Service-agreement economics is the arithmetic behind your maintenance plan: what a member pays, what they cost to serve, how long they stay and what other work they bring. A plan that looks popular can still be a quiet discount program if the visit cost has crept up and nobody re-priced.
We are not an HVAC contractor and do not run visits for you. We read your agreement list, visit records and invoices, and turn them into a few numbers you can manage.
The four numbers that decide whether a plan pays
- Cost to serve per member per year. Visits included, times the true cost of a visit.
- Renewal rate. The share of members due to renew who did, measured monthly.
- Member spend. Repair, add-on and replacement revenue from members, compared with similar non-member customers.
- Member lifetime. How many seasons a typical member stays, which follows from the renewal rate.
A worked example you can check
Suppose your plan costs $219 a year and includes two visits, one heating and one cooling.
- A visit takes 1.25 hours on site and 0.5 hours of drive time, so 1.75 paid hours.
- The technician's burdened wage is $52 an hour, so labour is $91 a visit.
- Filters and consumables add $14.
- Cost per visit is $105, and two visits cost $210.
The plan leaves $9 a year before any overhead. That is not a reason to scrap it; it is a reason to know that the plan's value lives entirely in what comes next. If members spend an extra $380 a year on repairs at 58% margin, they contribute about $220 of gross profit beyond the plan itself. If they renew at 80%, a typical member stays about five seasons.
Change one input and the picture shifts. If drive time doubles because members are spread across too wide an area, cost per visit rises to about $131 and the plan loses $43 a year per member before follow-on work. Service zone matters as much as price.
What is included
- A visit-cost model using your own wage, burden, drive time and materials, reviewed with you line by line.
- A renewal and churn tracker by month, split by plan type and by how members joined.
- A member-versus-non-member comparison of repair, add-on and replacement spend over the last two or three years.
- A plan-price check at least once a year, before your renewal letters go out.
- Dashboard lines for active members, renewals due, renewals won and visits completed, on your monthly owner dashboard.
Who it is for
Companies with roughly 150 or more active members get the most from this, because the numbers become stable enough to manage. Smaller plans still benefit from the visit-cost model, which takes an afternoon and often changes the plan price on its own.
Timeline
The visit-cost model and plan-price check usually take two to three weeks once we have the data. Renewal and member-spend tracking start the month after and run monthly. All timing is confirmed in writing.
How results are measured
We report cost per visit, renewal rate, active members and member spend each month. Success is a plan you price on purpose and a renewal rate you can see moving, not a promise of a particular figure.
Common mistakes
- Leaving drive time out of visit cost. It is often a third of the paid time.
- Booking all visits in two spring and fall weeks. Crowded visits push overtime and delay paying work. Spreading them into shoulder weeks is cheaper.
- Counting sign-ups but not renewals. A plan that adds 200 members and loses 180 is not growing.
- Using the plan as a price cut. Discounts on repairs for members are a cost. Track them as one.
To see how agreements smooth seasonal cash, read the cash-flow calendar guide. For how plan visits affect technician productivity, see revenue per technician-hour. When you are ready, contact us with your current member count and plan price.
Frequently asked questions
How do I know if my plan price is too low?
Cost one member visit honestly, including drive time, filters and the technician's burdened wage, and multiply by the visits the plan includes. If that total is close to the plan price, the plan relies entirely on follow-on work to pay.
What renewal rate should I aim for?
We set the target from your own history rather than a published benchmark. What matters most is the trend and the reasons members leave, which we track separately for auto-renewing and manually renewed plans.
How should agreement revenue be recorded in my books?
That is a question for your own CPA, because it depends on how and when plans are billed. We track the operating side: members, visits, renewals and what members spend.
Can you help sell more agreements?
Yes, through the HVAC.Agency marketing plans if you want campaigns run. On this site the focus is the economics, so you know what each new member is worth before you spend money acquiring one.