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The Rent vs. Sell Thread

Discussion in 'Christmas Trees & Seasonal' started by tdf, Sep 18, 2008.

  1. turf hokie

    turf hokie LawnSite Silver Member
    Messages: 2,753

    It is a good open discussion.

    I disagree with David in that it is dishonest or wrong to re-use the lights on a new customer if you have used lights from a cancelled customer and they are still very much viable lights.

    We gurantee our service, that includes any and all repairs and replacements. So for me to put "used" lights on a house that are old and unreliable will only hurt me b/c of service calls. If I feel that I will not have any problems then I will "recycle" them. My customers are not paying for new lights, used lights or anything in between. My customers are paying for a look, a service, a worry free holiday display.

    I also do not charge an "upcharge" in year one. You get my price, it is all inclusive, sign a long term deal (more than 1 year) I will gurantee to not raise your price for the duration of the contract. Matter of fact if you take advantage of early bird discounts and pre-pay options then you will actually pay less in following years. This does not mean I am charging an "upcharge" in year one but I want to get paid quickly and install the lights early in years 2,3,4 etc. so therefore will offer incentives to this effect after year 1. Unless you contact us early enough initially and you could qualify for these discounts in the first year.

    I like to think that it is really personal preference to rent or own. But I feel that renting is easier, cleaner and more straight forward. I also believe that you can make more money renting over the life of the product even if it looks like year one may be at a lower margin.
     
  2. OP
    OP
    tdf

    tdf LawnSite Member
    Messages: 127

    I said earlier that I don't feel like I fall into the sell or rent cat because I don't have any plans to give someone used lights when they pay the first year price. i really haven't thought about what I will do with used product when a customer cancels service but I wouldn't feel right charging a person the first year price and giving them used product. My idea is I will give the person new product the first year and every year after this charge 2/3 price while replacing any lights as needed as long as we do business. I specify that I own the lights mainly so they will not think of having joe landscaper put them up later down the road.
     
  3. David Gretzmier

    David Gretzmier LawnSite Gold Member
    Messages: 3,646

    I will say that at year 8 in this area I am glad that I am a seller and not a renter. my costs for replacing lights would be going up like a rocket. As a seller, I am selling people new product and getting rid of the old. 6-8 years ago I had a lot less new customers per year, but in the past 3 years I have been adding 25-40 clients per year. shooting for 50 new this year. As time goe on, I will be selling new product to 25-40 rehang customers, along with the new customers. Selling creates a much larger revenue company in my opinion over time, and protects you from replacement costs when the time comes.
     
  4. hotrod1965

    hotrod1965 LawnSite Senior Member
    Messages: 587

    What I do, and what you need to do as a renter is have your replacment cost built into your rehang price. I didn't just pull my 70% rehang price out of thin air. It has replacment costs built in. Now the trick is to not be like the federal government and spend that reserve on other things.
    Also, remember that the odds that you will have to replace everything in one single year is pretty low.

    Also, I would only recommend renting if you are using LED lights. LED's will take a beating a little better than incandescent. If I was installing incandescent, I would be selling!
     
  5. NE Landscape Lighting

    NE Landscape Lighting LawnSite Member
    Messages: 5

    I sell to residential but i am torn on what to do for large commercial properties. I have a large commercial property that might want a different display each year? If i sell to them they are stuck with the same look each year. Does it make sense to "Lease/Rent" to commercial properties only? (3 year lease/rent)
     
  6. David Gretzmier

    David Gretzmier LawnSite Gold Member
    Messages: 3,646

    so...You'd rather get stuck with what they installed last year?
     
  7. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 16,542

    Its like this, YOU pay for the inventory. So whos to say whats "used". It's not used it's in stock.

    If customer A "buys" the stock, but cancels then truthfully they get to keep the lights.

    The way I do it is the customer buys the lights in year one with the cost of install and take down and storage.
    Year two they get a return client price break like others have said.
    As long as they are my customers the lights are under warranty, and problems I fix it, no extra charge its warranyt, if i need new strands I buy them, etc.

    But if the customer cancels, they are MY lights, so its actually the customer buying the deocrating SERVICE although the start up cost in year one does cover the lights etc.
    Alot of times the customers change or upgrade or alter previous years decorations. so its all from INSTOCK stuff, unless its not instock then I make sure my costs are covered.

    I make more money in year two and three etc with customers than year one because of the start up of materials involved, but that woul;d be true with a maid service or window washing company, the client doesnt BUY your lawn mower or your truck, the deocrations are "equipment" the way I do it.
     
  8. David Gretzmier

    David Gretzmier LawnSite Gold Member
    Messages: 3,646

    I agree anyone can do what they want with thier business. You own it, you run it.

    I don't agree with a customer paying more for the first year if they are not buying the lights. Anybody that rents anything to anybody, it costs you the same to rent it.

    If united rentals asked me to pay more for equipment ( and by this I mean equipment) the first time I rented something and charged me less after that, I would want to know why.

    If I rented a car and they charged me more the first time, same thing.

    renting a movie.

    renting an apartment, a house, a travel trailer, or whatever.

    In no way would anything else you rent be fair if you were expected to cover the cost of the item you are renting.

    It is simply wrong to ask a rental customer to cover the cost of your equipment, inventory, additional time to install the first year, or whatever you want to call it.

    if the business owns the lights when service is cancelled, then you are renting to them and they should not have to pay more for year one.

    If they pay more the first year than the next, they paid for SOMETHING extra that first year and they should get it back.

    show me another business that charges more the first rental period, and covers the cost of the product they "rent" in the first rental, then charges less in the next few rental periods, and I will accept my argument and logic as flawed. If you can't find any other rental business to support your side of the argument, then consider the possibility you may be wrong in what you are doing.

    Just because customers may be willing to go along with it does not make it right.

    Most of you guys who are saying you are going to maintain these lights as long as folks pay have not been in business long enough to experience the costs of what happens when lights wear out.

    I have.
     
  9. turf hokie

    turf hokie LawnSite Silver Member
    Messages: 2,753

    I agree with you David. Some of the posts on here that state they are renting but charge more the first year are indeed not truly renting.

    We charge the same every year. We dont drop our prices just because it is year 2. Our structure includes incentives that allow us to install early and incentives to pre-pay us be X date. This is available to a first year customer as well if they get to us earlier enough. Matter of fact we have sold 4 jobs the past 2 weeks that took advantage of the incentives. But now that will be their price next year if they continue with the incentives, if they choose to not pre-pay or want a later install date they will lose the incentive and then would actually pay MORE in the following season.

    We may not make quite as much in year one as a person selling the product but I feel we will make more over the life of the product by renting and not selling. This is all predicated on pricing the service properly and accounting for replacements, services, repairs etc.
     
  10. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 16,542

    ahhh you are missing something, My customers do NOT pay for replacements, service, repairs etc.

    They pay what they pay. IF they sign up for additional years or even add on to what they had last year they qualify for a discount for repeat business based on the fact I do not have to spend time and money adverising or estimating new customers.

    There is considerable costs involved in attaining new customers, if you have a full customer list, you do not need to advertise for more, unless you have a growth plan. There for your second year customer costs you less to keep, than to go get a new customer.

    I do not need to charge as much, to make the same margin in year two as I did in year one.

    If you sell a customer the lights, and say they want green ones instead of blue and white in year two, no biggie, i trade string for string.

    If in year two they have bad bulbs, they dont pay for new bulbsm or service calls.

    They pay one price to have their house fully decorated for the season. Repairs, replacements, trouble shooting etc, no extra charge.

    Each thing they want has a price attached to it that is the cost to hang, maintain, retrieve and store.

    IF they sign up or request the same exact thing next year, the items are already listed, inventoried and set up to re-hang, I dont have to redesgn, figure out how many strings go where or what.
    Each tupper-ware tub is labeled (jones front left, jones from right) there for admin, training, set up etc is alot less as well ;i can hang that customer much faster than it took in year one, and we have a design/plan drawing with what the house looks like and where everything goes already done.

    Now if the customer doesnt want to continue services into year two for example, than those lights etc are recirculated into regular inventory, the Tubs are set aside for new customers and I can use that inventory for other customers.
    If that customer then calls me back in year two in say november wanting xmas lights all over again (after They didnt renew and their stock has been returned to inventory) then they need to pay year one prices all over again.

    Its not so much as I charge them MORE for year one, as it is year to is easier, faster, and less cost to me, and therefor that savings is passed along to the customer.

    I would much rather hang already laid out lights for a return customer than go through the set up of a new customer any season!

    Also return customers who say want to add 10 strings of lights thy didnt have in a previous year still get th 2nd year price savings even on the new upgrades, because they are a return customer.

    But if the customer say down sizes their decorations in year 2 say by 50% and then in year 3 goes back to the year one set up, those light strings etc , had already been taken off their order and put back into circulation for other customers, so going back up like that would cost year one prices because I have to relay out the entire job (tubs back to jones left, jones right etc)

    But the again it may depend, if I do full serivce for this customer (landscape, irrigation, snow removal and holiday lights) I may just take the bite and deal with it.

    So likeI Said its not actually charging them more for year one so much as it is successive years are simply less expensive.

    The benefit to the "Rent"to the client is they dont own the lights, so they dnt pay for the maintenance.
    The Benefit to rent to our company is johhny side job, doesnt get to hang our professional quality lights with our professional quality drawing and directions and setup by underbidding us on our labor to install and retrieve, fi the customer wants to go with someone else, that is their choice, but they dont get to do so with our intellectual property (i.e. product selection, layout and design)
     

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