty, etc. Some LCO's here avoid them like the plague.
  5. “… if I make $30, thats $30 more then I started with.”

    That’s where you and I part company. I don’t operate that way. If my competition wants to get a bunch of $40 accounts and get paid 75% of that, it means they’re keeping themselves occupied with low-profit business. Over the years, they’ll be fighting to stay a float.

    I don’t do this as a sideline activity to justify time away from my nagging wifey. I’m about PROFIT. If I get two accounts next to each other, they both get charged the full price. Otherwise everyone wants a piece of the discount pie.

    Something else, good words spread, but bad words spread like wildfire. When customers start knowing each other, and you get cross-ways with one of them, they’ll all know about it. Getting tied in with a HOA is like having one huge customer with a 100 bosses. You will make some of them mad and if they have enough pull to get you canned, do you have enough other business to absorb a hit like that? Larger LCO’s can, that’s a major reason they’re the ones servicing those accounts.

    If I were in your position, I'd be looking for the best (most profitable) accounts in that subdivision and forget about the rest.
  6. Clay

    Clay LawnSite Member
    Posts: 236

    Red flag number one!!! As Bluesteel said... Loyalty is my biggest concern with associations.... every time the board changes (frequently because it's a pita position) the new person wants to change something... either save money by doing it cheaper or improve quality without raising the price...

    To do large associations properly you really need a great deal of experience and can lay out the exact scenario that works up front to the board members... You need to establish a "system" that keeps you (the professional) in charge of what happens and when it happens... If not, there will always be too many chiefs and not enough indians....

    One red flag down, two to go... then run for the hills :)

    Suggestion: Offer better quality and value for their money, not a cheaper price... With quality work, you can improve the price of their properties by an average of 5%... as real estate professionals use comparable sales prices of the neighboring homes to price another.... A 5% increase in home value on 100 homes valued at $250,000 each is $12,500 per home or $1,250,000 total... That should pay your salary for a few months!!! :)

    Good Luck, Clay
  7. green boy

    green boy LawnSite Member
    from texas
    Posts: 18

    OK I see this is not gona go very far, THESE WHERE JUST IDEAS GET IT IDEAS. This is the first time to deal with something like this or else I wouldnt be asking quistions. I do quilty work and wouldnt do it any other way. Clay that is a good idea about increasing the homes value, and thank you. And Bluesteel I hate that we parted ways, theres a lot to be learned from EVERYONE in this site, even if its me that only has 31 accounts that are all on contracts and specifies what I will be doing for each person and what I will get in return, which is a set amount in a timely manor for a specified time for a quality job.
  8. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Posts: 489

    I believe that a discount can work if you know your numbers. You would need to know how much you will save in travel time for every group of houses that you get signed up. If you only discount the travel time then you can still make your manhour rate because of the density of the route. Once you go below your manhour rate, then you will lose your profit margin.

    So, in theory, what you are considering will work if you really know your numbers.
  9. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    the saved travel time could make you big profit.

    the cumulative discount could cost you your profit.

    like a bunch of people said, its all in your numbers. do some math, run some numbers, do some 'what-if's and so on and so forth.
  10. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I think you also have to think in terms of economies of scale and not just discounts or lower profits. There are savings here. A job of this type will have minimal (if any) windshield time (less labor expense). Fuel expense will also be lower due to the proximity of the jobsites.

    I think you really need to sit back and look at this one from all angles...I know I would. This could be a real money-maker for you and could help to take you to the next level.

    Good luck in your decision.

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