Demand service is unpredictable. The phones ring in the first heat wave and the first cold snap, and go quiet in between. A maintenance agreement, also called a service plan or a club membership, smooths that out. The customer pays a regular fee for scheduled tune-ups and a few benefits, and the business gains planned work and a customer who calls it first.
What an agreement usually includes
- One or two scheduled maintenance visits a year
- Priority scheduling when something breaks
- A discount on repairs
- Reduced or waived trip charges
- Reminders when a visit is due
What the business gains
- Recurring revenue. Monthly payments arrive whether or not the phone rings.
- Work in slow periods. Tune-ups can be scheduled for spring and fall.
- Customer retention. A customer on a plan is far less likely to call a competitor.
- Repair and replacement work. Regular visits find problems early, and the customer already trusts you.
What the customer gains
Equipment that is cleaned and checked tends to fail less often and at less inconvenient times. The customer also knows who to call and can expect to be seen sooner. Be honest about this in your sales material. Maintenance reduces the risk of breakdowns. It does not guarantee there will be none.
How to price an agreement from your costs
Begin with what one maintenance visit costs you:
- Labor: 1 hour on site plus 0.75 hours of travel, at $45 loaded cost = $78.75
- Vehicle: $18
- Materials, such as a filter and cleaner: $12
- Overhead per visit: $35
Cost per visit: $143.75. Two visits a year cost $287.50.
For a 20 percent margin, divide by 0.80: $287.50 ÷ 0.80 = $359.38 a year, which is about $30 a month.
If the plan also gives a repair discount or waives trip charges, those have a cost too, and it needs to be covered by the price or by the extra work the plan brings in. Use the service call minimum price calculator to check your cost per visit.
The discount trap
Many agreements are priced below cost on the theory that repairs will make up the difference. Sometimes they do. Measure it before you rely on it. Track the repair and replacement revenue that comes from agreement customers, and compare the total with what the visits cost you.
What to put in writing
- What each visit includes, as a checklist
- How many visits there are and when
- What is not covered, such as parts and repairs
- The term, the renewal terms and how to cancel
- How and when payment is taken
Many states have laws on automatically renewing contracts and on service contracts generally. Check the rules where you operate, and consider having a lawyer review your agreement.
Running it well
- Schedule visits before they are due. A plan customer who has to chase you for a tune-up will not renew.
- Use the same checklist on every visit and leave a copy with the customer.
- Record readings each time. A trend across visits is useful evidence when a part is wearing out.
- Send technicians who explain well. See how to explain a repair to a customer.
Numbers to track
- Active agreements
- Renewal rate: agreements renewed ÷ agreements that came up for renewal
- Visits completed on time
- Revenue per agreement customer per year, including repairs
Getting started
- Define one simple plan before adding tiers.
- Price it from your cost per visit.
- Offer it on every service call.
- Schedule the first visit at the time of sale.
- Review renewals and costs after the first year.
A maintenance plan is also one of the more reliable ways to raise your average ticket without pressure selling.
Related guides
- Spiffs and Bonuses for Technicians: How They Work and How They Affect Overtime
- Warranty Work: How to Track It and Stop It Draining Profit
- How to Reduce Windshield Time in a Service Business
Three Excel workbooks that take you from what a technician costs to what to charge, then show whether each job made money.
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