Year round monthly income.

Discussion in 'Lawn Mowing' started by TaylorLawn, Jan 31, 2004.

  1. TaylorLawn

    TaylorLawn LawnSite Member
    Messages: 195

    I would like to ask some advice, I have been in this business for quite a while, and have never had year-round contracts with any residentials, my commercials are of course, and I receive 12 months of income. My typical formula is figure out how many times I will service the property in a year, multiply by the amount charged per-service and divide by 12. Has anyone had success with this type of procedure with residentials? Negative aspects as well are welcomed. It would be nice to have the year round income from most every account, makes budgeting much easier. Are most homeowners up for this?
    Thank you, Eric
  2. Patriot

    Patriot LawnSite Member
    Messages: 1

    90% of my residential customers pay the same amount monthly. I use the same formula you do and everyone is good with that. You have to make sure the customer is very clear that you will only come twice per month (or whatever # makes sense for your area) in the winter so you don't get calls about why "you didn't come this week". If you say you are going to come xx number of times per year regardless if you are going to mow that many times, just make sure you show up and do something even if you don't mow. I picked up a lot of customers because the previous guy never showed up in the winter and billed the customer anyway. Also, I never use written contracts with residential customers because I have found it scares them off. Simple handshakes seem to work just fine.
  3. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Messages: 10,168

    i use 10 month payment plans. entire season service amount, divided by 10. first payment due 3/1, final payment due 12/1.
  4. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Messages: 2,808

    Like Bobby I had a 10 month billing plan. I just finishing revising my proposal for this season and mailed 'em out today. I am now offering three options for them to choose from.

    1. 9 equal installments
    2. 12 equal installments
    3. 3 equal installemnts with a 5% discount

    They all start on March 1st. I don't know how it's going to work out but I wanted to give them a choice. I'm hoping to get a good mix. With the 3 installments I will have some start up cash at the beginning of the season and with the 12 I will have a little something coming in during the winter.

    I'll let you know how it works out....
  5. mowerman90

    mowerman90 LawnSite Bronze Member
    Messages: 1,492

    Taylor Lawn,

    I use the exact formula you describe for all of my residentials. But, and that's a big but, I'm in Central Florida so it's normal.
    I mow weekly from Apr through Oct and bi-weekly from Nov through Mar. I think that some of the 10 month plans might work and be easier to sell for your location.
  6. OP

    TaylorLawn LawnSite Member
    Messages: 195

    Here is one drawback that I can think of, paying hired help. When employees work, they get paid, when we do not work, they don't. This works fine because I receive the full amount during the mowing months from residentials........and during the off season is where I enjoy the hard work we did on the commercials with the same income. If I were to spread out the residentials, I am afraid of not having much income for the business during the working season, although the working season is quite long here in the south, full sheduling begins March 1, with only 1 visit DEC-FEB. I guess that is where the competency and responsibility as the owner comes into play. I only emply 2 workers, and one is PT, so this should not be a big problem, maybe split it up, and offer the year round to some long time customers who have been loyal for so long.
  7. sprout

    sprout LawnSite Member
    Messages: 94

    Patriot said it and has it right on the money!
  8. OP

    TaylorLawn LawnSite Member
    Messages: 195

    I totally agree with the visitation no matter what.....Just today we went to some of the residentials, they did not need mowing but we picked up all of the pine cones, moss etc, and cleaned the driveways...we will still show up next week and mow as well...I just do that to show that we are keeping an eye on the properties, customers like the attention.....good advice so far, keep it up.
  9. Brian Taylor

    Brian Taylor LawnSite Member
    Messages: 15

    We use the same method as you said. It makes it nice to put the same amount of money in the bank during the winter as we did in the summer.
  10. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,895

    We do it exactly like Patriot. And we don't do residential contracts either - for the same reason.

    If you want to build up year-round residentials, I'll tell you how to do it. You have to understand the psychology of the customer in order to be successful at landing a lot of year-round customers.

    First, understand that people like choices. They don't like it when they're told, "I'm sorry. We don't offer seasonal service. Just year-round." Now, once you have enough accounts where you can afford to be choosy, then you can just offer that one choice - year round. But until then, here's the best way to approach it....

    Offer two options every time you give a bid. Let's say the normal price you'd like to make from a typical lawn in your area is $30 per week. Multiply by 4 weeks (almost 1 month) and you get $120. This is the price you give them if they choose year-round service. It's a flat price, and they pay it all year. In the winter, try to come at least 2 times per month, as Patriot said. Just do SOMETHING each visit. And leave a checklist so they know what you did. Now I know some of you are reading this thinking, "JIM! WAIT! Some months there are more than 4 weeks!!! I'd lose money!!!" Yah, that's true. Maybe 2 months of the spring and summer you'll get $30 less than you should. But then in the winter, you'll be making $60 per visit! That more than makes up for it!

    So like I said, the $120 price is the price if they sign up for year-round. The sweet thing is this is the price you're already charging - right? Remember, we said assume you want to make $30 per week. And you are! So then we go to the next option - Seasonal service. If they chose Seasonal service, the price is $135 or $140 per month.

    Now the customer has options! And you'll be happy to find out that most people will chose the year-round rate just to save $15 or $20 per month. It's crazy. They're actually paying more for the year. But most people have short term thinking. They think they can afford $120 each month easier than they can afford $140 for 9 or 10 months.

    This is the way I did it when I was building up my clientel. After I reached about 100 year-round clients I just quit offering the seasonal option and just told people I only did year-round, take it or leave it. We could afford to be more choosy at that point.

    It worked like a charm for us. Back when we offered that option, we had 80% or more chose the year-round option. Nowadays, I don't have any seasonal residentials. They're all year-round. The seasonals dropped off over the years and were replaced by year-round customers. Winters aint so bad any more. :D

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