Buying a customer base

andersman02

LawnSite Bronze Member
Location
Snowy MN
And I would look at what it costs you to get a new customer, not necessarily what he is pulling in. If it costs you $150/ customer from a direct mailing then pay him $150 or maybe more/less depending if they stay on for a year
 
OP
Easy Peasy

Easy Peasy

LawnSite Member
Before you shut the door on this consider making some sort of counter offer better suited to your terms. Do you have any idea what your cost of customer accquisition is? Mine cant be much more than $35 for lawncare(as a solo).
We are considering an offer of $0.80 on the dollar, changing the terms to paying off the purchase over a 5 year term with monthly payments. With the final purchase price to be determined after the first year ( based on customer retention ). Also, his partner would have to sign a non-compete, as would he.
 

andersman02

LawnSite Bronze Member
Location
Snowy MN
Before you shut the door on this consider making some sort of counter offer better suited to your terms. Do you have any idea what your cost of customer accquisition is? Mine cant be much more than $35 for lawncare(as a solo).


If I could buy customers at $35/ new customer I would have the largest company in the Midwest. $35 per customer might be close to cost of ALL new customers regardless of where they came from, but if your paying $35/new aquisition from marketing (not referrals or people seeing you working etc) then please tell me the secret sauce.


.80/dollar is better, I especially like final number based off who stays, id wait until you get confirmation of renewing the next season though. If also try for less then .80/dollar
 

hal

LawnSite Fanatic
Location
Kansas
We are considering an offer of $0.80 on the dollar, changing the terms to paying off the purchase over a 5 year term with monthly payments. With the final purchase price to be determined after the first year ( based on customer retention ). Also, his partner would have to sign a non-compete, as would he.
If you loose 1/2 those customers (why would they stay?) you are still paying...bad investment.....real bad...Offer 1/3 price for one year at most
 

Youngandfree

LawnSite Fanatic
Location
VA
If you loose 1/2 those customers (why would they stay?) you are still paying...bad investment.....real bad...Offer 1/3 price for one year at most
I can't figure out why he thinks the partner doesn't want to keep their existing customers if he is staying in biz.
 
OP
Easy Peasy

Easy Peasy

LawnSite Member
If you loose 1/2 those customers (why would they stay?) you are still paying...bad investment.....real bad...Offer 1/3 price for one year at most
So, I don’t know what the retention rate would be but let’s say I bought 10 customers and the gross revenue from that is 3200.00 per year. If I pay that over a 5 year term @ .80 on the dollar it would be 2560.00 spread over 5 years @ 512.00 per year. So the first year I would have paid 512.00 for 3200.00 in business. Now if 1/2 the customers canceled like you said, we would adjust the next 4 years to the 5 customers left @.80 on the dollar for a total payoff of 1/2 the 2560.00 ( 1280.00 ) then the next 4 years assuming we kept 1/2 of our customers we would have paid 256.00 for 1600.00 in business per year for the next 4 years. Does this seem like a good investment?
 
OP
Easy Peasy

Easy Peasy

LawnSite Member
I can't figure out why he thinks the partner doesn't want to keep their existing customers if he is staying in biz.
The Co-owner that wants to sell is selling his customers and his partner is keeping his own customers. Basically it is 2 businesses being run as one for tax purposes
 

Youngandfree

LawnSite Fanatic
Location
VA
We are considering an offer of $0.80 on the dollar, changing the terms to paying off the purchase over a 5 year term with monthly payments. With the final purchase price to be determined after the first year ( based on customer retention ). Also, his partner would have to sign a non-compete, as would he.
What about making the price a percentage of revenue from the customers that stay on, so you aren't paying for customers that leave.
 

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