To contract or not to contract?

Discussion in 'Lawn Mowing' started by Lee Homan, Feb 2, 2000.

  1. Lee Homan

    Lee Homan LawnSite Member
    Messages: 163

    All my customers are on a &quot;pay as you go&quot; plan but I was wondering if I offered them a 5% discount for a seasonal contract(approx.28 visits)and a 10% discount for a yearly contract(approx. 35 visits)it would be worth it. I'm trying to provide a steady flow of income and have a more precise mowing schedule instead of waiting for them to call or being wishy washy about whether it needs mowed when I show up to their house. I thought offering a discount might be an incentive to sign up for a contract. You guys that already have contracts how do you handle droughts or rain? If I give them a discount should I inform them that I still get paid even if the grass slows down and I have come up short on visits at the end of the season/year? After all, I can't go back to them and say since I didn't get the full amount of cuts in this year I'm going to have to charge you full price? <br>Thanks! Lee <br>
  2. MWHC

    MWHC LawnSite Member
    from Wyoming
    Messages: 243

    I personally don't like to use written contracts. Contracts seem to me to be a hastle. Here is how I do it. In the spring, when the customers are signing up for weekly or bi-weekly lawn care (mowing programs) we inform them that we are there every week or every other week. We ask that if they are going to cancel, they call the night before. I will not drive around with a truck full of employees and show up at their house only to find they don't want to be mowed. They are billed for me showing up. For example: If it costs you $30.00/hr to operate the business, and you waste 20 minutes driving to their house only to find they don't want done; you have spent $10.00 and made $0.00<p>When they complain about this I explain that I reserve that time in the day for their yard. If they call the night before, I can take the extra 1 timers that call during the day and not waste time driving around needlessly. I guess in a way it's a verbal contract. I do like your idea of adding discounts for signing a year round contract.<p>
  3. HOMER

    HOMER LawnSite Gold Member
    Messages: 3,183

    Droughts or rain? <br>If you offer any discounts I would be sure I did it to those that had an irrigation system. We have had so much hot, dry weather around here that a lot f my new customers already have irrigation. If they have it then they are more than likely the type that is concerned about the appearance of their lot. <p>I cannot see how anybody makes it through the winter if they don't sign these people up on a yearly plan. The seasonal people I have will flat out cut you off at the end of October and won't call you again til' April. If I had to depend on them I would starve, and wouldn't have any equipment for tne next year!<p>Tell your new customers that you want and need to set them up on an annual plan, Level out their monthly charges by multiplying the $ amount x # of mowings and divide by 12. That is what they pay at the end of the month EVERY MONTH. Try to convert your old customers and tell them they will save money in the summer months by doing this. I don't have all of mine on a &quot;contract&quot; per say, more like a signed agreement. I detail what and when and have them check it and sign it. This is so 4 months down the road when the weather starts cooling off they don't forget what we had discussed. I don't know if it would hold up in court or not and it really isn't intended to do that, just makes an impression on them that I need it year round and so do they.<p>e-mail me if you need help wording some of this.<p>Homer<p>E-mail me if you need any help.
  4. Lee Homan

    Lee Homan LawnSite Member
    Messages: 163

    Homer,<p>I didn't want them to sign any type of legal contract mostly just an agreement with maybe a clause stating that I had the means to collect any outstanding debt allowed by the law. I figure I can use your formula for seasonal customers too. That would give them the benefit of making smaller payments over 12 months instead bigger ones over 6-8 months plus give me year round income.<p><br> Lee
  5. Charles

    Charles Moderator Staff Member
    Messages: 10,861

    I operate like the second reply. I tell them to call me at least a day ahead of time if there yard doesn't need cutting. But this only applies during a drought period. Other wise when it is raining on a regular basis I keep to a schedule. We have too many droughts and winter for me to have contracts. After it starts back raining a couple of times I use my judgment when to come back.
  6. moonarrow

    moonarrow LawnSite Member
    Messages: 223

    I set my cust. on yearly I show up every week for eight months drought and do something just to make it look good and every two weeks the other four mths. work on beds, trim trees and sork on little small things and ask them if there somthing they want you to do, blow leaves of roof clean gutters. add all the mowings up for the year and divide by 12 and charge that rate no complaints.<p>----------<br>Dale<br>Southern lawn and Landscape
  7. AandB

    AandB LawnSite Member
    from Houston
    Messages: 17

    I personally like contracts and have never had a problem with a customer saying that he didn't want to sign one.<p>The advantages are that a written contract is enforceable, it clarifies your work duties, and, if for any reason you decide to sell your business, it will be much easier to sell written contracted customers than verbal contracted customers.<p>Has anybody ever lost a quality customer because he refused to sign a basic contract?<p><p>----------<br>A and B Lawn Services<br>
  8. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,890

    I don't like contracts for several reasons. For one it scares a lot of people off. Who wants to be bound by a contract to someone they don't have any experience with? Even if it doesn't scare them off, it sure makes them feel a little uneasy or at least cautious. I don't want any of those feelings with a new customer. <p>More importantly, most of the time CONTRACTS ARE NOT NEEDED IF YOU ARE PROVIDING GOOD SERVICE !!! (emphasis intended). I've proven that. We have over 100 full time, flat rate, year round customers who have no written contract whatsoever with us. And our service warrants their continued patronage. That's how it should be. Are there yearly contract for other home services (house cleaning, window washing, child care, etc.) ??? Not usually. Why do we need one then? My stand is that if you do well, MOST (not all) people will be more than glad to keep you around. <p>Thirdly, they are too time consuming and rarely enforcable. Don't take my word for it, ask your attorney. They can break the contract at any time and give any number of reasons why they broke it and you can't do squat about it. <p>Am I against contracts or year round agreements persay? Heck no. We've found a happy medium that works very well. I get asked about 50% of the time when I give an estimate if we make our customers sign a contract. And I always give the same answer, &quot;No, there are no written contracts. You are not obligated to stay with our service any longer than you want to. However, that being said, I do like to emphasize that our service is a full, year round service. I ask that you understand that and agree to keep us on all year, provided our good service warrants it. As long as we do a good job, I expect that you will keep us working for you all year. But if at any time you are not satisfied with our service and I can't do anything to make it up to you, you are free to go. I doubt that will happen though, John, because we have over 100 satisfied customers in this area who are happy with our program. You're gonna like this service. That's why I am so confident about it.&quot; <p>That blurb does a lot more than just reassure them that they won't have to sign a contract with some person they don't know. It also shows them that I am confident of our company and our service. People LOVE to hear that. <p>Sure. I get burned once in a while. Not on people taking the service and not paying as much as a few jerks who take advantage of the year-round service then ditch us for no reason during the winter just to save a buck. This winter I lost a good 5 customers or so that way. They just called and cancelled service at the beginning of winter for no reason. You know what? I didn't get all that upset. Because, screw 'em. I got another 100 customers who are totally stoked about our service and would never take advantage of us in that way. I WANT to weed these jerks out early. And guess what. Next spring they'll call back wanting to start up again and they'll find (politely) that we will not work for them any longer due to their lack of honor for agreements. Furthermore, they'll find they are paying a LOT more this year with another company and they'll regret not staying on our service. <p>The 100 or so who stuck around made up for the 5 who bolted. And it's sweet as pie to be making the same money in the winter as I do in the summer, even though the time we spend per month is only 1/3 of what it is in the summer. <p>I have the same program as the guy above. We mow every week for 8 months, then we stop by every 2 weeks in the winter. But unlike that guy, we don't do any extra stuff for free. We just do lawn maintenance. We mow once a month and do chemical applications the second visit. It's sweet. Our program is spelled out on our web page (below) if anyone's interested. <p>Now, on to another question above. Should you give a discount for year-round contracts. Heck yes!!! That's how I got to where we are today. Nowadays all of our new customers must sign up for the year round program. That's all we offer. But I couldn't always afford to be that choosy. So here's what I did for the first 2-3 years. I'd have our program spelled out on a typed paper and at the bottom I'd have two prices. One if they went with our seasonal service (every week for 7-8 months) and another if they went with our year-round service. My year-round rate was what my previous seasonal rate was. So I didn't go backwards. Then I'd always increase the price of the seasonal one to about 15% more, as sort of a penalty. I found that about 70% chose the year round program. The ones who didn't I would happily service on a seasonal basis and it was more profitable. Eventually, when I had enough year-round customers to keep me and another worker busy all year round I went to accepting only year round clients. That's when things start happening. It's nice to be in that position. <p>Nuff said. I've just written a chapter here. :) <p>----------<br>Jim Lewis - Lewis Landscape Services<br>
  9. GroundKprs

    GroundKprs LawnSite Bronze Member
    Messages: 1,969

    A contract is just an agreement between parties put on paper. Any party who wishes to get out of the contract can do so. A contract is not going to guarantee performance or payment. (Not my ideas, my lawyer's own words.)<p>No one has mentioned the main reason for a contract, or any other written statement. If the client dies, how do you show the executor that he requested your service? If you have a sudden boom year and need to outfit a whole new crew, will your banker just take your word that you have increased services by 50%?<p>What if something drastic happens to the individual owner? Who else knows what the agreement was with each client? How will your survivors value the client base? If you are just disabled, and wish to sell clients, it's a lot easier to show value to a prospective buyer if you have it on paper.<p>People I have worked for for 20 years still sign a contract. To save paperwork, we have a renewal option for the following year at a 5% rate increase. 90% of contracts are for 2 years.<p>Lee, to give a discount for just signing a contract is up to you. If you feel it will help to convert people, go for it. However, our flat rate contracts have a stipulation that cancellation will be reconciled by and itemized computation of services rendered to date, plus one month's service fee. We discount only for multiple services on one property and for longevity.<p>Jim
  10. Jim Lewis,<p>If I were you I would fire your lawyer ASAP.<p>When push comes to shove MY contracts are 100% enforcable.<p>If you don't pay me I file an action at<br>the county court of common pleas. I bypass<br>the district justice since his ruling can<br>be appealed to the county court.<p>I then obtain a judgement.<p>Then I perform a writ of execution.<br>Two constables and myself pay a visit to the<br>home in the evening hours. I notify the local police what I am doing when I arrive<br>at the residence or business as not to tip<br>off the bad debter I am coming.<p>I then proceed to remove the customers personal goods like large screen tv's, computers etc. If the tv was worth $1000<br>new this item will satisfy 10% or $100<br>of the debt. Usually the customer offers to pay me for the debt and all costs of obtaining the judgement before I have to load up my truck with their household items.<p>As for writing off bad debts I have again<br>collected 100% of my recievables for the<br>third straight year.<p>If a new customer refuses to sign a contract<br>where services are billed as when they are<br>performed you should walk away ASAP.<p>With new customers I have a 30 day termination clause covering both parties.<br>Thus they are able to try my services w/o<br>being locked into a yearly deal.<br>

Share This Page