View Full Version : How do contracts work?
09-23-2007, 01:48 PM
Hi everyone. This is a great website with so much good info. I'm 25 and I just started my lawn care business in May and have had great success in the Seattle area. I definitely see the potential of where this is gonna go. I have a question regarding contracts. I want to start my customers on contract work but I don't understand how they work. Do I charge one flat rate per month year round no matter how many times I service a month? I don't know if customers will go for paying the same amount per month for me to come 4 times in the summer and 1 in the winter. Or do I add up the number of times I expect to service their lawn a year? Then average it out into a monthly rate. None of my customers are on contracts but I plan on switching as many I can over to ensure year round income. I have all residential customers. Thanks for the help. Rob - Four Seasons Yard Care http://www.gophergraphics.com/forum/iB_html/non-cgi/emoticons/newbie.gif
S.P.Martin Lawn Care
09-23-2007, 11:38 PM
A contract is an agreement between the customer and the service provider that spells out the terms and conditions on what, how, and when services will be performed, as well as how you will be paid. Check into your state business and consumer protection laws to see if any language is required. Examples might be 3 day waiting period, exit clauses, mediation or arbitration requirements, and so. Failure to include this stuff may land you in hot water, an unenforcible contract, or both.
It sounds like mowing lawn takes place year round in your neck of the woods with a slow down during the colder months. Take a look at how many times you anticipate mowing a lawn each month, some weekly, some every two or more weeks, and total it up to give you the number of times per year you will service it. Multiply that by the fee so you have a figure to work with when negotiating with the customer.
The contract should be for the season or calender year. You can offer the customer the option of paying weekly, monthly, or yearly, let them decide. I offered a 10% discount for paying for the season up front with good results that gave me some working capital. Not every customer can do that so the other options will likely be more palatable.
I highly recommend looking over the sample contracts located elsewhere on this site. There are lots of great ideas on what to include.
To give you peace of mind, spend some money on a lawyer experienced in contract law. They can produce a contract as only a legal mind can. Just be prepared with items you wish to incorporate, a list of questions to ask, and be able to explain your goals, plans, and customer base.
09-25-2007, 08:18 AM
Thanks for clearing this up for me. I appreciate all the good insight.
10-03-2007, 11:41 PM
I will also do a contract Agreement on any job that is over $500.00 and most of the time if its over $100.00 I will ask for half up front other half when the job is complete. This has worked out for me many times. anything under 500.00 Ill eat if I have to, BUT I can say I never have had to do that.
10-04-2007, 09:21 PM
My business is now set up using a contract for any work that we do for a customer whether its is year round lawn service maintenance or us coming in one time to do some landscaping. Then not only do I have it in writting for my records but if something goes wrong on anyones part we fall back to it for the resolution of the problem.
For lawn care maintenance year round we charge per visit. So if its spring or summertime (we change to weekly service for my customers in the spring unless they specificly state they only want to be serviced twice a month) so they will get charged for 4 visits that month and in the fall and winter we go to bimonthly.
So for example lets say someone has a 1 acre lawn and contracts us for one year for the property at $60.00 per visit at a weekly rate. The contract for that customer will state that and when it changes in the fall to bimonthly because growth slows down then the price would change to show a bimonthly service.
Hope that helps. Its sounded like you were asking regarding that so figured I would throw in my two cents of how I do my costs in my contracts. Also I am pretty sure I have some old contracts I looked at to get ideas how I wanted my contract to be if you need something to use as a base for your contracts. Let me know and give me an e-mail address and I can send them to you.:D
10-05-2007, 05:31 PM
Quote[/b] (Clean Lawn @ Oct. 04 2007,9:21)]The contract for that customer will state that and when it changes in the fall to bimonthly because growth slows down then the price would change to show a bimonthly service.
Are you telling me that you drop the price when the season slows down? Because when I do a contract I charge same for the whole year rather I mow every week or once a month.
10-07-2007, 12:22 PM
[QUOTE]Hope that helps. Its sounded like you were asking regarding that so figured I would throw in my two cents of how I do my costs in my contracts. Also I am pretty sure I have some old contracts I looked at to get ideas how I wanted my contract to be if you need something to use as a base for your contracts. Let me know and give me an e-mail address and I can send them to you.:D
Thanks. My email address is firstname.lastname@example.org
[QUOTE]Are you telling me that you drop the price when the season slows down? Because when I do a contract I charge same for the whole year rather I mow every week or once a month
Where do you get your same monthly price at for the whole year? Do you add up the times you plan to service their lawn for the year and average it out into a monthly figure? Or do you charge the same flat rate no matter how many times a month you come. And if you did it this way then I would assume you would base your price on the busy time of the year when your servicing once a week. Right? And if thats the case I wouldn't see how customers would want to pay the same amount a month for you coming once a week and then twice a month when it slows down. I know if I was the home owner that wouldn't seem right to me to be paying the same amount for less service. I would think that the price drops. Unless this is how the lawn care business works. But isn't that more of how a commercial contract works. I just started in May of this year so I'm still not sure.
10-07-2007, 12:25 PM
How do you do the quote so that it shows up in the white box like that?
10-07-2007, 02:32 PM
You started the quote right.... just at the end of the line you're quoting, you have to remember to put [/QUOTE] so that it closes the quote.
10-12-2007, 10:31 PM
Sorry did I give the impression I lower my pricing because of the time of year?I have a weekly and a bimonthly lawn service amount for my customers. That is the only difference.
I am sending you those contracts also I did not forget I got sick for a week....ugggh!
10-12-2007, 10:47 PM
Here's what I do.... or will do (since I'm just starting)... If you have them on a 12 month contract, you tell them it will be $X.xx broken down into 12 equal payments. You tell them what all you plan to do for that money and how many times through the different months they can expect you to visit their property.
10-13-2007, 11:59 PM
I was going to average it out so that they pay the same amount all year to. But I was thinking if the situation came up where the customer was to cancel for some reason, then I wouldn't have recieved full payment for the services I was providing for them up until the cancelation time. I don't have any of my customers on contracts because I just learned about the residential contract thing not to long ago. So starting next season I'm going to switch everyone over. I'm not worried about losing customers because I always get little notes that come in with my payments for the month of telling me how nice the lawn looks and what a great job I've done. So I was just thinking about charging at the end of the month for the services I provided for just that month.
I'm still confused about Rodman (pnplawn) when he says Quote[/b] ]Are you telling me that you drop the price when the season slows down? Because when I do a contract I charge same for the whole year rather I mow every week or once a month.
So what does he base his same monthly charge off of. Weekly summer mowing. I don't see how a customer would want to pay the same amount for a Biweekly service, as *they would for a weekly service.
10-14-2007, 09:36 PM
I am not sure either. I have different rates for weekly and bimonthly services. We dropped the onces a month amounts because we are a newer company and right now we just aren't getting those requests. We get one time work jobs but thats not the same.
For those customers that are weekly and/or bimonthly because I still have both when it is roughly 10 days before the end of the month I start getting the invoices ready to mail out. Because we are only a few months old and only billing a few people this doesn't take me but maybe one evening worth of work. Then I send them out the next day. Most of our customers leave us their payments when we come to service their homes but a few send in the mail too. So we bill before we come to service for that month and get payment in advance now to avoid not being paid for any services. We didn't push a pay by this day because like I said we are still small and most of our customers leave them at their homes the first time we come to service their lawns for the month but starting next year with new contracts we are going to have a pay by this day. As we grow I think it will be much easier for us and if we pick up a lot of new contracts next spring then we might include paypal as a means for our customers to pay for their services. Does anyone else use paypal?
10-14-2007, 10:48 PM
Paypal is a good idea. Does that make it so people can go to your website and pay their bill. I'm not sure exactly how it works. I've been considering a credit/debit card machine for next season. I still havent decided yet. Is anyone else using those for people to pay for lawn care services. Or is it just a waste of money.
Quote[/b] ]We dropped the onces a month amounts because we are a newer company
Next year when customers switch to twice or once a month I'm raising the price per cut. Because this is the same time of the year when there is leaves all over the ground. Which takes more time to mow becuase the bag fills up faster and theres more waste to dispose of. I don't like just mulching a bunch of leaves into a customers lawn.
Quote[/b] ]Most of our customers leave us their payments when we come to service their homes but a few send in the mail too
I bill everyone at the end of the month becuase its to hard for me to keep track of who didn't pay becuase they werent home or whatever the reason might be. Its alot more organized for me.
I just started in May of this year. Ive learned so much stuff with alot left to go. And alot of help from this site. I wish I would have found this site long time ago. I've learned alot of things the hard way. Probably the best way though to.
10-21-2007, 02:38 PM
Paypal works from two different ways if I understand it correctly. You can pay via transferring money from a bank account to the paypal account (which is like a bank account) or credit card to the paypal account. Then you need to take the funds from the paypal account to deposit into your personal bank account or business account. But you have to have a bank account to set up a paypal account. Paypal is used by a lot of people who sell things on ebay or online. I know some bigger companies use it for payments and said it makes it easier for them. You do get charged per transaction which is just like a credit card terminal but for the credit card terminal you do need a land line (no cell phones for this). So your paying for the extra land line, the credit card terminal and a fee per transaction. For paypal your paying a transaction fee only. So this is the reason I was considering going with paypal. If that helps anyone make their decisions based on this information.
10-22-2007, 12:44 AM
Here's a suggestion when using PayPal... Keep in mind that they charge a fee when someone pays you (2.9% + $0.30). If I were going to take PayPal payments, I would charge the customer a "Service Fee" of that much to allow them to pay using PayPal. I mean, other people do it... people charge $5 all the time to take payments by phone and etc...
Just my thoughts.
12-09-2007, 09:50 AM
Quote[/b] (pmblair @ Oct. 22 2007,12:44)]Here's a suggestion when using PayPal... Keep in mind that they charge a fee when someone pays you (2.9% + $0.30). *If I were going to take PayPal payments, I would charge the customer a "Service Fee" of that much to allow them to pay using PayPal. *I mean, other people do it... people charge $5 all the time to take payments by phone and etc...
Just my thoughts.
Be careful charging people extra for using a credit cad, FEDERAL GOVERMENT has put a stop to it. You can no longer charge extra for accpeting credit cards. Payments by phone are on overdue payments not on current payment and that fee is for convience of paying by phone to bring the account up-to-date not for using a credit card.
12-09-2007, 07:02 PM
Tim that is a very good point. I don't know about paypal, but most credit card merchant accounts forbid you from charging a customer extra for using a credit card. I do think an exception was made for gas stations because the profit margins are so slight.
12-09-2007, 07:14 PM
That must be why some small stores have signs posted - Credit Cards Accepted
Stores can charge extra for debit purchases though. At least in Washington.
12-09-2007, 09:06 PM
Yeah, I'm in Oregon, and all the time at those small minute markets like 7-11 and others, they charge .35 when paying with my cards, and its been that way for atleast the last year.
12-09-2007, 09:49 PM
Quote[/b] ]That must be why some small stores have signs posted - Credit Cards Accepted
I meant NOT accepted.
12-09-2007, 11:04 PM
Ok, let's revamp... I didn't say anything about an extra fee for using a credit card... I said an extra charge for using PayPal. PayPal can come from a checking account, too... or there can be no account associated with it.... could be money they got paid for something... .
....and the fee would be for their convenience... just like the charge for paying another company with check by phone.
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