Maintenance Agreements: How Much Should You Sell Them For?

Want to keep increasing profits and keep your staff busy all year round? Maintenance agreements are your ticket to consistent work and profits!

But a service or maintenance agreement program does much more than simply keeping your staff busy and pockets full. 

In this blog, we’ll cover:

  • Benefits of maintenance agreements
  • Comparing annual vs. monthly charges for agreements
  • How to price maintenance agreements
  • Implementing service software to run your maintenance agreement program

Benefits of Selling Maintenance Agreements

There are many benefits to selling maintenance agreements. Recurring revenue increases the value of your business. And with satisfied regular customers, the relationship builds between customer and company. 

It also improves the stability of cash flow for your business, which is huge. 

82% of businesses that failed cited cash flow problems as a factor in their failure.

Customers under contract have no reason to call your competitors, ensuring loyaltyMaintenance agreements also increase the opportunity to sell add-ons, such as accessories or new equipment. 

But it’s not enough to just sell agreements. Before you sell you’ll want to make sure to price your agreements so you’re making consistent profits.

Traditionally, the bulk of them are sold annually. The industry has been shifting recently. By leveraging modern technology, it’s more advantageous to sell agreements on a month-to-month or quarter-to-quarter basis, particularly during service calls to residential customers.


Annual vs. Monthly or Quarterly 

You’ll have to decide the frequency of your agreements. The frequency of service agreements is largely dependent on the type of customers you serve.

Annual: Yearly or twice-annual maintenance agreements are usually the best option for residential customers. For an annual fee, the maintenance agreement usually covers one to two visits a year to test and maintain your system. 

Quarterly or Monthly: Paying for a visit monthly or quarterly are often good options toward larger commercial service agreements. For these larger jobs, a customer could break up the cost of any large payment to an ongoing agreement.

Pricing Maintenance Agreements

Now, how much should you charge for your agreements? It’s important to know your market. Have an idea what your competitors charge to make sure your prices are within reason.

It’s also essential to never be the business with the lowest price. Customers equate the lowest price in town with the same kind of quality and effort. 

Conversely, you don’t want to have the highest prices either. Customers may suspect that you are trying to pull a fast one on them.

With maintenance agreements, your pricing should cover your costs and desired profit. Any growing service business, especially early on, should avoid losing on any transaction. Here are factors to consider in your cost of providing maintenance:

  • Average time it takes to perform maintenance
  • Average travel time in one direction
  • Number of maintenance visits per year
  • Cost of highest paid field staff
  • Average material cost per visit
  • SPIFF or commission paid for each sale
  • Department overhead rate
  • Desired gross profit margin

The goal is to sell as many maintenance agreements as possible. Of course, the more agreements you sell the difficulty in keeping track of everything increases. That’s where service software comes into play. 

Take Your Service Agreement Game to the Next Level

FieldEdge Service Software can manage and automate your service agreements which saves you time and headaches, all while growing your profits. With FieldEdge service software you will:

  • Know when service agreements are due for renewal, billing, scheduling
  • Send reminders and invoices to customers automatically
  • Utilize dashboards that show you which agreements are set to expire
  • Automatically send scheduled service reminders via phone, text, or email so you spend less time following up

Did you know that you can easily track all your service agreements for your business? Sign up for a FREE demo to explore how FieldEdge can help your maintenance agreements program thrive!

Book a FieldEdge Demo!

Grow Those Maintenance Agreements! 

Now that you know the importance of a solid agreements program, it’s time to use the information provided to increase the number of agreements sold and the efficiency to which they are maintained.

In this post we covered:

  • Benefits of maintenance agreements
  • Annual vs. monthly charges for agreements
  • Pricing maintenance agreements
  • Implementing service software to run your maintenance agreement program

You are now better prepared to go out and grow your maintenance agreements program! 

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