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Switchin to Per Month payments next yr..how do i tell customers?

Discussion in 'Starting a Lawn Care Business' started by Adam3669, Dec 20, 2006.

  1. Adam3669

    Adam3669 LawnSite Senior Member
    Messages: 311

    Right now I tell customers that the Charge is XX amount of dollars per cut, and that they will pay me for however many cuts I made during that month at the end of the month

    But, next season I plan on telling all my customers a flat rate for each month, but I'm not sure how they will accept this.

    How should I tell them about this change in my business?

    Thanks guys/gals,
  2. Rons Rightway Lawncare

    Rons Rightway Lawncare LawnSite Bronze Member
    Messages: 1,164

    I too am planning to do the same.

    I do not want to offer " Full Service " contracts though, as I would rather be paid extra for extra work, such as trimming hedges, fertilizing, pinestraw etc...

    My plan was to call each client this winter, probably next month and first, ask them how service has been..... Have they been happy.... Do they plan to keep me on next season....

    Then after getting that out of the way, I want to ask them - or tell them, depending on how you look at it - if they will go to monthly service, flat rate for their lawncare.

    I want to let them know it is not a contract at all and that they can cancel anytime with a 30 day written notice, so they don't feel trapped.

    I will let them know that their rate will be based on the amount they would normally pay for 4 cuts in a normal month and that if they agree to pay this rate there will be no increase in price for 2007, and..... that this price will be the same for slow months were I only make it out 2 or 3 times, and for long months were a 5th week sneeks in and I am out 5 times.

    I want them to do this for two reasons that benifit me.

    (1) I like to go out of town for a week in April, a week in July, and a week in October and of course those weeks I nornally have not cut and therefore don't get paid for.... Also if I get rained out, or the lawns are too dry from drought I suffer as well. Having everyone on a monthly flat rate means I still get paid the same, even if mother nature keeps me away or if I want to go out of town once in a while.

    (2) I will be able to more easily and more fairly collect money for mulching down the leaves in the fall. I will simply come less often in the fall and be able to have more time to do a better job on the lawns as I get to them, and yet still make a reasonable amount of money, since I would be getting paid for what would normally be 2 or 3 weeks of cutting for the one visit where I cut and blew leaves for 2-3 times as long as It normally takes in the summer!

    I am planning to sell the customer on the idea that doing this will help them better budget their money, because there will be no need to worry about the bill being really high one month or really low the next... they will know that my service is X amount each month and they can pay accordingly.

    If they cancel in the winter, or want to stop the service till spring I wouldn't even care, as long as they just have grass cutting only in their agreement. I do have some customers that have me do everything the lawn needs on a monthly basis now and they pay year round, but for just grass cut agreements if they want to suspend service at the end of December when the leaves are all down and the grass isn't growing, that is fine too.

    One other reason I would like to get everyone on monthly agreements is to help out with slow payers. I have several people who just seem to pay when they feel like it, certainly not in a timely manner... I always get paid at some point, but at times they will get 2-3 months behind before they finally pay. I have tried late charges in the past and everyone bitches about it so I rarely every enforced it. I WANT to SKIP these peoples lawns till I get paid, but for every week I skip, I make no money, so I end up keep coming out knowing that I will collect at some point and I never lost income proving a point to the customer. Having someone on a monthly plan, I would write in the agreement that once they are say 30 or even being extra nice, 45 days past due, I will stop coming out until they pay the bill... again I would still collect and not have to do the lawn in the meantime.

    Anyway, I just have had good customers for the most part, most of my accounts have been with me for several years and I hate to chance losing some with my " Agreement " demands, but this year I plan to put my foot down and make it happen and if someone refuses to go monthly I will tell them I will keep things as they were but the 2007 price will now be a additional 5-10$ more per cut, and if they refuse that, then I will just drop them and use the slow time in Jan and Feb to drum up replacement clients.

    So I too am curious how others have done this and how did it go over.
  3. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Messages: 3,065

    How can you justify charging if no service is needed? EXAMPLE- you are charging Mrs.ABC, $120.00 per month for 4 mowings and come late summer you only are able to cut twice due to being too dry. On the flip side of things, why are you cutting it if it does'nt need cut? Some people say, "well then we will pull weeds and edge the driveway", well thats great if it justifies $30.00 worth of work but often times you spend more time there and costing you money. This payment system to me is'nt such a good thing. Some guys do this because in the late summer they think their getting "screwed" if their customer's lawns don't need cut, its not your fault, it certainly is'nt the customer's fault its just mother nature and thats a risk you take in this type of industry. Another point is that it closes the door for upselling certain services that would pay more when done seperately. Just my .02
  4. Adam3669

    Adam3669 LawnSite Senior Member
    Messages: 311

    Rons- Thanks so much for your input, that has given me a lot of ideas when I finally call my customers

    Nobagger- The point you make is very valid...I am interested to see what other LCO's here think about this...?
  5. JJLandscapes

    JJLandscapes LawnSite Senior Member
    Messages: 682

    everything he just said
  6. Grass-Masters

    Grass-Masters LawnSite Senior Member
    Messages: 424

    I think it may cause a problem. many customers already b#@ch if you cut and it does not need it. So if they are paying and you are not working, i think you may hear about it. but i don't know let us know how it goes.
  7. Rons Rightway Lawncare

    Rons Rightway Lawncare LawnSite Bronze Member
    Messages: 1,164

    Nobagger, two points...

    One, I work by myself, and by myself I can only take care of a certain number of yards. There are plenty of people that WILL pay a flat monthly fee, no matter if the lawn is dry or it rains too much, or if it is winter with a few inches of snow on the ground etc.... So even though I agree with you, people shouldn't have to pay for service when it is not needed, why should I as the service have to take a pay cut due to dry conditions when I could find other customers willing to pay me to just be " on staff"? Do you see my point....? Also as far as the " too dry " conditions.... is it my fault it hasn't rained and the customer is TOO LAZY TO GO OUT IN THE MORNING AND WATER THEIR LAWN? ;)

    My second point is I do NOT want to make my accounts full service accounts. I want their monthly fee to include as little as possible, then I still leave the door open to those " upsells " you are talking about.
  8. desii

    desii LawnSite Member
    Messages: 193

    First, I don't think you tell them as much as you should ask them. This will let them think that they are part of this decision and not be resentful that you are telling them you are changing your policy.

    Second, in that conversation, I would explain that this system benefits both you and your client. The customer may not see the benefit in the first year, but if they stay with you, it will balance out over several years. With this program, your cash flow will be more predictable.

    You explain that you and your client are taking a risk: If you have a wet season, they make out, if it's dry (which is out of your control and you still have bills to pay), you make out.

    Another great selling point is budgeting!! They will always know what there cost per year will be and won't be so concerned when you cut and they don't think you should be there. I would'nt sell it as a per month as much as I would a per year.

    I converted a commercial client several years ago and they weren't too sure about it at initially and we had a dry season the first year. The next year was very wet and we cut more than usual. I was quick to point out that this is where it pays off for them. Here's the risk part - you may need to cut more than you had planned on. (You could also negotiate a (reasonable) set number of cuts for your yearly fee - if that is exceeded, you would be compensated for the extra cuts). They are still a client and it's the only way the contract is written now.

    To implement this, you need to calculate how many cuts you make per year on average and give them a per year price divided by however many months you want to charge them.

    Two important things: Explain that with this program, they won't be questioning that you are showing up just to make a dollar when they may not think the grass needs cut. BUT you also would not want to let the grass get too tall just to have less cuts. (Theoretically, you could cut once a month and get paid for your regular visit, but the client will not sign up again next year).

    Finally, if you have slow pay customers, start the payment plan 1 month prior to your regular cutting schedule so you get your first check before your first cut. This will also prevent no pay customers from getting into you for too much $$$. (I wouldn't keep these type anyway as it is too much hassle chasing money).

    Sorry to be so long winded, but I wanted to be as thorough a possbile. Hope this helps you with your decision.
  9. kppurn

    kppurn LawnSite Senior Member
    Messages: 426

    I've been tossing around the same idea, only with automatic payments via credit card or bank draft. Consistent cash flow and less collections. I don't worry much about the skipping of lawns during dry times since 90% of the lawns are irrigated. I'm surely not skipping town during the season, so there will be no no-shows.

    I'm thinking about setting the mowing, fertilization, and aeration as a package with monthly installments made April 1- November 1. Other jobs will be invoiced upon completion. I still have a lot of thinking to do though. My fiance will be taking on a small role in the office and has been on me for a couple years to do away with the per-cut business.

    If I don't turn on my t.v. or get on the internet for a month I can guarantee you there will still be $125 deducted from my checking since I agreed to the service. Same with phone, gym membership, etc.
  10. justanotherlawnguy

    justanotherlawnguy LawnSite Bronze Member
    Messages: 1,282

    It will be a real challenge to convert your existing pay per cut customers to the monthly fee. In my area people are either pay per cut or monthly and it is next to impossible to convert pay per cuts. Thats just the way it is.

    I would leave the ones you have on pay per cuts and any new business you get, just quote them the monthly rate. Within a year or so all your pay per cuts should be weeded out and replaced by monthly paying customers.

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