fixed price, monthly billing

Discussion in 'Business Operations' started by scott's turf, Aug 19, 2002.

  1. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    For those of you that bill a customer say $200/month for mowing still chage that if there is a drought and you don't have to cut the grass? Do you decide if it needs cutting or do they? I was thinking of going this route but was wondering what disadvantages any of you may have that do this. Thanks
  2. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    We are going to be switching to more contract billing (versus our current per occurence billing or al la carte).

    The way I see it, you're setting up a contract with them for $xx dollars and they pay xx for xx service which you define. So you might indicate that you'll determine when the lawn needs service according to weather conditions. In March/April and November/December you may add or delete cuts depending on weather. We figure about 30 cuts per year. I've had late springs and early winters that leave us at 27 or 28 cuts and we've had early springs and late winters taking us to 32 or 33 cuts.

    Even with the drought conditions and you skip cuts, you figure that into your average number of cuts. As well, you may still do a little line trimming or edging to keep the edges neat if they're growing. The customer has hired you as a professional to manage their turf, which means they're paying you to not only know when to cut the lawn because it needs it, but they're also paying you to know when not to cut it beause you'll damage the turf. Don't feel guilty if you haven't run your equipment over the grass - this is the time of year you can relax a little and bring in the extra income from working your butt off in the spring when it was growing more quickly.

    Weather is not something you can control - and should be stated in your contract. What happens if you get a blanket of snow from November 15th into January/February not allowing you to do a final fall clean up for your properties? There needs to be a provision as to how you handle inclement weather - in my opinion.
  3. Old Guy

    Old Guy LawnSite Member
    Messages: 59

    All our maintenance customers are on a monthly pay. We figure 30 mows per year, bed maintenance every other week from late April to November. We don't offer any other type of billing. Makes it easy on us, customer knows what it will cost each month and everyone is happy. Should we do some special project during the year, we bill that project at the end of that month in total.
  4. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    So mowing is primarily the only thing that gets billed a $X amount per month and all other additional services are tagged on at the end of that month? What if a customer cancels service? Do they have to do it at the end of the month? Have you ever had a problems with customers complaining on getting billed for a month's service durring a drought when say their lawn only got cut once? I have had my business for about 10years and have always billed per visit but this drought has cost me some money for skipped services. Half that I am mowing probably don't need it either. Thanks for your insight
  5. GroundKprs

    GroundKprs LawnSite Bronze Member
    Messages: 1,969

    You don't do a monthly flat rate billing just to get a better income, or lock the customer into a fixed rate even if we have a drought.

    You should only bid flat rates if you are in the business for the long term. But in some areas, flat rates are the norm, and in others you could never get a client to pay a flat rate.

    I will offer a client a flat rate after three years of service. After 3 years, I can tell you within 15-30 minutes how much time I will spend on total service on your property. And since I know what I need hourly to charge for for the various services, and the average time for each of those services, I can easily fix a flat rate for a property. Just be sure to list what services are included.

    Now the reason you need to be in the trade long term: you may charge for 30 mowings, and do 25, or 35, because of unusual weather. You don't refund to customer, or charge for extra mows, because you sold a flat rate service. (Hopefully you are providing a quality, dependable service, and that is what the customer is buying, not a certain number of visits.) Since you are there year after year, and you track the numbers and times, you can adjust your flat rates if actual number or times of service are changing in the long term.

    Now the first year I included snow removal in the flat rate for some clients, I got blasted. Did 50% more snow work that year on each of those properties than the average for the previous 5 years. But since I'm in this for a long time, I was getting paid for that winter over the next 5 years, because flat snow rates are calculated based on previous 5 years' average. Have even had a few winters where I was paid for twice as much snow work as I actually did (I hate these, means I have to make up and work extra in future years, LOL).

    Put whatever you want, and whatever the client wants, in the flat rate contract: mowing edging, trimming, shrub work, mulch renewal, spring-fall-general cleanups, fert & weed control, weed control in shrub beds, snow removal, anything. Just track your times, and make sure you are charging enough. Of course, if you're charging too much, someday soon you will likely lose this account.
  6. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    So if you chage a flat rate and include a $700 mulch job over 7 months that would be an additional $100 on each bill. But what if the customer has to move. You would have to bill the balance correct. Do you tell the customer the cost for each service and the monthly rate if something like this should happen?

    I feel that this is a great method for evening out cash flow and selling more services to my regular customers. If they could spread the price of a clean-up, bark mulching, and aerating out over the season maybe they would be more willing to have these services.

    LAWNS AND MOWER LawnSite Bronze Member
    Messages: 1,129

    I have several of my larger accounts on a 12 month payment plan. Way this works is I get a ballpark figure on what they spend per year. (Go back 3 years to get an average.) This includes mowing, spring and fall cleanups, etc....... Say their average is $4,800 per season. They make the first payment of $400 in Jan. and continue paying $400 per month until Oct. After I do the fall cleanup, I will total up what their actual expenses were for the entire season. Let´s say their actual bill for the entire season is $5,200. I´ll adjust the last two payments to $600 per month. If their total bill was $4,400, then the last two payments would be $200. Then I start the whole cycle over again in Jan. Is this making any sense????? I´ve been away from Lawnsite too long!!!!!

  8. cos

    cos LawnSite Addict
    Messages: 1,253

    I was wondering the same. Whoever is set up like that must be making out like a bandit. I wonder if any of these type of contracts are causing friction between them and the home owner. I am sure the homeowner feels if they aren't getting anything cut, they shouldn't pay. I bill on a per cut basis, like most of us here. There are many commercials that require a regular monthly billing cycle for budget reasons.
  9. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I've sold a lot of contracts residentially over the years with almost zero problems.

    A little tougher to do now because all you guys went to the nickel dime method.

    I used to send them out in Feb with a down payment required that equaled the clean up and mulch work plus a few bucks. Then equal monthly payments billed March 1 thru Nov 1, terms due 30th of the month.

    For me that meant cleanups and mulch were covered early and the March payment due by the 30th gave me $$$ to start cutting.

    Properly written contracts are a must.
  10. gogetter

    gogetter Banned
    Messages: 3,256

    I'm thinking the same as Cos. I can't imagine people being too happy paying for a full month of cuts, when I only cut it once or twice.
    Especially since there are 30 or 40 other companies they can call that will charge per cut. Or worse yet, 15 or 20 other weekend cutters that will cut it bi-weekly all season long!

    I'm thinking you gotta be a pretty smooth talking salesman to get them to go for that. Something I'm not. But I guess if you look at the fact that you got some months in spring with 5 and 6 cuts per month because of excess growth, it sorta evens itself out in the end. So I don't get too worried throughout the drought. Plus I use this time to do some hedge trimming and other little jobs that I didn't get to earlier.

    I will strive for seasonal contracts someday though. Just can't see it being an easy sell.

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