Thinking of changing billing...

Discussion in 'Lawn Mowing' started by Carolina Cutter, Jan 25, 2005.

  1. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    Ok hang on tight here we go.....

    Lets use this example of a customer.....

    $60 per service, twice a month for a total of $120 monthly. This is a commercial Insurance office so it needs to look good all the time.

    I currently do this account every two weeks or 14 days. When I arrive the Bahia grass is tall, about a foot, not a complete Bahia yard but it is mixed in with the centipede. Sometimes get trailing and have to double mow to make a perfectly clean yard due to this. So in essence I am doing this account 4 times (double mowed) a month for $120 or $30 a cut.

    Stay with me.

    I AM going to change to a 10 day cut length this year. This will in essence make this account a 3 time a month service instead of 2. With the first month actually being 4 cuts (the 1st of the month, 10th, 20th and 30th...then it would be the 10th, 20th, and 30th and so on)

    So here is what I figured. Drop the visit price to $45 on the 10 day cycle (easier to sell to the customer and raise the price without such a slap in the face method). Remember now that this is going to be 3 cuts instead of 4 (double cut twice = 4).

    So lets do the math here.

    Now: 2 cuts monthly (4 doublecuts which equals time) at $60 = $120

    $120/4 = $30 per cut

    Proposed: 3 cuts monthly (NO doublecut) at $45 = $135

    $135/3 = $45 per cut

    So...I think by doing this I will make $15 dollars more per month on this account and have to do one less cut.

    Does this sound like a feasible idea to you? Let me know what you think.
     
  2. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,073

    No, I don't think that sounds right. Now you'll have to go there 3 times instead of 2 times. That's an extra trip there for what? 15 extra bucks?
    I don't think the two week thing is right in the first place if you are arriving there and the grass is a foot tall. If the place "needs to look good" in your words, then they should be getting a weekly cut.
     
  3. Lux Lawn

    Lux Lawn LawnSite Silver Member
    Posts: 2,267

    Merlin
    I agree with TOM if it is a commercial account and it has to look good why would they not want it cut every week?Sounds like you are busting your but to make it look nice to save them money.
     
  4. ritchiem

    ritchiem LawnSite Member
    Posts: 58

    pardon? 1.8 Jigawatts?

    Sounds good to me, I have customers like that as well, they think the per cut is too high so they want me there every 2 weeks. Then I have to spend as much time there as if I were to cut it every week because the grass is up to my knees. I have done this before as well, offer more cuts at a lower per cut price, and come out ahead in the end.

    For example:

    cut once every 2 weeks takes me 1 hr @ $80.00 per cut pulled off 8 bags
    cut once every week takes me 25 min @ $50.00 per cut pulled off 3 bags

    I open up time to do other jobs and I make more of a proffit. It is easier on myself and my equipment. Time is money

    Richard
     
  5. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    Well what I am getting at is this....

    I know what I can get from this account....being the $60 per service. It is already above what I need for profit margin versus size and time to do. I agree weekly cut would be the way to go but that is just not going to fly with this account. So that unfortunately is out. But, on the other hand I am trying to decrease the workload of double cutting...well maybe it evens out with the extra trip....but I already do A LOT of work in that area and the time required to do the services would drop do to the lower amount of work that would be needed and the "windsheild time" would be minimal due to already being in the area. If I had to travel a long distance to do this I would leave it as it is.

    These are just some thoughts and that I why I am asking. To see if this change would be accepted by my customer. In the end the customer looks at the bottom line of the total monthly right? They are already going to see a change but the added benefit of having the property look better might ease that bottom line shock.
     
  6. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    Because this particular agent is got a figure in her mind of what it should run to get the service and when the service should be done. So, it is a hard sell. She did tell me that someone else came in and wanted to quote the service and came in higher (sidenote - this is a personal friend so I am not going to gouge but I am going to make my profit margin and then some). The funny thing was that the guy who quoted was driving a Buick Century with a push mower in the trunk.

    Looking at my bottom line I will increase the monotary value of hte account by $15 per month or $150 per season (9months at 3 times per month with 4 during the first month) which equals a months worth of money for doing nothing other than just increasing frequency of the service and in turn making my customer happier.

    I wish I could hold it at $60 or 3 times a month but that isn't going to happen and I have not raised her price for awhile so I thought this might be an easier way to do it.

    Oh and one other thing I started last year is to charge a fuel surcharge. Hey gas prices are rising so why should I eat the profit loss? I figure it at 1% of the bill total. That currently makes $1.20 off this account and I dare say that I do not use $1.20 of gas to do this account, not counting travel gas.
     
  7. andersonmowing23

    andersonmowing23 LawnSite Member
    Posts: 84

    If I were you I would just mow it once a week, You said it had to look good, If you wanted to you could drop the price then to 45, wouldn't recomend that because they might always expect a price drop. The only way I would give them a price drop is if that 60 dollar cut is that price becuase you have to double cut it.
     
  8. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    Using your figures....

    That brakes down to $1.33 per minute at the $80 rate for a total of $80 per hour.

    AND

    $0.83 per minute at the $50 rate for a total of $50 per hour BUT you freed up 35 minutes that you could be doing another lawn at $50.
     
  9. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,073

    When you intially looked at the property, did you know right from the get go that you would need to double cut the property?
     
  10. Carolina Cutter

    Carolina Cutter LawnSite Senior Member
    Posts: 987

    OK lets look at the season tally.

    9 months at 3 cuts per month equals 27 cuts plus 1 cut extra the first month at $45 equals $1260 per season at approximately 30 minutes working time.

    9 months at 2 cuts per month equals 18 cuts at $60 equals $1080 at approximately 1 hour working time.

    Total times
    9 months at 3 cuts per month plus the one extra at the beginning of the season at 30 min. working time equals 14 hours working time.

    9 months at 2 cuts per month at 1 hour working time equals 18 hours working time.

    Remeber these are projected times on the new plan and not in stone yet as I am figuring that the working time will be cut in half by not having to doublecut.

    So I already see a profit increase of $180 figuring it this way and a profit increase. I am really working the numbers here trying to figure out better paths to profit increases so bear with me.
     

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