Monthly package pricing - residential

In the Competition thread, a handful of folks were discussing selling monthly payments for annual packages. Package deals, as I’ll refer to them since I don’t exactly know what to call it so we have a common phrase to unify the information. If anyone thinks of anything let me know.

Check out this post over there if you have no idea what I’m talking about. I probably don’t either.

I’m kinda intrigued by the idea of recurring revenue so I tried to run the numbers and I’m missing something in the math I think.

I get that July customers will pay into the next year, but looking at rolling 12 month periods and it seems like it would take an incredibly long time to see the financial benefit of this.

Can we talk about this? Because I’d love to have recurring revenue in Dec, Jan, Feb on top of the money I squirrel away throughout the year, but why is this being promoted by Josh Latimer as such a financial windfall if you have to worry about non payments and years to see a payback.

Also, if you see a problem with my numbers I’m sure I’m missing something so hit me over the head with it.

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I think it’s the constant cash flow is why he promotes it. I agree though, it doesn’t make much sense.

If you were a full service window cleaning company as well I think the packages/subscriptions start to make more sense. As you can sell people on getting there windows done 3 x a year

Spring- gutter clean out, roof wash, house wash, driveway cleaning, in/out windows

Middle of Summer- Exterior windows only

Fall- gutter clean out, house wash, in/out windows

You’d have to live in very wealthy area to sell a package like that though…

Anything less and it definitely not worth it.

The constant cash flow is nice, I do net 30 on all my invoices just because I like the constant flow coming in.

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That’s an idea I like starting in October and November. I usually have good demand right up to Thanksgiving before it falls of a cliff.

In your example above, the math isn’t working out because in line A your looking at $39/mo x 20 clients x 12 months. So that is $9360 a year for ONLY 20 clients.

However, in line D your looking at a one time wash of $468 x 20 clients each month. So that is $112,320 but 240 clients.

Your not taking into account adding new accounts each month for the monthly plan. If you divide the $9360 that is 240 “payments” but still only the same 20 clients.

Make sense?

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Makes total sense. Thanks!!

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I’m no mathematician, but I ran the numbers. And if you look at a 12 month span (the first 12 months), its still not going to add up the same as looking at the $468 x 20 a month x 12 months. It looks like its roughly half of that. Somewhere in the neighborhood of $60k. But you have to keep in mind that your additional 20 clients your adding each month will take longer than that first 12 month span to recoup your money. So I would think if your wanting to seriously look at this option, you might want to run the numbers for a few years to see if it makes sense. Anyway, hope that helps.

Your still assuming that your customers pay on time or at all. Again most lawn companies will tell you that’s one of there biggest problems.

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I know. It’s very optimistic. I think I’m gonna go ahead and do Christmas lights this year since I’m trying to hire at least one person prior to a big project in September/October and I want to keep him busy. I’m trying to find a reason to try the “subscription” model for the Christmas lights, but I just can’t other than recurring revenue.

The best thing I know of to get paid a lot of “recurring” revenue is don’t stop marketing. Lol

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I think pushing subscription services makes sense if:

  • your customer acquisition cost is high (either monetarily or timewise).
  • Or you don’t know how to budget for the highs and lows of your income.
  • Or it allows you to make more money overall for less labor time.

Other than that, I think the concept is a bit overhyped.

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Exactly. The only thing I could really think of otherwise is if I sold it as a single payment for service or make more money over the course of a year and account for nonpayments, but I feel like I’d have to charge 30%-40% more over the course of the year on monthly payments to feel comfortable taking the risk.

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I think you’re way underestimating the monthly fee. Figure an upper midsized house cost with a house wash and exterior window cleaning, siding treatment if vinyl or painted, driveway, mid season pollen rinse, and/or window cleaning, a 6 month driveway post treatment only. All that could easily add up to $1000. Divide by 12 and add 10-20% for monthly. Heck all my neighbors pay $75 - $100 each treatment for 7 yard sprayings per year.

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I got a call to go bid cleaning a brand new long term care facility today and pitched the monthly regular cleaning plans. This place would need us there 2 days per month. If all goes well with this and another one I’m looking at around $8k in contractual for 6 days of work each month.

I think I’ve sold myself on that route over residential maintenance plans.

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