Making my 12 month contracts more effective ?

Discussion in 'Business Operations' started by Bunton Guy, Nov 20, 2001.

  1. whitleys

    whitleys LawnSite Member
    from Kansas
    Messages: 55

    This approach works for me:

    To the customer I say:
    "For your turf in this area we will make about 30 visits to mow; another 4-5 visits picking up leaves this fall; then we come by on/about December 15th to 'spiff you up' (mow, trim & edge) for Christmas. The per visit costs for the mowing and leave pick ups would total $2400 for the year. At $200 per month, you pay one price at the first of each month all year long and you don't have to worry about your property. I take care of it. Simplifies the process for both of us. You don't have to record my visits on your calendar to see if I billed your right. You just look out and see that your property is continually being well maintained."

    Works well for me. I use 10 months rather than 12 as I do not make any visits to the property in January and February. I also roll the pesticide, aerating into this computation where it works. Just started this practice in 2001 and every new customer that I presented it to liked it!
  2. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    It doesn't matter if you make any visits in certain months or not, the point of the 12 month contract is to help even out your cash flow during slow months.

    What I would do is give the customer two options and break it down so they see if they are billed for all the work during the 8 month period it would equal $5000, or if they paid $416 a month for 12 months it still equals $5,000.

    Its easier for you because you have cash flow that wouldn't be there during months you don't work on the property.

    Its easier for them because its like a payment plan, where they actually end up putting out less during most active growing months because its spread out. Makes it look more affordable I think.
  3. Matthew Morgan

    Matthew Morgan LawnSite Member
    Messages: 45

    You can not set everyone up on a system like this. While many or most may like it, if you are not a "perfect" money manager, cash flow will bite you in the rear in April/May/June. Your labor is very high at this time and extra bucks for cash flow are needed. If you do this a lot, bank as much Dec./ Jan. /Feb. money as possible, you will need it.

    I have a few customers on a monthly plan, but I still have a few high dollar contracts that pay monthly for each visit. When you mow, fertilize, spray turf, spray gravel areas, pre-emergent for the beds and mulch a single property all in one billing period, that is a nice check that will be in your mailbox. During the busy spring months, you will need it.

  4. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    Lets see what everyone's opinions are on what should be included in your 12 month contract/payment plan.

    I know some say "everything" but I don't think so. I think your better off adding in the price for only difinite sure thing jobs that youy can predict a price for with not much error from now until the time you perform the service.


    -Lawn Maintenance (mow, edge, trim, blow)
    -NORMAL lawn treatments
    -Maybe mulching of beds twice a year
    -Maybe pruning shrubs and hedges once a quarter, etc, etc

    I would leave the big jobs outside of that window and bill on completion of the individual job. Its easier that way (less figuring at the beginning of the year, especially on a new property you just picked up) plus like Matthew said, that check in the mail will help boost your cash flow during the busy months.
  5. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Messages: 1,895

    Here is part of my contract.
    Bronze package:
    During normal growth season you will receive the following services: Mowing,trimming,edging,blowing
    - in the fall months a bagging system will be used to pick up all leavs on the lawn surface.
    -minor pruning of trees twice a year.
    -two visits each month.
    -Mowing atleast once per month if needed.
    -Winterizer lawn fertilizer. Lime application if needed.
    Gold package: This service plan includes that of the items from the bronze plan plus: -Weed control in spring months.
    -Round up applied to paved areas.
    -Weed control in flower beds.
    -Trimming hedges up to 4 times a year.
    Extra services available to customize to your needs.
    -Seasonal flower bed arrangements, Tree trimming, Hedge trimming, Seeding, 6 Step fertilizer program, hedge & flower fertilization, round up apps, dethatching, aeration, pine needles, mulch, fill dirt, leaf removal, bushhogging, & more upon request.

    Ok this contract goes on and on ...just giving a little taste of what its like if you guys want me to type the remaning part of it let me know but if I have made any type of mistake or things to take away or add for the problem in which this thread was started. This contract is typed up different than what you see here and has correct spacing , grammar, spelling and more. Thanx for your help in advace.
  6. I was thinking of giving a choice between 8 or 12 to the customer.

    Also leaf pick up salting, or pushing snow will not be included in the contacts, since the hours very to much.

    Weed Control

    Or what ever program service they wish to have.
  7. opposite view..

    Can't advise you on a 12 month contract. Never had one. Never had a client that I thought would tolerate one.

    But maybe showing you the opposite side of the spectrum will be of use.
    Here's an excerpt from my last letter of proposal I sent out.

    I'm doing pretty good with this "cut as needed-bill as cut" schedule.

    Mine is not a “full service” lawn care company where I sell “Packages” for lawn care. Instead I subcontract from an exclusive list of specialist to provide exactly what is needed when it is needed. I can provide everything, from grading, sodding and seeding to tree transplanting. Some of these are stand-alone companies; some operate under my insurance and bill thru me. I charge nothing for this service. It’s like having your own personal groundskeeper.

    Most of my customers choose to have their lawn cut on an “as needed” basis. When it grows to a height of four inches, I cut it back to three inches. Lawns vary from 17 to 29 cuttings per year. Kentucky bluegrass thrives under these conditions. The lawns look better every year.

    Don't know what to say about your situation other than you may be bidding against a bid like mine.
    Most of these "industrial" jobs don't want anything additional anyway so I don't even bother to offer it.

    I'd be kind of scared to offer only yearly contracts. I'd just be another opportunity for them to tell you no.

    One thing I have noticed about the commercial contracts is the bigger the contract, the sharper their pencil is. If you're not efficient and productive, you're not there.

  8. David, I curantly cut and bill on an as needed basis now. Most lawns get cut every week, and get billed every month. Also we mow around an avg of 32 cut's. I was trying to save paper work adminastative work, and keep from having to keep extreamly acurate records. This way I can get paid if it rains for a full week stait and the customer can't get irate when we come to mow 2 times in a week to get it back under control.
  9. rixtag

    rixtag LawnSite Senior Member
    from Lehi Ut
    Messages: 280

    David and LGF,
    If I understand you right , you are "on call"? I only do this part time and that would not work for me. How can you have consistent income without regular work? How can you have any predictabilty to your schedule? How are you able to satisfy all of your customers? I am only curious, not critical.

    Whit, Guido and Matthew,
    I am liking this plan becuase of the slow months. I also like it because I go into withdrawals after about 2 weeks of not mowing and it's not pretty( just ask my wife)LOL

    I will offer both plans for next season as I have only one property that will carry over. I also think that it's smart to offer this only on the regular services. You know the ones that are consistent.

    Thanks again everybody for the help!

  10. Budgeting, money management.

    1; I am not "on call" I work atleast 40 hrs a week when and as long as we can. This is my full time job.

    2; This is regular work. Also provide all aspects of lawn care.

    3; Weather is the only unpredictable part, as with all out side "contractors"

    4; Schedule for 4 to 5-10 hour days. It just happens. They also know that if it rains for 3 days strait we will be there 3 days later.

    5; Thats ok, that's why we are all here. Questions and answers.

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