Years ago I posted on my forum that because it was so difficult to rely on snow removal services, we had moved our billing to a “monthly package format”. At the time, the business owners who read my post were not exactly on board with what we were doing. A lot of people commented that their clients would not be willing to be billed this way and would prefer to be billed based upon the services they have done (and choose to have done).
I am sure this is still the case for many business owners – there are clients out there (both residential and commercial) who prefer to be billed each month based upon the services provided and nothing else. The opposition I got to the format mostly had to do with things like:
1.) What about when you lay out a significant amount of your own money in the spring for things like labor, mulch, etc….?
2.) What about in the middle of the summer when not as much time needs to be spent at a client’s property?
The concept of creating a set price each month for a maintenance client is obvioulsy not black and white in every situation. But for the most part, if explained and sold properly, it becomes a win-win for you and the client.
Many business owners I speak with come to me with a similar dilemma – they tell me:
“Sean, I make all my money in the spring, summer and some in the fall. If it doesn’t snow here I have to make my money stretch until the spring. It’s very difficult and each season I feel like I am starting all over again.”
I understand. In fact, I have been there. No matter how efficient, organized and prepared you are, if there is a lapse in services, money starts to find its way out the door without any money coming back in.
The reasoning is simple. Take the following example:
The client wants the following services performed – mowing, trimming, edging, mulching, aeration, seeding, fertilizing, weed control, spring clean-up, fall clean-up, leaf removal, irrigation maintenance. You figure out your price for each service and how many times each service will be performed in a year’s time. You figure out the total cost of this maintenance package for the client is going to cost $6,240.
If you allow the client to pay you based upon when (and if) the work is done, you could see a windfall in the spring and less the other times of the year. In the grand scheme of thing, the client wins in this scenario….well, sort of.
Let’s say that there is a drought, or an excessive amount of rain, or something else occurs out of your control that ends up limiting the number of service trips you make to the client’s property. Now instead of the client spending $6,240 in a year, it looks more like he is only going to spend $4,950. Problem is, much of this money is due in the spring and the client may have to cut a big fat check for $2,000+ in one month. Sometimes that is a hard pill to swallow for a lot of clients.
Now, instead you say to the client the following:
“Mr. Smith, for everything you have chosen to have done at your property this year, the total price will be $6,240. What we can do is break that total amount down into 12 equal monthly payments of $520. That way you know exactly how much you will be spending and there will never be any surprises come invoice time. In exchange we will make no less than 50 visits to your property, more if necessary to ensure that the irrigation system is functioning properly and the turf and bed areas remain weed and disease free.”
Let’s assume these 50 intended visits break down in the following manner:
30 mowing visits, 1 mulch visit, 1 aeration/seeding visit, 7 fertilizing/weed control visits, 1 spring clean-up visit, 1 fall clean-up visit, 5 leaf removal visits and 4 irrigation maintenance visits = 50 visits total.
Mr. Smith has now reserved 50 visits to his property. Now your service changes as well – you actually have 50 visits to make sure the client’s property is getting done what needs done versus you showing up just to try and squeeze in another mowing or leaf removal visit, etc.
From a business and accounting perspective, life becomes a little easier. Money is coming in month after month – money you can count on in amounts you have prepared for.
This scenario doesn’t work in all situations for all businesses and clients, but something to consider.