Anyone have a Pre-pay contract?

Discussion in 'Business Operations' started by DLS1, Feb 10, 2006.

  1. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    I don't do contracts. I only do residential and all pay on time.

    I started offering this year pre-pay for the year discounts of 5% for lawn mowing and 10% for the fertilize/weed control. Mailed out spring renewal and referral discount letters 3 hays ago. Already had one guy leave a message about doing the prepay for the year for mowing and fertilizing.

    He is asking what happens if something happens to me where I can't do it for the year. I will tell him I will give him the difference back. He will probably want something in writing so does anyone have a simple pre-pay type contract that you have been using a few years that you can send me or post here?
  2. cochino12

    cochino12 LawnSite Senior Member
    Messages: 319

    I have one, email address?
  3. CamLand

    CamLand LawnSite Bronze Member
    Messages: 1,299

    Can you send me one so I can look at it
  4. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    It is

  5. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    ... the customer may not know what's coming for sure, but then neither do you.

    So here's the deal:

    They're giving you the benefit of the doubt that you will honor your end of the bargain, the chance they take they will lose some money.
    In return, you're giving a 5-10% discount for pre-pay, that is the chance you take that you will lose some money. Yeah, what if the leaves turn out heavier, or it turns into a wet year with a lot of growth and pita mud fields, for example...

    In order for a deal to be win-win or 50-50, both sides have to take a chance, fair is fair.
    To smooth it up for those who may be doubtful, you could give a 5% off for 1-month prepays, and 10% for the whole year.

    It is an investment, it's almost like selling stock in your company, and in return for their investment, you're giving the greatest return for the longest-term investment. 10 percent return is almost unheard of these days, while it's not too low for a somewhat risky venture, it's also not too high for what is likely a safe bet. But as with all investments there exists risk, please don't take all the risk yourself, they have to take their end of the stick or the deal is off.
  6. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    I don't see it your way. The 5 - 10% is so I get my money early to pay bills or whatever. If I can not fullfill my obligation the customer wants his money back for the mowings/fertilizing I didn't do. Now that is win-win.

    Their is no way i would sign a contract for anything if the contract says i will not get my fair shair of pre-paid money back if I the company can't fullfil their obligations.
  7. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    If someone doesn't want the discount, then they pay 100% of the amount due upon completion. One or the other, take it or leave it. They don't get a refund on the 100%, either.

    Because the thing concerns me is, if you're going to spend the money on bills and whatever, and then say something happens to you... Now you're out of money and you're out of work, how exactly were you planning on coming up with the cash for the refunds? Please don't tell me you'll figure something out, that is very poor planning. If anything, put the money in a money market account at 3.75% so at least you minimize your losses, because you're losing 5-10%, and 5-10% is all profit, so you just handed them your company's profit.

    You are correct in one regard, I would have to be a fool not to sign a contract that offers me 10 percent interest on my money, guaranteed. Mainly because there isn't a company in the world offers this, but also because you're taking all the risk, and I get 10 percent one way or the other. On top of that, I have the option to take you to court in the event something happens, and pass judgements until the day you are fit to go back to work... At which point you'll likely be working to pay me back for some time to come, this could be especially beneficial and lucrative if I were retired, and had nothing but idle time on my hands.

    It is an investment, it is interest on my money. I can either deposit a thousand dollars in my money market account at 3.75% and a year later I have 1040... Or, I can pay 960 for a thousand dollars worth of work, either way I come out 40 dollars ahead a year later. The bank doesn't guarantee anything, they keep my money the whole time and all I get in return is 40 dollars. FDIC insures the thousand, but then I only get 3.75 percent, and not 5-10 which is over twice the amount. And if the bank gets robbed, I still don't get my whole thousand back, the FDIC only pays back a percent of lost money.

    Only thing I can recommend from what I gather, you need to put as much money as you can aside in the bank this year... That way, come this time next year, you have several thousand dollars in the bank that says take it, or leave it.

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