How To Increase the Value of Your Home-Service Business

Posted on May 22, 2020

Most small home-service companies rely on a steady stream of calls from customers in order to stay in operation. What happens if your phone stops ringing? Your business and livelihood could be at risk. But what if there was a way to put some of your income on autopilot, allowing your company to weather even the worst of off-seasons? That’s the type of effect recurring service agreements can have for businesses that make house calls.

It costs time and money to obtain new business. In fact, getting new customers is one of the most difficult aspects of running a home-service business. According to, “acquiring a new customer can cost five times more than retaining an existing customer. Increasing customer retention by 5% can increase profits from 25-95%.”

The “best” customers are repeat customers, right? You think if you do a great job and have satisfied customers they will come back. Maybe they will, and maybe they won’t. How can you ensure they return?

There are a multitude of factors that come into play when someone is shopping for a home-service contractor. It could be the service that is the most affordable at that point in time gets the nod. It may be the service that answers the phone call or email first. It may be the one who can schedule the work immediately. And, these could be your business. But, again, at any given time they may not be you. The good news is you can turn the situation around and ensure that you have repetitive customers by using service maintenance agreements.

The key to a sustainable HVAC business is recurring revenue, both from customers you already have and new ones who hire you in the future. So, ensuring your current customers keep coming back to you consistently, through maintenance agreements, and continuing to provide great value shows your thanks for their loyalty.

What is a recurring service maintenance agreement?

A service maintenance agreement is a contract between your business and a customer who agrees to pay a set monthly fee for ongoing maintenance and preventative care. With the service agreement, you establish benefits for customers so they are motivated to get one. A typical agreement includes checkups at regular periods during the year, usually twice a year, and typically provides discounted rates for other services and anything that needs to be replaced. Additionally, customers in emergency situations receive priority.

Here are some important aspects of recurring service agreements:

  • Service agreements are a great way to inspire customer loyalty and increase the value of customers over a long time.
  • Service agreements can be tailored to individual clients so that the agreement covers aspects of your service that matter most to the customer.
  • Service agreements protect both you and your customers by guaranteeing the quality of your service and clearly detailing the clients’ financial obligations.
  • Service agreements provide convenience for your customers by allowing them to pay a fixed cost for your services and reap the benefits discussed above.

How can your business integrate the recurring service agreement?

Depending on the industry in which you work, the terms of your recurring service agreement could vary from another type of home-service company. For HVAC, electrical, plumbing, and pest control businesses, the role of recurring service agreements is similar to that of a warranty where your customers are purchasing an assurance you will take care of their needs. The do so by making either monthly payments or paying a lump sum for a specific period of term for the agreement, for example one or two years.

How do recurring service maintenance agreements increase the value of your business?

The value of your business is based on the revenue that is brought in. If you envision selling your business at some point, the evergreen income of service maintenance agreements are quantifiable and make your company more attractive than one that doesn’t have these contracts in place.

There is no question that service maintenance agreements bring in more revenue, as compared to project revenue, and secure predictable future income. By enlisting customers for a long-term contract, you can ensure that you have recurring revenue for the duration of the contract. This type of recurring income is stable and reliable. And, makes your business more valuable.

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