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What to pay for accounts

Discussion in 'Lawn Mowing' started by Drew Gemma, Nov 3, 2004.

  1. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Messages: 1,508

    Earlier my thread stated my situation and possibly purchasing more accounts roughly 35 of them. What percent and for how long. Sending letters to customers and have other LCO sign a contract with no compete stating the payment rules. I figure 10% a month of what I have every month from the accounts that I purchased from him (mowing only). How many months whole first season or six months. Any help or suggestions to maximize my sucess with this transition and of course come out on top. Thanks!
  2. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Messages: 7,547

    If you keep them all that will come to 60% of one months gross. That seems a bit on the low side to me.
  3. Precision

    Precision LawnSite Silver Member
    Messages: 2,995

    going rate is somewhere between 1 and 3 months gross. Depends on the profitability of the accounts, location, and if the client signs a contract to continue with you.

    Perhaps give the guy 1/2 of the agreed money up front and the other half dependent on retention after 3 months.

    So say you gross $3500 monthly off the 35 accounts (each at $100 monthly). And you agree to 1.5 times monthly gross. Give him $2625 on day one. Then say you lose 8 of the accounts in 3 months. Your next payment would be $1425.

    And yes you will lose accounts. Doesn't matter what you do, some people don't like change, your equipment, you, your crew, whatever. 75% retention is probably a good yardstick.

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