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Ethics of continuous contracts?

Discussion in 'Business Fundamentals' started by starspangled6.0, Nov 12, 2014.

  1. starspangled6.0

    starspangled6.0 Senior Member
    Messages: 270

    A couple outfits around here use continuous contracts, meaning that they will continue year-round service until they're told not to by the client. We just use work orders for each individual landscaping job, and then basically a separate 6-month contract for mowing and plowing. Thoughts on the ethics of automatically renewing clients? I think it's kinda shady, myself...
  2. seville009

    seville009 Senior Member
    from CNY
    Messages: 878

    Presumably either party can cancel with proper notice (ie: 30 days) or for just cause (non-performance or non-payment). Nothing really wrong with them. Nobody can force either party to sign it.
  3. starspangled6.0

    starspangled6.0 Senior Member
    Messages: 270

    Correct... I just think of it through the lens of a consumer: it appears to me that you're betting on them forgetting to either sign up again or cancel the contract. Instead of showing them that they should choose to have you do a, b, and c services, now the burden is on them to de-select the options in the contract, and to cancel which ones they don't want. I always hate that when a vendor tries to pull that on me. Just my $0.02.
  4. LapeerLandscape

    LapeerLandscape 2000 Club Member
    Messages: 2,247

    I don't care for the auto renew and good for a year type contract, waste management is good for that but we do have a couple clients that want one price every month. That includes spring and fall clean ups, lawn care, weed and fert and snow removal. Again some customers request it that way so they can budget money better and either one can be released at anytime.
  5. andersman02

    andersman02 Senior Member
    Messages: 756

    ALL of our fert/wc customer are automatically renew each year unless we cancel them in the system. They automatically get the same amounts of treatments as the previous year. We just sent out next seasons renewal letters that state, in large letters at the top, "XXX is a continuing service and will renew each year unless canceled" or something like that, it also says this on all of our invoices. they can send the bottom half if they want to add aeration or seeding as there are prices for that.

    Getting away from the subject I know but for any other services we send out proposals at the beginning of the season. For residential I think it could work, commercial it may not be a bad idea to send contracts and get in touch as there usually is alot of money on the line.
  6. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    whats unethical about securing work year after year?

    why the need to reup every year?

    I have a customer I've had for over 15years.
    we have told each other that i will perform the work unless they fire me or I quit.

    you can still go and put in a bid, many do, every year.

    they didn't even want a new contract signed when I increased my rates.
    they just did it.

    If I need to charge more for a project they just want to know
    and then they pay...

    you have to take care of customers like these..
    Last edited: Nov 12, 2014
  7. Snow tracker

    Snow tracker Senior Member
    Messages: 137

    I've had clients like this for years. In the last billing of the year I mention service for next year. I stop by each site if the fall and piss on my tree. I don't want to put the idea in there head that someone might do it cheaper:nono: bidding can be like going to a auction the winner is the biggest looser:eek:

    Clients like these come from always doing a quality job. What's unethical about that????
  8. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,993

    No reason not to do that. My plow contract has a fixed price increase and auto renewal unless otherwise notified.

    My snow removal customers seem to like it. Most of them are HOA volunteers and they like not having to deal with pricing or finding a service provider, I simply send them a short letter yearly reminding them of everybody's responsibilities and a copy of that year's price schedule reflecting the already agreed price increases. All they have to do is go to the meeting say "I have talked to Basher and everything is good to go" and they're finished no getting approval, discussion, arguments, etc because it was already settled years ago. Deletes yearly price discussions and as long as you have fair prices (not cheap, FAIR,) and provide excellent service the customer rarely if ever shops the contract.

    The lots hesitated the first time but when I pointed out that MY price increase are also restricted at a fixed 2.5% annually they came right around.

    Does that effect my profit % if my costs ( fuel, salt, insurance, etc) increase at a greater rate? Perhaps for a year at most because I have the right to not renew automatically also. I need to send them a new contract if I want to change terms, verbiage, pricing beyond 2.5%, service perimeters, etc.

    I have the same type contract with Waste management, my weld gas supplier, my bottled water supplier, and a few others. Not all of them include auto mark ups and I need to notify them 60 days before canceling contract. In return I get fixed pricing and increases. If they do their job correctly I don't have to spend time thinking about them. It sure beats having to deal with a sales guy every year.
    Last edited: Nov 12, 2014
  9. 04hd

    04hd Senior Member
    from WI
    Messages: 170

    I agree with this 100%. The 3 places I plow and mow I have had for some time now and they are very easy going and quick paying. Therefore I do an extra good job with cleaning up snow/leaves or anything they want. Good business is take care of the good and cut away the bad. (at least my thought)
  10. BRL1

    BRL1 Senior Member
    from Wyoming
    Messages: 666

    Exactly what I do. Works good on my end rather than sending out 600ish contracts and having them call and ask what does this mean or that include.
  11. allagashpm

    allagashpm Senior Member
    Messages: 797

    I don't think it is unethical. I feel like most of my customers don't want to deal with it or worry about it. They are happy with my work and have no reason to change. We communicate but it is just like see you in the spring or see you when it starts snowing! Unless there is a problem I will work for them unless told otherwise. Obviously a bigger job will require authorization but basic maintenance is just done and billed.
  12. MSS Mow

    MSS Mow Senior Member
    from Maine
    Messages: 983

    Absolutely correct!!!

    I see ZERO ethical issues with continuous contracts. It means your customer is happy with the work you are performing and trusts you to continue. I've got several of these and it's great. There is no wondering every season whether you've got the work or not.

    And yes, you definitely have to take care of customers like these!!
  13. ponyboy

    ponyboy PlowSite.com Addict
    Messages: 1,104

    It also helps keep my costs down
    Look at the time it takes to write up new contracts send them out wait for a response then call those that don't respond
    28 years later been doing it this way for over 15 of them
  14. starspangled6.0

    starspangled6.0 Senior Member
    Messages: 270

    Ok, 2 questions:

    What percentage of your clients are this way? The competitors I was referencing made it seem like they had almost all of their clients sign the contract with the continuous language in it, and combined, they were probably serving 3-400 clients a year.

    Lastly, how many of you used to send out contracts with every seasonal change, and then switched?
  15. ponyboy

    ponyboy PlowSite.com Addict
    Messages: 1,104

    I only send out a reminder at end of year saying happy holidays see you next year
    All my prices for everything are on contract already
  16. starspangled6.0

    starspangled6.0 Senior Member
    Messages: 270

    And are your clients using you for all 4 seasons of work (Cleanups, mowing, plowing)?

    The way the other two guys had it set up, to my knowledge, was that they would send a contract with the options to check for mowing, cleanups, fertilizing, and plowing, and the only way out was to give notification, otherwise they'd continue with service visits.
  17. ponyboy

    ponyboy PlowSite.com Addict
    Messages: 1,104

    My lawns I only offer full service
    We do everything or nothing
    And then my snow I keep separate and I'm sorry only residentals are auto renew
    My commercial work are 3-5 year contracts no single year contracts with 4% increase yearly on 3 year contract if they choose 5 year then 0% for final 2 year that is there incentive to sign 5 year deal
  18. starspangled6.0

    starspangled6.0 Senior Member
    Messages: 270

    OK, thanks for the info.
  19. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    There are many ways for them to get out, if they choose.
    What is wrong with continuing service until they fire you?

    Why does this bug you?
    Do you feel left out, slighted?
  20. ponyboy

    ponyboy PlowSite.com Addict
    Messages: 1,104

    Yes there are always ways out but if you do leave the contract early it could be responsible for more money that's why I list all my prices included so if they stop a landscape contract early you're still responsible for all services performed up till that date