service contracts & agreements

Discussion in 'Irrigation' started by HBFOXJr, Aug 23, 2001.

  1. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    Anyone have anything good going with service agreements beyond the traditional spring start up and winterization in the colder areas of the country.

    I'm looking to up the amount of money that an irrigation account yields annually and keep peoples stuff more up to date and efficient.
  2. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I'm revisiting this idea and looking for input good or bad on my thought process.

    1. Add up the number of site visits we make in a year for system start up and repairs.

    2. Add up the number of labor hours we sold plus the 1 hr included as start up.

    3. Divide #2 by #1 to get on job hrs. per site visit.

    4. Divide dollars billed for materials by #2 to get avg parts sale per site visit.

    5. Multiple #3 by desired labor rate, add avg parts sale, one winterization and one trip charge to site to get a package price.

    Of course alterations, upgrades, pre-existing problems and certain systems for various reasons only known to us gurus, would not be included.

    Discounts could be offered by the service tech on a new contract when servicing a new or exisiting customer for a repair if they are not under contract. Commission given as an incentive.

    Comments please.
  3. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778


    You may already know the answer to this from me:

    We have a new contract that worked out well for us this season. We do not winterize or start up.

    We will visit our clients once just befor the spring rush (Feb) and once just after the summer rush(this year December). Once at the house we will turn all the zones on, check for operation, check the emitters/sprinklers/bubblers etc, change the battery on the December visit, in the timer of course, set the timer for applicable season.

    We allow one hour, any problems that cause us to go over that hour are additional, all parts are additional. We give 10% discount on all labor beyond the 1 hour visit and 20% discount on all parts used.

    We also give these discounts for any visits during the year that are not part of the contract.

    The cost is roughly the cost of 2 hours of our labor. We sold 89 of them last season, this year my tech has sold 8 of them already and hopefully all 89 will renew. Last year it generated quite a bit of revenue that went straight into savings. I will be dipping into it this winter for essentials. I have already dipped into it for this new house in Colorado!!!!

    For me the advantages are:

    Money up front and in the bank
    Customers who absolutely WILL NOT call anyone else while contracted
    Customers who trust us
    Customers who feel "special" because they have a membership #
    The freedom to do 89 "checkups" basically on the route that I want


    Some people cannot read so they don't understand the "simple" agreement that they signed. They still think all their system is "warrantied" because they are "members"
    This year we have not gotten to all of them by the end of November like I wanted because we are "SWAMPED".
    Sometimes it hurts when you sell a timer to someone and they get the discount.

    Ask more, I'll tell more. Overall, I am very happy.

    Attached Files:

  4. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I'm looking to a little higher dollar, one package covers all type of thing like companys do with appliances, heaters air conditioners etc.

    I don't want to nickel-dime for extra time or create discount structures for labor or parts. It is also an easier way of hiding a price increase for one service. Just buy the contract and get taken care with in well defined, pre-defined limitations.
  5. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    I guess the problem with that is the price would be so damn high! I still don't know how the home warranty companies can do it! 450 a year and no deductible covers all my major stuff in my house! Wow!

    as for sprinklers, we tried to market exactly what you were talking about. I had thought I could set it up much like a home warranty. silver tier, gold tier, platinum tier etc. When we talked to clients about it, they seemed put off by the amount of money we would need to get. We were going for somewhere in the neighborhood of 325 and that would cover everything for 1 year. I had played around with the thought of not covering the timer for say 250 per year.

    I struggled with this thought and worried that some would take advantage and call all the time about little crap like bad emitters. Or anytime they "thought" there might be a problem, instead of investigating it themselves they would call us. Or maybe they would want a new timer because "this darn thing keeps acting funny". Ya know.

    Therefore, I settled on a pre-set one like I have. I would be interested though in hearing all your ideas. Too bad you and I are the only ones on here huh?
  6. therainman

    therainman LawnSite Member
    from IL
    Messages: 196

    You two are not the only ones.
    I am very interested in all these ideas. I am still very new at all this and don't know much about what is in these type of contracts. I was thinking very simple charge for the startup then the shut down and 1 more visit in the middle of the season. normal rates for start up and shut down one hour middle of season visit. parts extra. basicly just contract them so u atre quarented the money...

  7. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    Go to the Hunter Website. They had 3 articles this year on service contracts.

    I think the basics of start & blow don't deserve too much of a break other than pre-pay discount Same with adding in a mid season check up.

    I hadn't thought about the deductable scenario. That would help get price down and then back up. But that might only be for a midseason svc call. You wouldn't do that for start & blow, would you?

    I have 5 yr of sales info to go on. Using this years only becasue it is in QB I came up with a number of $270/year for 1 visit ( start or repair) and blow out. Parts included. The method I used to arrive at that is above. I'll do the same for the prior 4 yr.

    This years numbers show we did about 1/2 as many inseason site visits for start up or repairs as we are doing blow outs this fall. We're talking an appliance here that is worth $3-$4K on the avg I'm guessing.

    Unlike the home warranty stuff we provide maintenance service for the annual fee. That skews the comparison a bit more. Tony, you bit on $450 right? If you knew you could take your car in for oil changes and other required maint, plus tire & brake replacment for tire replacement $500-900/???yr you'd probably do that too.

    I'm thinking the fact that the customer actually gets serviced for his annual fee rather than the promise of service if something happens would make this an easier sell.
  8. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    I am bringing this back to life!!!!!!!!!! I hope all that participated last time will this time also.


    I am revamping my service agreement for Arizona and trying to create one for Colorado. I am looking to do this ASAP.....of course.

    Have you gotten anywhere with yours?

    How was your season by the way?
  9. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

  10. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    yes...but thanks

    I have that one and one other.....still looking for a good one, maybe I need to take good points from all sources and combine.

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