Should you lock yourself into a multi-year lawn care contract?

Should you lock yourself into a one year or multi-year lawn care contract? What about taking a customer’s money who offers to pre-pays for the entire year? That’s the question one lawn care business owner had on the Gopher Lawn Care Business Forum. There are a bunch of variables you need to consider before you do any of this but once you consider them, you can really taylor fit your contracts and pricing plans to your business and make good money.

He wrote “let me start off by saying, I am a new lawn care business owner and have no contracted lawn care customers yet. As of right now I bill everyone weekly. However, one customer recently told me he wanted to lock in his current mowing price and lock in a two year lawn care contract. Those of you who do contracts how should I write it up? I feel I have a good estimate of 26 cuts per year was just going to multiply total cost x years of contract however I am now sure if I should include anything else. Any help I can get on this is appreciated.”

A second lawn care business owner said “as a new business owners, you don’t want to get locked into a 2 year mowing contract, especially one with a price you’re not satisfied with. You have a lot of growing and learning that will go on in the next couple of years and I can almost guarantee, what ever you are charging your current customer for lawn care, you are not charging enough. The customer knows this and that is why he would like to lock you in for two years more at this same price.

Something you might want to consider though, is if you are able to make a profit on your current pricing, you might want to lock in a contract for a single year if the customer is willing to pay in advance.

I got started offering this to my customers when one offered to pay me in full for 12 months for lawn care and hedges as they are out of the country a lot. All of this was done with a hand shake.

Once I got the money in hand for the season, it got me thinking that others may pay for the full year if I offer a discounted rate.

So what I do now after that guy paid me in full, it was his idea, is I’ve come up with a senior annual discount plan for those over the age of 65, although you wouldn’t have to do it this way. It is just that my area has a lot of seniors, and they like to feel there is a discount offered specifically for them.

I offer them a specific amount of mowings per year. Where I live, the average lawn goes for around $40 to $55. For seniors, I mow the lawn for around $35 to $45. With my prepay plan, I go with a price of $45 per mowing and show them that if they pay in full that they will save a certain amount of money each year. I will work it out to show them in my presentation as the price can seem dramatic. Instead of $765 per year if they paid per mowing, they would instead pay $544 up front.

That’s a saving of $221 a year! If I need to, I can play around with the numbers, depending on the size of the property and it’s proximity to other customers and take the savings to about $250.

My plan is to get up to 50 lawns on this pre-pay plan. That would be a big cash flow boost and all of it to sit in the bank at the beginning of the season, just when I need it most. If it takes off I will look at doing it in other areas and hire more people to mow for me.

If you are new, my best advice is to charge per cut and adjust your costs as you need to. As you get more comfortable with what you are charging, you may want to experiment with some prepay options like I described above. Only later after you are in business for at least a year should you experiment with using lawn care contracts.”

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The GopherHaul Lawn Care Business Show Episode Guide.
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