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Cost per contract?

Discussion in 'Lawn Mowing' started by stizostedion_vitreum, Oct 27, 2004.

  1. stizostedion_vitreum

    stizostedion_vitreum LawnSite Member
    from ND
    Messages: 51

    Have any of you itemized costs far enough to equate your costs per contract, yearly or over any other periods?

    Here's the deal....I met with the current largest "landscape contractor" (in our area) last night and they do not do any mowing. They indicated that they don't want to nor plan to ever do any mowing, so I told them that if they referred their mowing requests to me that I'd pay them a referral fee for every annual contract that I received signed. I offered to pay them a referral fee equal to the cost of one mowing per contract....which I told them based on my current contracts would range anywhere from $25-$200 per new contract.

    They believe that they will refer 50-100 new accounts to me annually. Our season consists of 25-28 mowings per year. Obviously, I will also gain additional business in fert apps and other accessorial services.

    Is my referral fee too high or any recommendations?
  2. turner_landscaping

    turner_landscaping LawnSite Member
    Messages: 187

    I do not think that is to much to pay as a referal fee. Just think you will be making alot more money off of that client than the referal fee you pay to the contractor. If you do good work and dont let the contractor down you will be set and not have to worry about obtaining more clients from anyone else besides the contractor. It is a win win situation. I would go for it
  3. out4now

    out4now LawnSite Bronze Member
    from AZ
    Messages: 1,796

    Sounds very reasonable to me. Smart thinking getting business that way.
  4. BCSteel

    BCSteel LawnSite Senior Member
    Messages: 876

    Yup, sounds like a good deal all around to me too. I think your referal fee is reasonable for both of you.
  5. Gravely_Man

    Gravely_Man LawnSite Silver Member
    Messages: 2,075

    If you can afford to give away that much money per contract and still make a profit why not? You are advertising or spending your time tracking down leads. You are just servicing accounts and writing up new ones. Sounds like a winner to me.

  6. bushtrimmer

    bushtrimmer LawnSite Senior Member
    Messages: 351

    We give anywhere from 5-10% commission on accounts we get like that. Now most of those are high end accounts where we can just add that to what we would normally charge and noone knows the difference. I get with individual managers when I can and cut them checks 3 or 4 times a year based on grass sales from their referrals.
    Don't screw them though or it will mess up a good relationship. If the customer starts asking you for mulching etc, let the landscaper know b4 u bid to keep from stepping on toes.
  7. Mo Green

    Mo Green LawnSite Bronze Member
    Messages: 1,487

    You will definately make that money back in no time. Not to mention the customers that you will pick up by word of mouth from the refered customers.

    It's a win win situation. Good luck and keep us informed of how things progress.
  8. Flex-Deck

    Flex-Deck LawnSite Silver Member
    Messages: 2,845

    Go for it - we figure 24-26 mowings per year here depending on the fertilizer progam they opt for, so that is 5 per cent - most companies would pay any sales person that much. I am thinking of going along that route too.
  9. stizostedion_vitreum

    stizostedion_vitreum LawnSite Member
    from ND
    Messages: 51

    Thanks for the replies everyone. I was very excited about this opportunity even if it's only half as good as they think it will be. My only concern was that I may have been too excited.

    I know that my initial marketing costs (time/$) have been far greater then the 3-5% that this will be.

    Now, I've found out about another Nursery in town that doesn't do any mowing and am trying to work out a referral fee with them.... I sure hope this process helps to eliminate the abundance of time marketing.

  10. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Messages: 1,847

    you screwed yourself by offering a referal fee IMO. trust me, there are those who would gladly pass along leads for free... keep in mind that it works far better as a mutual agreement.

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