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mark123
10-20-2010, 02:13 PM
I got a call today asking to cancel service for the rest of the year. The problem is this guy is on a monthly contract that doesn't expire until May. This doesn't bother me as it just means I won't have to wait to get the balance of the money for the cuts I've done so far. What bothers me is he says he's trying to save money for fuel oil for his home heat.

It just doesn't make sense. It's going to cost just as much only it's going to have to be paid in one lump sum (something he always had issues with).

Guh. What do you do when someone wants out of a contract? Does anyone write a penalty for early cancellation into their contracts?

The Cleaning Doctor
10-20-2010, 03:01 PM
If it were me I would write in a 30 day cancellation clause. give 30 days notice or pay 30 days... you choose.

This gives you time to add another customer.

mark123
10-20-2010, 03:07 PM
If it were me I would write in a 30 day cancellation clause. give 30 days notice or pay 30 days... you choose.
That's an interesting idea. I think I like it a whole lot! :)

This gives you time to add another customer.
I'm not losing him as a customer. He wants snow shoveling and mowing again next season.

The Cleaning Doctor
10-20-2010, 03:29 PM
I'm not losing him as a customer. He wants snow shoveling and mowing again next season.

Next season does not help you now. It is great that he want to come back but you need to fill the slot now. Who knows, the next customer might be bigger and better. He needs to understand that he will loose his slot in your schedule and that you have to replace him.

mark123
10-20-2010, 04:16 PM
Next season does not help you now. It is great that he want to come back but you need to fill the slot now. Who knows, the next customer might be bigger and better. He needs to understand that he will loose his slot in your schedule and that you have to replace him. Perhaps. This may be a bit different though. He was only scheduled for 2 more mowings so the only thing I'm really losing is the wait to get paid for the remainder of the contract. He wants out then he pays the balance. Still doesn't make any sense to me though. :)

mcscapes
10-20-2010, 06:27 PM
Let him out without penalty and explain next year he will pay a 20% premium We put a thirty day clause for us and the cust.

mark123
10-20-2010, 06:35 PM
Let him out without penalty and explain next year he will pay a 20% premium We put a thirty day clause for us and the cust.

His price was locked in with the contract. "Was" is the key word there. ;)

jymie
10-21-2010, 10:59 AM
If you try to rail him for the money that you could have made, just remember one thing, people will tell everybody they know about a bad experience and it will travel like wildfire. I would just let him out without penalty and tell him I understand your plight and i look forward to serviceing you next year. For the couple hundred you will be out with this one customer, is it worth losing several potential thousands becuase of bad word of mouth? Now if it was a commercial account, thats another story all together. Those agreements are all iron clad and specifically have terms of what happens when canceled so they would hold up in court.

Steve
10-21-2010, 01:19 PM
What do you do when someone wants out of a contract? Does anyone write a penalty for early cancellation into their contracts?

How do you handle your contracts? Do you charge the customer a lower rate spread out over 12 months or do you only bill them during the months you are mowing?

Depending on the way you handle this, it can really make a big difference.

mark123
10-21-2010, 04:22 PM
How do you handle your contracts? Do you charge the customer a lower rate spread out over 12 months or do you only bill them during the months you are mowing?

Depending on the way you handle this, it can really make a big difference.

I charge them the equivalent of 3 mowings for 12 months. This allows for either 36 cuts or 32 or so and a leaf pickup. I did it this way because most of the customers with poor money handling skills would have a bird every month that had 5 of their weekday in it. They could barely handle 4 per month. lol

Steve
10-22-2010, 09:58 AM
Ok so 36 mowings a year or so averaging 3 per month. What is the mowing season in your area? The reason I ask this is because, I wonder if they are getting a deal throughout the year and they make up for it on your slow months when you barely have to mow or don't mow the property at all.

mark123
10-22-2010, 03:50 PM
Ok so 36 mowings a year or so averaging 3 per month. What is the mowing season in your area? The reason I ask this is because, I wonder if they are getting a deal throughout the year and they make up for it on your slow months when you barely have to mow or don't mow the property at all.
I never skip unless asked. The season goes from the first week in April to the 3rd week in November which includes leaf pickup.

Steve
10-23-2010, 08:22 PM
Ultimately, if the customer is signing a contract to get a budget price spread out across 12 months of the year, there has to be some clause that is basically a cancellation fee to make up for the money you lost up to that point. Maybe even have it so they pay:

what they still owe you in total for the rest of the year - (the # of cuts * price per cut)

So they aren't paying for unused cuts but are making up for the discount you gave them through the year for the cuts you already made.

mark123
10-23-2010, 08:34 PM
... So they aren't paying for unused cuts but are making up for the discount you gave them through the year for the cuts you already made.

Yes, that's how I figured it. Number of cuts performed all year * cost per cut - payments already made. I have a feeling it's going to be more than they expect.

Steve
10-23-2010, 09:13 PM
There is a good chance it will be. I do wonder if explaining this concept to the customer before they sign would make them more understanding. That you are actually taking a hit early in the year by offering budget pricing that ultimately equals out in the end of the year. So it is very important that they not cancel or you will need to make up the difference.

Do you explain that to them? Do you feel that is important? Or do you feel there would be a better way to get them to understand the situation?

mark123
10-24-2010, 07:07 AM
There is a good chance it will be. I do wonder if explaining this concept to the customer before they sign would make them more understanding. That you are actually taking a hit early in the year by offering budget pricing that ultimately equals out in the end of the year. So it is very important that they not cancel or you will need to make up the difference.

Do you explain that to them? Do you feel that is important? Or do you feel there would be a better way to get them to understand the situation?
Yes, I did explain it. They always talked about how it should help me when I'm not cutting in the winter as if I was bad at handling money like they are. lol

Now they're getting popped with a bill that equals about 3.5 months of the contract.

Steve
10-25-2010, 12:54 PM
The other thing I was wondering, when you create your contract for the annual service, do you include things like leaf cleanup or gutter clean out? Maybe if those services were included along with an increase in price, they wouldn't back out of it so easily because they know they need those services in fall and late fall.

johnslawns
11-03-2010, 04:58 PM
Jymie is right. Just let it go, the badwill created otherwise is not worth it. The money will come back to you in other ways.

Happy mowing (and leaf blowing, and snowblowing),

JP

mark123
11-03-2010, 06:09 PM
Jymie is right. Just let it go, the badwill created otherwise is not worth it. The money will come back to you in other ways.

I think you and Jymie may have missed a few posts. :p OK, here's the deal; The contract was canceled because he needed money for heating oil so now he has to pay for the mowings performed and nothing else. This is going to net him less money for heating oil and it just doesn't make sense to me.

I'm not losing anything. Neither is the customer.