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prepay discount?

Discussion in 'Lawn Mowing' started by wrightlawn, Jan 24, 2005.

  1. wrightlawn

    wrightlawn LawnSite Member
    Messages: 33

    what do you guys think are the pros and cons of giving a 10% discount for full one time prepay for a summer mowing contract.
  2. gqnine44

    gqnine44 LawnSite Senior Member
    Messages: 502

    Obviously, the main "pro" is you get your money in advance and can invest it or spend it throughout the year. The main "con" is you get 10% less. I think 10% is significant. You cant make back 10% very easily during a summer with the extra early cash. If I wanted to try this I would go with a 3-5% discount.
  3. stumper1620

    stumper1620 LawnSite Bronze Member
    Messages: 1,889

    if you have equipment debt that could be paid off it would actually save you money, only if it would pay off debt, otherwise 3 to 5% would be effective
    that turns in to a eye catching amount on a big account.
    i do seasonal snow plowing that way, it has alot more risk involved for both me and the client. too much snow my profit suffers, too little and the client feels cheated. if i estimate close we are all happy. the last three years i have done it this way and so far i have estimated very close, so far this year is looking really good for it to be fair to all. :cool2:
  4. stumper1620

    stumper1620 LawnSite Bronze Member
    Messages: 1,889

    oh i forgot to mention,
    i only do a small number this way, it covers the winter expenses snow or not.
    then the customers that are "will calls" pay the normal fees. :blob3:
  5. i_plant_art

    i_plant_art LawnSite Senior Member
    Messages: 558

    i think 10% is a little steep. personally i use a 6% discount and it seems to work out fine. some prepay and others dont, for whatever reason. the money up front it nice as well. i use it to get more equipment for the year pay off some debt and use it for some direct mail expenses for th year. by the end of the year i always make up that 6% with the new jobs i land. it all evens out throughout the year i have found.
  6. Jeff@SGLC.ca

    Jeff@SGLC.ca LawnSite Senior Member
    Messages: 576

    I've run 10% on some of my lawn time customers but prepaid nets you 5% discount. It's nice to have it up front as then it's a lot harder for someone to cancel or stiff ya on your pay.
  7. mtdman

    mtdman LawnSite Gold Member
    Messages: 3,143

    I do a 10% and I've been thinking about cutting it down. I get 20 or so folks that prepay every year, and it adds up to a nice chunk of change. And for the lcos that are always complaining about late payers or deadbeats, if they pay you up front, they won't become a deadbeat. It cuts down on billing time and expenses, as well as having to worry about the effects of drought or too much rain.
  8. tinman

    tinman LawnSite Bronze Member
    from ga
    Messages: 1,346

    I did a couple of "buy 10 mows up front & get 11th free" last year. Was nice since I was gettting my box truck lettered at the time. I would not do too many unless you are very good with money & can space it out. Otherwise you will feel like you are making nothing when you are doing the lawns if the money is gone.
  9. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Messages: 4,771

    I am doing something similar just to get new business. Offering 3 mowing free...I think that will be quite attractive. It translate into 10%. 30 mowing @ $30 each would be $900.....10% off or 3 free mowings = $90. I am also offering 5% discounts on prepay chem app clients.
  10. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,872

    I agree with some of the other posts that 10% is a little too generous.

    We scaled back to 5% a few years ago and it seems to still work great. We have about 10 customers who pay us 12 months in advance every year. I think some people just like to pay a year in advance regardless. They have tax money or just don't like monthly bills or whatever. If they save an extra 5% too - BONUS! But I don't think that's the biggest motivating factor.

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