How to switch from per cut to fixed rate?

Discussion in 'Business Operations' started by UrbanGreen, Jul 13, 2008.

  1. UrbanGreen

    UrbanGreen LawnSite Member
    Posts: 162

    I will try to keep this short...I am trying get all of my customers on a fixed rate plan instead of charging per cut. I would like to offer an 8,10, or 12 month contract however I am struggling with how to price some of my accounts.

    Example of my problem: Customer A we do for $35 per cut. I start in March with scalping (bermuda), April there is almost nothing to do b/c bermuda hasnt quite come in yet, and then we mow may through September. Really Oct there is absolutely nothing to do as well. Then Nov and Dec there is like one visit each b/c the people have no trees at all. There are a lot of times during the cutting season when we show up and there is nothing to do again! Not a single weed to pull, grass hasnt grown, nothing! I dont have many accounts like this but these few seem to be a pain to set up this way.

    What do you guys do if you dont mow b/c it doesnt need it, bad weather, etc? Do you still charge same price?
    Since I already know that I am going to have missed visits with these accounts how do I price them?
    Also using this as an example how many months should I set the contract up for since the work at these type of accounts is kind of spaced out?

    Any and all help will be greatly appreciated!!!:)
  2. LawnPro19

    LawnPro19 LawnSite Senior Member
    Posts: 254

    well what you need to do is figure out about how many cuts a year you will do for each property then multiply the price you are charging per cut times the number of times you will cut the property a year then divide that number by 12 and thats what they pay you a month.... for example down here commercial properties we service 41 times a year so say for one property i charge 75.00 per cut... then i would multiply that by 41 which is 3075.00 yearly then you divide that by 12 because there are 12 months a year which would be 256.25 per month, and this way you will recieve a check every month
  3. UrbanGreen

    UrbanGreen LawnSite Member
    Posts: 162

    lawnpro19, thanks for the reply...the steps you stated are what I have already done with most of my accounts. I was more concerned with the best way to handle an account like the example I gave and how would you guys handle the other questions I had?
  4. AJ Lawnscapes

    AJ Lawnscapes LawnSite Senior Member
    Posts: 322

    I charge a trip charge if they don't call me and I show up and it doesn't need mowed.

    But you do the exact same thing as LawnPro described for all your customers that you're moving to a monthly contract.

    If they dont' get mowed in Oct, they still pay that month, as they got their service earlier in the year, and they are just paying for it now over 12 months as compared to every week. Saves them some dough over the summer and gets you a check in the winter.
  5. scottgalat

    scottgalat LawnSite Member
    Posts: 72

    You are not in a area that is "monthly contract friendly." If i came to your house and did nothing, how much should you pay me? (i'll be right over for my check.) If you condider that your monthly rate is derived from your actual mowing earnings divided by 12, all that you have accomplished by converting that customer to equal monthly billing is your waiting longer to get your money. All money is good money, even if it was only 9 month's worth, accept it and be happy. If you want to charge full-rate year-round
    Move further south. Be fair with your pricing... only good things will come from it. Be unreasonable and expect problems.
  6. UrbanGreen

    UrbanGreen LawnSite Member
    Posts: 162

    scottgalat, yea I am finding out its a lot harder to do this then everyone makes it out to be. A lot of customers no matter how many times I explain how things are going to work they just dont get it. I thought about taking any missed visits and applying them to some other extra service or crediting that amount back to them somehow. Does anybody else do this or have suggestions?
  7. causalitist

    causalitist LawnSite Senior Member
    Posts: 610

    i'm planning on the switch, 7 month season, 7 equal bills.
    everyone is told i will be there every week, if there is no growth a few times, their weeds will be sprayed in beds or lawn, maybe fert ... i tell them no matter what i will be there every week and they will get their moneys worth the few times it doesn't need mowing. i'm sure i'll lose a few, but guess what, those will be the pitas that have crappy lawns and would have me mow once a month if i would.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I base my monthly rates off a full season of every week mowing, but I do not issue credits or do 'make up' work for missed cuts due to the weather. If we are hit with mandatory watering restrictions, that is the only time I will cut them some slack.

    When you sit down and really look at the whole picture, you can take on only so many mowing customers before your schedule is full. So basically, I'm committing myself to taking care of those lawns and turning away other work in the spring. When things get dry in the summer, some customers water and some don't. If they choose not to water, that's their call, but I'm not going to give them money back or do other work to make up for missed cuts.

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