Lawn Care Business Forum Lawn Care Business Book Lawn Care Business Blog Lawn Care Software
Home Forum Contract & Flyer Templates Blog Software Videos Podcast Calculators / Estimators Store Mower Review Design It Yourself Lawn Business School

Go Back   GopherHaul Landscaping & Lawn Care Business Marketing Forum > Business > General Business Discussions

General Business Discussions A place to talk about general business discussions.

Are pre-payments bad?


General Business Discussions

A place to talk about general business discussions.
Reply
 
Thread Tools Search this Thread
  #1  
Old 01-25-2012, 03:04 PM
TiedemanLLC TiedemanLLC is offline
Senior Member
 
Join Date: Dec 2011
Posts: 226
Rep Power: 5
TiedemanLLC is on a distinguished road
Default Are pre-payments bad?

Going over our 2011 season I noticed that 16% of our income was from services that were pre-paid. The funny thing is, the pre-payment of services was also our best marketing technique used in the 2011 season.

Now with us, and pre-payment we always give great discounts. Anywhere from 5% up to 25% (25% is when more than three years of service are pre-paid). But we are starting to wonder whether allowing clients to pre-pay is actually hurting us in the long run.

Are we just concentrating on pumping cash into the system NOW instead of looking at how much money we are losing down the road?

What are also the pros and cons of pre-payments?
Reply With Quote

Stop guess-timating. Learn how to estimate and make money! $$$
Mow Time Estimator Lawn Care Price Estimator Mulch and Topsoil Calculator Snow Plow Estimate Calculator


  #2  
Old 01-25-2012, 03:36 PM
dpld dpld is offline
new member
 
Join Date: Jan 2012
Location: nj
Posts: 885
Rep Power: 0
dpld is on a distinguished road
Default

Lawn care business tipsLawn Care Business Book
Quote:
Originally Posted by TiedemanLLC View Post
Going over our 2011 season I noticed that 16% of our income was from services that were pre-paid. The funny thing is, the pre-payment of services was also our best marketing technique used in the 2011 season.

Now with us, and pre-payment we always give great discounts. Anywhere from 5% up to 25% (25% is when more than three years of service are pre-paid). But we are starting to wonder whether allowing clients to pre-pay is actually hurting us in the long run.

Are we just concentrating on pumping cash into the system NOW instead of looking at how much money we are losing down the road?

What are also the pros and cons of pre-payments?
i used to do that when i had residential accounts but i would offer a 10% discount for monthly auto pay with a credit card and i would give a 20% for pre payment of the entire season.

25% is a little too high even if they paid for the whole season in advance.

but now i bill ahead instead of behind so i have eliminated any discounts like that.
Reply With Quote
  #3  
Old 01-25-2012, 05:24 PM
CHEESE2009 CHEESE2009 is offline
Dr. Scott - Ruler of the Underworld
 
Join Date: Mar 2009
Location: Switzerland, Grindelwald
Age: 75
Posts: 4,473
Rep Power: 0
CHEESE2009 is on a distinguished road
Default

Getting your clients to pre-pay is awesome.

Getting your clients to pre-pay in order to eat your profits, sucks.


A discount of 25%, you're most likely paying the tax on their bill and more.
Reply With Quote
  #4  
Old 01-26-2012, 03:24 AM
USA Lawn Care USA Lawn Care is offline
Member
 
Join Date: Jan 2011
Posts: 62
Rep Power: 6
USA Lawn Care is on a distinguished road
Default

There is no reason to discount for pre-pay. No need to apologize to customers about your policy.

This is your business. Run it and bill how you choose. If a customer doesn't like it so be it. The only thing you need to explain is that 'this is the way that has worked best for our company so this is how we will continue to bill clients.' Your main goal is to stay in business. Cash flow is a key ingredient of that.

I can't tell my trash collector that I don't like pre paying. They would tell me to go find another trash collector then.

Again.....DON'T APOLOGIZE FOR PRE-PAY.
DON'T OFFER DISCOUNTS.
PAYMENT IS DUE BEFORE WE CUT YOUR GRASS.....PERIOD.
Reply With Quote
  #5  
Old 01-26-2012, 06:56 AM
mark123's Avatar
mark123 mark123 is offline
Senior Member
 
Join Date: Apr 2009
Location: Pennsyltucky
Posts: 1,404
Rep Power: 9
mark123 is on a distinguished road
Default

There is a difference between fast food and fine dining. You pre-pay for one.
Reply With Quote
  #6  
Old 01-26-2012, 08:53 AM
dpld dpld is offline
new member
 
Join Date: Jan 2012
Location: nj
Posts: 885
Rep Power: 0
dpld is on a distinguished road
Default

Quote:
Originally Posted by USA Lawn Care View Post
There is no reason to discount for pre-pay. No need to apologize to customers about your policy.

This is your business. Run it and bill how you choose. If a customer doesn't like it so be it. The only thing you need to explain is that 'this is the way that has worked best for our company so this is how we will continue to bill clients.' Your main goal is to stay in business. Cash flow is a key ingredient of that.

I can't tell my trash collector that I don't like pre paying. They would tell me to go find another trash collector then.

Again.....DON'T APOLOGIZE FOR PRE-PAY.
DON'T OFFER DISCOUNTS.
PAYMENT IS DUE BEFORE WE CUT YOUR GRASS.....PERIOD.
that is why i chose to bill ahead instead of behind and when the customer frets about it i tell them i am not bank of america financing homeowners dreams.
if you want to go with the finance plan i suggest you put it on your credit card or go borrow the money from your local bank and work it out with them.

and if the account is not up to date they get no service until it is.
Reply With Quote
  #7  
Old 01-26-2012, 09:53 AM
Hedgemaster Hedgemaster is offline
new member
 
Join Date: Jul 2010
Location: Pittsburgh, PA
Posts: 2,772
Rep Power: 0
Hedgemaster is on a distinguished road
Default

Currently my two options are "Pre-pay", or "at time of service".

I don't offer discounts, I offer options - one or the other.



My mother didn't offer incentives for me to eat my dinner when I was a kid, she gave me two choices: Eat what's in front of you, or go hungry.

Reply With Quote
  #8  
Old 01-26-2012, 10:14 AM
ringahding1's Avatar
ringahding1 ringahding1 is offline
Senior Member
 
Join Date: Mar 2010
Location: Stillwater, MN
Posts: 316
Rep Power: 7
ringahding1 is on a distinguished road
Default

Pre-pay is a good way to target the slow payers or potential non-payers before the growing season ends.

Pre-pay discount would only be offered by us to give the customer an option to capture last year's rates. Other than that I would not offer any other discounts for pre-pay. This is a good way to keep income rolling through the winter season, especially when spring start up $$ is needed.
__________________
08 F250 Ext Cab/04 Chevy 3500
05 F350/04 F350 Diesel/12 Ram 4500 Dump
4 -60 Toro Zmaster/Lesco 48
3 -8'2" Boss V-Plows
1- Hiniker 9'6" V-Plow
20' Enclosed trailer
18' Skid & 16' Open Trailer
2012 - S185 Bobcat


Reply With Quote
  #9  
Old 01-26-2012, 03:48 PM
Steve's Avatar
Steve Steve is offline
Administrator
 
Join Date: May 2003
Posts: 38,067
Rep Power: 10
Steve has disabled reputation
Default

Has anyone looked at the difference in cost between their monthly insurance payments and if they prepaid it for the year? What kind of discounts are you seeing? Could a similar discount % work for lawn care?

Also, is it best to keep the max time to 1 year? Does 3 year lock you into something where you might not want to be performing a certain service that far down the road?
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote
  #10  
Old 01-26-2012, 04:33 PM
TiedemanLLC TiedemanLLC is offline
Senior Member
 
Join Date: Dec 2011
Posts: 226
Rep Power: 5
TiedemanLLC is on a distinguished road
Default

Quote:
Originally Posted by Steve View Post
Has anyone looked at the difference in cost between their monthly insurance payments and if they prepaid it for the year? What kind of discounts are you seeing? Could a similar discount % work for lawn care?

Also, is it best to keep the max time to 1 year? Does 3 year lock you into something where you might not want to be performing a certain service that far down the road?
I was waiting for someone to finally ask this question, thank you. Even though you are getting 3 years of cash pumped into your system is that three years worth of cash actually good for the long haul. It may be a short term gain, but does it actually hurt you?
Reply With Quote
Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Contracts and Payments Liberty Landscaping LLC General Business Discussions 3 04-01-2011 09:31 AM
Dealing with payments?!?!?! Fresh Cut General Talk 16 10-04-2009 10:22 PM
recurring payments All Aspects Landscaping General Business Discussions 14 03-14-2008 05:46 PM
How to make payments Gopher Software Support Archived Question & Answers - Read Only 5 07-06-2006 05:44 AM
Payments off of Statements Gopher Software Support Archived Question & Answers - Read Only 1 07-20-2005 05:43 PM

» Recent Threads
  RatingTitle, Username, & Date Last Post Replies Views
Any successful one man...
WarriorLandscapingCAN
09-26-2016 06:04 AM
Today 07:16 AM
by Chilehead
2 44
What were your top...
WarriorLandscapingCAN
09-13-2016 05:10 PM
09-26-2016 05:43 PM
by Steve
4 369
Enter to win Free...
arthur712
09-25-2016 11:28 AM
09-26-2016 05:41 PM
by Steve
1 45
I have a new show!
Chilehead
09-19-2016 06:50 PM
09-23-2016 05:45 AM
by Chilehead
7 137
First commercial estimate
WarriorLandscapingCAN
09-19-2016 12:42 PM
09-22-2016 05:42 PM
by acrajchel
7 145
Larger projects - Labor...
WarriorLandscapingCAN
09-18-2016 07:38 AM
09-21-2016 06:51 AM
by Chilehead
5 164
I need some business...
Firehouselawn@hotmail.com
07-06-2016 05:42 AM
09-16-2016 01:50 PM
by DLC123
5 615
Is it too late?
Cpadgett
05-28-2016 09:10 AM
09-16-2016 01:35 PM
by DLC123
15 1,327
Not a newbie just...
lwlawn
09-09-2016 02:32 PM
09-16-2016 01:25 PM
by DLC123
2 521
I'm making stupid money...
WarriorLandscapingCAN
08-07-2016 07:07 PM
09-16-2016 01:15 PM
by DLC123
6 1,403
Lawn problem
magiccc
09-14-2016 11:37 AM
09-15-2016 06:14 AM
by Chilehead
2 287
What kind of seed do you...
Bradcook21
09-02-2016 02:58 PM
09-12-2016 07:18 AM
by joshp
4 916
Commercial Flail Mower...
Chickenthief
09-05-2016 04:46 PM
09-09-2016 04:50 PM
by Steve
7 782
Newbie here
paulgrant
09-07-2016 04:52 PM
09-09-2016 12:01 AM
by paulgrant
2 619
Hello, New Member Here,...
Chickenthief
09-05-2016 06:19 PM
09-08-2016 09:35 PM
by Chickenthief
6 742
Pricing fall cleanups?
WarriorLandscapingCAN
09-06-2016 11:17 AM
09-07-2016 04:06 PM
by Steve
3 715
Say Hello !!!
Steve
03-19-2007 11:18 AM
09-06-2016 05:25 PM
by Steve
1,255 443,810
My Invention
biglee
01-11-2015 06:51 PM
08-31-2016 02:47 PM
by Steve
21 3,273
fliers
joshp
08-19-2016 03:23 PM
08-30-2016 07:47 PM
by SC93
11 2,094
fert/lawn programs
joshp
08-28-2016 10:43 AM
08-30-2016 03:27 PM
by acrajchel
2 1,129
» Popular Tags
annual apartment become an entrepreneur best mower be your own boss bidding business business education business help business management complex contractor hacks contracts convention converting customer dethatcher edging entrepreneur entrepreneur education estimate estimates fuel problems fuel pump half moon blade intro introduction jjandm lawncare l.t.rich landscape landscape design landscaping landscaping design company landscaping richmond va landscping lawn lawncare lawnservice lowering grade marketing mulch planting raising grade residential lawn care richmond va richmond virginia lawn care seasonal snowblower snow plowing snow shovel sprayer start a business start a lawn care business start business start up toro timecutter townhome tree tree service video web design websites what to charge work from home z-max z-spray
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 07:48 AM.


(C) 2011 Riggs Publications - Terms of use & Privacy Policy

All times are GMT -5. The time now is 07:48 AM.

(C) 2011 Riggs Publications - Terms of use & Privacy Policy