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Annual service agreements

Discussion in 'Business Operations' started by mkroher, May 29, 2007.

  1. mkroher

    mkroher LawnSite Senior Member
    Messages: 539

    Next year, I'm thinking about putting all my residential customers on a service agreement. I will give them a price for the entire season, and divide it up into 8 or 12 payments.

    If it's $1200 to treat/cut/cleanup their property for the year, I get $100 a month.

    The only reason I want to do this is for financial reasons. I'm sick of waiting until June to start seeing serious money come in. I'm sick of barely making it through the winter with my few condo contracts that I have.

    I do not plow my residential. One reason my customers may not go for this, is they wouldn't want to pay 4 installments over the winter months when nothing is going on. I really don't know how they will react. I think my rich customers won't go for it....but I think my average double income family 80 grand in credit card debt might because it's just another "steady monthly payment".

    Has anyone tried this? Does it work? I just want this seasonal business to be more steady financially.

    Thanks in advance for your input.
  2. fknippenberg

    fknippenberg LawnSite Member
    Messages: 49

    We just started moving in the same direction - Have 2 property's on the 12-month plan now. We established complete property maintenance plans for them including, mowing, property cleanups, prunning, etc. These customers love it - One easy to remember payment each month.

    Wether or not they pay in the winter shouldn't matter - they will pay for it in June or July anyway.. This gives them one lower payment...its easier for them if you ask me.

    I'm hoping to convert a few other customers to it and am presenting it to all new customers as our "prefered" option.
  3. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    I have always been leary of people who do this.... dont mean to bash you,,, BUT what this tells me is that you cant manage your moeny...

    ya see, when YOUR money is in YOUR account it draws YOUR interest...

    when YOUR money is in someone else;s accont it draws THEM interest....
  4. mkroher

    mkroher LawnSite Senior Member
    Messages: 539

    I can manage my money. But my overhead doesn't go down that much during the winter.. Same mortgage, same truck payment, etc...

    Besides, I think I can offer more services to customers, they'll be more willing to spend the extra money to improve their property, and have a budget.
  5. Jake Wolf

    Jake Wolf LawnSite Member
    from NYC, NY
    Messages: 37

    I'm on a 10 month payment plan as I work Mar-Dec. It includes all the basics and I give them a price sheet for extras such as seasonal plantings and mulching. It helps keeps things simple and the best part is that my clients setup automatic bill pay through their bank or credit card and I never have to chase down money.
  6. ed2hess

    ed2hess LawnSite Fanatic
    Messages: 14,279

    The 12 month plan is a good idea and most people will set up some type of auto pay and once it get going you are in. Be very very explicity about the fact that you are spreading the total charge across the winter months to head off that argument.
  7. mkroher

    mkroher LawnSite Senior Member
    Messages: 539

    Thanks for the feedback. What were people's reactions when you moved the customers from the pay-as-you-go billing to the service agreement plans? How did you approach it?

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