When should you offer discounts on lawn care?

A great question came up on the Gopher Lawn Care Business Forum. It was on the topic of when should you offer lawn care customers, a discount. Should they be offered a discount if they pay in cash? Or what about a discount to seal the deal if they are on the fence?Do discounts help or do they make you look desperate?

Here is what one lawn care business owner wrote. “Should I offer a certain % discount when a customer wants to pay in cash? But then what should I do when the work is all done and then the customer wants to write a check? Or when I have a contract that states 1/2 the money up front and the rest of it upon completion only to find out that when I get done with the job and the customer decides they want to send me a check? I’m thinking about tacking on something a little extra for those customers who want to try too screw me over.”

One lawn care business owner suggested “when I start any landscaping project over $300 I write an estimate/contract and in that contract it clearly states that before I start the project I am to be paid half upfront and when I finish the other half I get paid the rest. Then we both sign it.

Normally I don’t have a problem with customers paying but if they want to push off the final part for a week or so by sending me a check through the mail which wasn’t part of the deal, they will then have to pay a late fee which is in the contract as well. I point this out to them when the problem arises and it tends to resolve the issue.”

A second business owner said “people sometimes ask me If I prefer to be with paid cash or by check. Some even ask if there is a discount. When this happens, I just explain that it doesn’t really matter to me. No matter how I get paid, I claim the money in my taxes.

Besides it being the right thing to do, I want to point out a reason how claiming or not claiming money can effect you in the future, in a way you might not initially think of. Right now I have 2 kids, a little boy and a little girl in the same bedroom. I can only get away with that for a few more years until they get a little older. Then I will want/need a bigger house, possibly in the next year or so. I have pretty good credit now which is fine, but if I can’t show the actual income I make, I won’t qualify for the loan I want. So I claim everything.

Customers at times need to understand that I do run my business as I should. I pay insurance and taxes. I offer the best prices I can with all that in mind and my price is what it is. I don’t care how they pay as long as they do.”

A third business owner said “first off, I am in business to make money. Not to work for less then I know the job is worth. With that said, the only discounts I offer are for annual contracts paid over the year, instead of pay as you go. But on the other hand I do have this to say, perception is 90% of the yes factor from a potential customer. By this I mean, say I have a job to re-mulch a flower bed and I do my figures and come up with the price I would do it for, that covers all my costs. For instance, if my bid totals $150.00 then I add an additional 20% = $30.00 to the bid. This bid now totals $180.00.

Now when you present the bid price to your customer, you will get 1 of 4 basic responses.

1) Good for you, they say ok when can you start.

2) We will let you know. This tells you they think it’s too much. But if you respond with ‘hey mr/mrs customer I really want this job, if I took 10% off, would we have a deal?’ Remember you added 20% above the real quote you came up with. You could probably cut even a little more and still be good.

3) The customer says ‘thanks but no thanks.’ In this situation, refer to rule #2

4) Can you do any better on the price? Yes you can! Refer back to rule #2.

All people want is to feel like they are getting a good deal. Response #1 is always great to hear but that happens maybe 1 out of 5 times. Normally I get response #2 or #4 which is fine with me. That shows me they are interested in my service and I have the chance to make a higher profit. My normal is approximately a 25% profit margin in quote. Then I add the 20% on top of that. I usually get 10% to 15% 0f that additional markup.

I have found that most people I get calls from don’t get many bids. They just use the 1st one they feel can do the job and who makes them feel like they are getting a good deal.”

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