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Refunds

Discussion in 'Business Fundamentals' started by farmertim, Jan 15, 2003.

  1. farmertim

    farmertim Member
    Messages: 95

    I have a situation developing here in NW Wisconsin.
    It has yet to snow this season and the forcast through the first of Feb. is dry as well.
    I plow on yearly flat rates, and there is no mention in the contract of rebates on a dry year.
    The rate is figured on a 11 time plow per year on 20 year average, last year 17, year before 13 year before 7.
    The long term customers I know are cool with it but I added 35 new customers who look like they are going to eat it this year and wonder if there is a rule out there about cutomers retention on flat rate contracts.
    I am thinking of a small discount on those new accounts, but it is a small world and don't want to piss off the old customers??
    We still have 14 weeks of winter snow season left and all I need is to plow 6 times to pull this off for a good standing next year!!
    Any sugestions:(
     
  2. Pelican

    Pelican 2000 Club Member
    Messages: 2,075

    I don't have any experience in seasonal contracts, but my feelings of contracts in general are they should be honored if signed. I wouldn't discount them myself, as you've already mentioned, you'd put your established accounts at risk.
     
  3. MLB

    MLB Senior Member
    Messages: 110

    I think

    you've got 8 more weeks before you need to worry about it. :nono:
     
  4. NoStockBikes!!

    NoStockBikes!! Senior Member
    Messages: 215

    Yeah, forecast, schmorcast. Day before yesterday they were predicting clear and dry, and less than 24 hours later we had a decent portion of central MN got ALMOST enough to plow. 1.5-1.75 inches around here. Plenty of time for snow. They wouldn't be offering to pay you more if it was snowing every other day. Go strictly by the terms of the contracts. Seasonal contracts are a gamble for both parties. The only way to be REALLY fair would be to offer them the option when signing them up. But again, it's a gamble, cuz if it snows a lot, they're taking it in the shorts on a push basis.... Long term it will even out. Call it Snow Insurance.
     
  5. Got Grass?

    Got Grass? Senior Member
    Messages: 641

    Nothing but flate rate contracts here...
    I wouldnt even think about giving a refund for not plowing.
    So this year you may not have to plow at all but what happens next year when you get 7ft of snow? Some years you need to take a loss & make up for it in the years to come.
     
  6. ProSno

    ProSno Senior Member
    Messages: 257

    I would ask John Allen on that one, I think you would get a very straight foward answer. Hows about it John?:drinkup:
     
  7. wyldman

    wyldman Member
    Messages: 3,265

    We do a lot of seasonal,and you don't give discounts or refunds during slow years.You don't bill extra for heavy years do you ?
    Also,if you bend once and give them a break,they expect it all the time.
     
  8. fordman

    fordman Senior Member
    Messages: 327

    I agree stick to your guns. I wouldn't give them a refund or discount if you have a signed contract. You don't control the weather, it's not your fault it's not snowing and if it was snowing I'm sure you would be there to provide the services outlined in your contract. So it's a slow year, like I said not your fault and the winter's not over yet anyway. Your clients are just going to have to learn to take the good with the bad.
     
  9. Got Grass?

    Got Grass? Senior Member
    Messages: 641

    A plowing contract is like an insurance policy.
    You hope you never have a need for it, but when you do it's great to have.

    If you don't get into an accident do they give you a refund?
    I think not!



    :drinkup:
     
  10. Ohiosnow

    Ohiosnow Senior Member
    from Ohio
    Messages: 415

    Never :nono: It's a gamble for both.

    As for what to do -- nothing but sit back & a take it easy :waving: for now.

    If the snow comes then bust butt & show them what they paid for with Great service. ;)
     
  11. farmertim

    farmertim Member
    Messages: 95

    Thanks Guys

    I appreciate the feed back, I have been throwing around those very responses if the phone begins to ring..:waving:
     
  12. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Seasonal contracts remind me of my situation last year when I bought heating oil for the house. I purchased 950 gallons at a set price - a little lower than the going rate at that time. That was the first year I know of that the price of heating oil went DOWN during the winter. I wound up "buying" oil all winter for more than if I'd just bought it as I used it. The owner of the oil company didn't offer any "refund".

    Ironically, I went in this year to buy a winter's worth. He offered me a price that was higher, by a quarter a gallon, than the going rate. His reasoning was that he was offering me protection against a drastic price increase. I declined. My reasoning was that I'd rather have access to that money for the season (well over $1000) and take my chances.

    It's like insurance and the casino. You don't get a refund of insurance that's not used and the casino isn't about to return your money just cause you lost a pile. You take chance and you win, lose or break even but don't come crying either way.
     
  13. Earthscapes

    Earthscapes Senior Member
    from WNY
    Messages: 577

    The first line in my contract (after the money part) is
    "There shall be no deduction,rebate and or offset to the total amount to be paid regardless of the total snowfall accumulation."

    I was gonna add something else but Got Grass? took care of that for me.
    "A plowing contract is like an insurance policy You hope you never have a need for it, but when you do it's great to have"

    I have commcerial cleints that tell me they would pay triple if it wouldn't snow....
     
  14. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    I personally wouldn't give a refund. But I have felt guilty in year's past so I offered a Landscape coupon as a cross promotion and billed it as a way of thanking them for their business in the past winter. I made sure the coupon meant I was going to get paid for my landscape work, so I was only discounting, not giving anything away. I defintely would not send a check back to them as a refund. The other option might be to give them a coupon offering $xx.xx off of next year's service if they sign up again. $10 or $15 perhaps.
     
  15. SCFALL

    SCFALL Member
    Messages: 47

    no way

    Look at it this way,If it snowed everyday for the rest of the season would they feel guilty, or offer to pay you more, I THINK NOT! so I wouldnt think twice about it. Thats my 2 cents Scott:drinkup:
     
  16. chris k

    chris k Senior Member
    Messages: 204

    No refunds. They signed a contract for the season. If you give them a refund tis time they will expect it evry year you don't get much snow. Besides are they going to pay you more if you go over the 11 storm mark. I DOUBT IT!!!
    Here's a thought...instead of a season contract, try getting them to prepay for say 5 storms then mabye a discounted rate after that. I have a friend that did this and it works for him. Good Luck.
     
  17. drobson

    drobson Senior Member
    Messages: 112

    I don't have seasonal contracts; although I do offer them, just not any current customers that wanted it that way. I would not give a refund, as was already stated, they would not pay extra if they thought you got more snow than the average.

    I may think about having a stipulation in the contracts to offer a discount on whatever your "other" season profession is if there is under a certain amount of snow. This would give them something back and possibly get you more business in the non-winter months. For me that would be Landscaping....
     
  18. Grshppr

    Grshppr Senior Member
    Messages: 268

    I wouldn't refund anything. Who knows maybe next year you'll have 2 X the amount of snow. Then you'll wish you didn't give a refund. Most people that go for season contracts know it is like "insurance". They also like it because they know the payments beforehand...no surprises. If they complain ask them if it had snowed lots would they have given you extra?
     
  19. ebaron

    ebaron Senior Member
    Messages: 110

    Top 10 reasons why there cannot be a refund

    1. You cannot get a refund from your insurance company for the season.
    2. All the maintenance put into your equipment will not be refunded to you.
    3. Your equipment will not appreciate in value since it is sitting there.
    4. You still had a bust your butt to get all the snow equipment ready for the season, (it does look nice sitting there though!)
    5. Your property taxes will probably not go down, even though the town did little plowing.
    6. You cannot disconnect yur phone to save $ till next year.
    7. Your accountant will not work for free this year.
    8. You'll still probably have to change the oil after this boring winter.
    9. The bank will not give you 0% financing simply because of no snowfall.
    AND NUMBER TEN
    10. You're stuck in WI until at least April, snow or no snow, and you CAN'T go to Disneyworld.
     
  20. farmertim

    farmertim Member
    Messages: 95

    Hey Ed
    Amen
    I just needed to hear from others that my thoughts were not being self defeating!!!

    Thanks:waving:
    Tim