Monthly Package Pricing for Landscape Maintenance Clients

Discussion in 'General Industry Discussions' started by Sean Adams, Jan 14, 2013.

  1. Sean Adams

    Sean Adams LawnSite Gold Member
    Messages: 3,597

    Sorry I did not get back to this thread sooner.

    As far as the idea/argument that all the money comes in one way or another, so why does it matter if you bill in equal monthly installments versus billing for work as completed, my answer is this in no particular order of importance:

    1.) Budgeting. If you know every single month that your clients (or most of your clients) are going to make the same payment amount, without fail, within the first 5 days of the month, you can plan and project with that in mind. If you kow $8,333 will be in the bank by the 5th of each month, you know what you have to work with, you can pay your bills on time, always have needed funds for payroll and tax obligations and rarely deal with a surprise you can't handle (equipment goes down, truck goes down, etc.).

    2.) Discipline. I understand the premise that if you generate $100,000 a year in revenue that eventually it will all come in, but if that money arrives every single month in the amount of $8,333 then you know you have that much to work with and nothing more. Business owners have a tendency to see a pile of money in the bank and for some reason feel the need to spend it, usually on the unnecessary.

    3.) Reinvestment. If you are waiting for money to come in, or money only comes in from the months of May to October, it is significantly more difficult to pull the trigger on an investment in the business that requires payment 12 months of the year. For example, if it is July and you have the opportunity to bid on a large project that will require the investment of another truck and some equipment, it is easier to manage and plan for this investment if you know every month the same amount of money is coming in. I have also found that when consistent money arrives due to monthly payments, business owners are now more inclined to advertise 12 months out of the year versus the spring rush. This allows the business to grow.

    4.) Customers. If you do the majority of your work for a client in the months of April, May and June (and therefore the checks they have to write you are larger), they are less inclined to put you at the top of their payment list. In some instances, you may not even get paid at all. But when a client knows that all of their needs will be tended to and they are only going to have to write a $400 check each month, it eliminates the sticker shock of getting one bill for $2,400 in June.

    5.) Sleep. It is just easier on the mind knowing that each month a significant portion of the money owed to you is going to come in a timely manner versus sending out invoices and wondering if and when people are going to pay you. Afterall, your employees and vendors and bill collectors do not care if clients don't honor their obligations. They want paid.
  2. yardguy28

    yardguy28 LawnSite Platinum Member
    Messages: 4,463

    sorry dude didn't mean to come off that way. I was in a bit of a bad mood when writing all that.

    now to sean.

    I appreciate where your coming from, BUT......

    as I said my billable months are for most clients usually may through november.

    I budget just fine with no money physically coming in december through march. I write my budget based on my yearly income, not monthly. in fact even when I worked for others outside of this industry just taking home a weekly paycheck I wrote my budget off of how much I was making in a year not how much I was bringing in each month.

    my discipline is well, very good. I have ALWAYS lived below my means, never at or above my means.

    investment. well you might have me there. personally I would never bid on a job I couldn't already handle with what I already have. but I do have a nice reserve in the bank. so far in the 7 years I've been in business I've been able to pay for everything with cash up front. I've never made payments on business equipment.

    customers. again you might have me. but I have yet to have a client skip payments for reason of it being a large amount. all my non payers have been in the amounts of $200 or less.

    sleep. well I sleep great each night. especially in the winter months when I can sleep in most everyday. I know during those months I can just kick back and enjoy the money I worked hard for all season long.

    not trying to argue sean. just offering info on the other side. and while yes some of the info offered applies to me personally as a person but not all of it.

    I think it's very achievable to be very successful and only have cash flowing 6-9 months out of the year and never have to stretch a buck.
  3. Sean Adams

    Sean Adams LawnSite Gold Member
    Messages: 3,597

    No problem at all. In fact, more people should take pointers from you specifically about financial discipline. It is key to keeping your head above water which then gives you the opportunity to profit, sleep in, kick back and post on lawnsite!
  4. coolluv

    coolluv Banned
    from Atlanta
    Messages: 4,514

    When I first started I took on all commers. You have to in the beginning. But after all the ups and downs I decided that I had to do something different.

    I looked around at some of the bigger players and went to their websites. What I found was the bigger guys who have been around for years and still are, only provide maintenance contracts. One of the biggest players around actually has on their contact page that states something like, we only work off of yearly maintenance packages and our minimum per year package is X.

    So they are basically saying, if you don't have at least X amount to spend on your lawn and landscape maintenance, then you need to look elsewhere.

    They don't do maintenance on call. They don't do bi-weekly accounts. Most take credit cards only. They all spread out the services and bill monthly.

    I talked to some local guys who I'm friends with. I was complaining about my customers and explaining my problems. One of the business owners told me, You need better customers. I said yeah I know. How do you do that?

    He told me to just offer maintenance agreements and nothing else. If they won't sign then you don't want them. So I reluctantly tried that approach. I spent a lot of time writing a clear and concise maintenance agreement and I have been modifying it all the time. You learn from experience.

    I ask customers what they want. Then I basically modify my agreement to give them what they want and then break it into 12 monthly payments. Just like Sean said to do.

    What I have found is that you will have to be a good salesmen. Which I'm not, but I'm getting better. You will not get a lot of people to sign up for that. Why? well from my experience you have customers that really can't afford to pay for the service but they need it done and don't want to do it themselves. So they look for the cheapest guy in town.

    They also don't want to pay for weekly service because its cheaper for them to pay for bi-weekly service. You get the point.

    Then you have the customers who can somewhat afford it but are trying to save money. We all want to save money. So they may sign up or they may not. But they also don't like the idea of being tied to you or your company. Even though you show them they can cancel anytime.

    That is the way I do it anyway. I will reconcile their account and then they either owe me money or on the rare occasion I may owe them money. But they still want that option to be able to drop you at the blink of an eye if someone comes along cheaper. So with that in the back of their mind they will likely go with someone who isn't forcing a service agreement on them.

    Then you have the customer who can afford the service. They want a nice lawn, they want fert and weed control. They want the landscape plants and beds kept nice etc. They don't have the time to take care of it nor the desire.

    These are the ones that will sign an agreement with no problems what so ever. But those customers are far and few between.

    But since sticking to that, and its hard sometimes when you are not selling like you think you should, I found that I get better customers. I don't have any real problems with my customers. Most pay on time all the time. My revenue actually increased with less customers. Its been a win win for me.

    I'm still solo and would like to grow and run the business not be the business. But when you have to live off of what you make and invest in the business at the same time its hard. At least for me. Maybe I'm not the best business man or the best salesman.

    I try to project a professional image with everything I do, and that helps also. Most customers could care less because they are looking for the lowest price possible and the shortest payment period they can get. Meaning they want to start the process as late as possible and finish as early as possible in the season, and just want the minimum at the lowest price possible.

    But those are not the customers I want. Down here where I live landscape plants need trimming and pruning through out the year. So you are basically pruning or trimming something nearly every month. Cheap customers will wait for the landscape to get completely out of control and then want it to look great or cleaned up when the HOA gets on their buts or they are embarrassed.

    Good customers want the lawn and landscape to look good all the time. Here is an example. January or December you prune low hanging branches on hardwoods. February comes and crepe myrtles need to be pruned. So do ornamental grasses. Late February early march first round pre emergent goes down in lawn and beds. March first mowing begins and weed control in beds and lawn. April mowing continues so does weed control and by this time Pine straw and mulch installs come.

    First pruning of landscape plants like hollies ect starts and mowing continues in April. Fert and squirt continues and so does bed maintenance, seasonal flowers go in if they want them. Throughout the summer everything continues. May, June, Maples get pruned if needed and all the other maintenance continues.

    Down here plants grow like crazy. Even with pre in the beds weeds still need to be pulled or sprayed. If a drought comes and the lawn doesn't need service, those weeds in the beds still need to be addressed and so do the weeds in the lawns. Flowers need to be deadheaded and so on. I have it in my agreement that the lawn will be mowed at my discretion for the benefit of the lawn.

    I've had to skip lawns 2 or 3 weeks sometimes in mid summer, but I still had to pull weeds or trim bushes or whatever, and the customer doesn't mind. Come November leaf cleanups start final lawn apps go down and leaf cleanups go until late December. January starts and it all starts over again.

    For me growth has been slow. Because this is the process that I follow. I also make more from each customer because I can bundle all those services into one monthly payment. I get the maintenance and the fert and squirt and the aeration etc.

    I don't have to sell them every month on doing this or doing that, I sell them one time in the beginning.

    My only complaint is I wish I could grow faster and become a business owner rather than a laborer with a business.

  5. FerrisDiesel

    FerrisDiesel LawnSite Senior Member
    Messages: 447

    If anything like Sean said, this is going to be beneficial to the customer. If in April you do a spring clean-up, a mulch and edge job, and mow their lawn a couple times it's gonna add up. Most of my customers are pretty well off and can afford that, but maybe they would like to strecth it out over 12 months to help lessen that big chunk of money first thing in the season.
    I have money in the bank too, not as much as a larger company, but enough to cover my expenses for the winter and start up costs come the Spring. It sure would be nice to have some cash flow coming in if we don't get snow to plow, thus lessening the money I need to take out of savings to cover expenses.

    Sean, I know you covered a little bit of this but what if we get alot of rain or possibly a drought? And my customers don't have alot of other extra stuff we could do in their yeard to make up the difference? What could we do to offset the cost? Maybe give them a credit toward snowplowing? or maybe a credit toward the following years services?
  6. coolluv

    coolluv Banned
    from Atlanta
    Messages: 4,514

    I can't answer for Sean but what I do is, I don't prune the whole landscape at one time. I do it in sections. So if you keep an eye on the weather and you see it starting to get dry and they don't have irrigation you can do a little every visit.

    As far as rain goes, I only schedule maintenance for 5 days. That leaves me with one day or 2 if needed for makeups. Plus I have in my agreement that if weather prevents maintenance for days then the property will have to wait until we can service it again.

    Which could mean a skip that week, but you have more work the following week due to growth, so you end up cutting it 2 or 3 times anyway. And that is what I say if questioned. Which I haven't been yet. Plus I have in my agreement that no discounts will be given for rain delays.

    But I have mowed in the rain many a times. But I won't if I'm going to damage the lawn.

  7. yardguy28

    yardguy28 LawnSite Platinum Member
    Messages: 4,463

    i've offered payments plans before to clients. no one seems to take advantage of it. even when they get behind. i have one client that when the season starts she pays her monthly invoices. every year around thanksgiving/christmas she starts to fall behind and ends up owing me $60 and carries that balance into the new year. she always gets it paid before the season, mostly because i won't service her lawn with a balance over her head.

    so she'll be catching up here soon then the cycle starts all over again. i've offered multipul times to put her on a 12 month plan. she won't do it.

    everyone wants to be invoiced at the end of the month for work actually completed and pay there invoice and be done.
  8. NC Greenscaper

    NC Greenscaper LawnSite Senior Member
    Messages: 447

    We do maintenance both ways. Billing for the services as they occur or Full Service agreements billed at the same amount for 12 months. For me this is a no brainer. All of the full service customers are getting multible fert. applications, 2 pre emergent applications and one post emergent application, periodic prunning, weeding the beds etc... The fact of the matter is we are on site providing more services and better care for the customers. My full service customers are the better paying and much more profitable customers and thier lawns look the best. Because we provide full service we look everything over and oftentimes there are other opportunities for upsell. If I was a solo operator, I would look at this differently. It is much simplier to mow, trim edge blow and go. A business with employees needs to make sure the employees' time is billed out consistently throughout the year or its going to have problems making a profit and covering overhead and payroll.
  9. terrabites

    terrabites LawnSite Member
    Messages: 44

    I am only starting my second season, but I have learned very quickly all of the issues that other operators mention above. I was growing and doing pretty well through September...then all of my customers started "laying me off" because the grass was not growing quite as much so they didn't want me to come by...even though it should have been mowed.

    This season I have implemented a service agreement approach and am getting a little pushback. I have allowed my previous customers to remain on a bi-weekly schedule, but I'm going with a weekly schedule for any new customers. I'm also adding fert and squirt, aeration, and shrubs/bushes as additional services this year that I did not do last year. I'm committed to keeping this service agreement approach because those are the kinds of customers that I want. I believe that is the way to grow a solid business and will eventually get me out of the seat of the mower and into the seat of the office/truck.

    I do not want to be known as Joe-Bob the grass cutting guy. I want to be known as a Lawn Service with professional appearance, professional work, and professional clients.
  10. imow in NC

    imow in NC LawnSite Member
    Messages: 59

    I am using Quick books for my accounting and at the end of every service day, I enter all my clients information into their perspective invoices and beside the particular service description I insert (01/14/13). everyone, every time!

    As far as money throughout the year, this has worked well for me. 3 commercial clients. All three have 3 year contracts. All three pre-pay Quarterly, all three have been renewed for a second term. All three receive a slight discount; (usually 3-5% annually) for having a 3 year contract and pre-paying.

    Bank Accounts: Find a banking system that does not charge a minimal balance fee. I have been with Bank of America for 3 years, and have never paid one single banking fee....ever.

    Do not following the spending credentials set forth by our political leaders. You cannot spend, what you do not have.


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