What's a realistic service agreement adoption rate?

Industry baseline: 20-30% of active customers. Top-performing shops hit 40-50% through aggressive selling at every install + repair touchpoint. Below 15% means you're not actively selling agreements at the point of sale.

How much should I charge for a service agreement?

2026 benchmarks: $185-$285/year for basic single-system (2 visits + priority service). $349-$485 for premium single-system (adds 15% off repairs + no service-call fee). $485-$785 for multi-system households.

Why do agreements raise business exit value 3-5x?

Buyers pay a premium for predictable, locked-in recurring revenue. A $300K agreement book typically values at $900K-$1.5M on top of EBITDA. Shops without agreements sell at flat EBITDA multiples — agreement-heavy shops command much higher.

Service Agreement ROI Calculator

Calculate the revenue, gross margin, and 5-year LTV of launching a service-agreement program. Built for HVAC, plumbing, and electrical service contractors — the single highest-leverage decision in residential service trades.

Why this matters more than any other calculation

Service agreements are the single most valuable asset on an HVAC/plumbing/electrical balance sheet. They smooth seasonal revenue, create automatic repair pipelines, and 3-5x your business's exit value. A shop with 30% agreement penetration sells for substantially more than the same shop without one.

Active customersCustomers you've served in the last 24 monthsAdoption rate (%)Industry baseline: 20-30%. Top shops hit 40-50%Agreement price / yr ($)2026 benchmarks: $185-$485 single-systemVisits per yearTypical: 2 (spring + fall tune-ups)Cost per visit ($)Burdened labor + truck cost (not full overhead)Service call fee waived ($)Opportunity cost — fees you would have chargedAvg repair lead value ($)What an average repair from an agreement holder closes atAnnual renewal rate (%)Top shops: 90%+. Below 75% = quality problem

Year-1 program results

Subscribers

80 customers

Annual subscription revenue

$22,800

Repair-lead revenue (attached)

35% of subscribers generate at least one repair/yr

$18,200

Visit + foregone-fee cost

($12,360)

Net contribution

$28,640

Contribution margin

Healthy: 35-55%

125.6%

5-year compounding value

LTV per subscriber

$2,387

Program lifetime value

$190,933

Business exit premium (3x recurring)

What a buyer would pay for the recurring revenue stream alone

$68,400

Software that runs this for you

Running 100+ recurring agreements manually is impossible. You need an FSM that handles auto-billing, visit scheduling, and renewal reminders.

• Housecall Pro — solid for 1-15 agreement-active techs
• FieldEdge — mature service-agreement module for HVAC/plumbing shops on QuickBooks Desktop
• ServiceTitan — best-in-class at $1.5M+ revenue, justifies its cost with agreement workflow alone

Take the 2-min software quiz →

Did this help?

How to Use This Calculator

Enter your active customer count, the adoption rate you expect (industry baseline: 20-30%), and your agreement pricing. The calculator outputs year-1 revenue, contribution margin, 5-year program LTV, and business-exit acquisition premium. Tune the renewal rate based on your call-back discipline — top shops hit 90%+.

Formula Used

Subscribers = Customers × Adoption. Year-1 Revenue = Subscribers × Agreement Price. Contribution = Revenue + Repair-Lead Value − Visit Cost − Foregone Service Fees. LTV per Subscriber = Contribution / (1 − Renewal Rate). Exit Premium = Annual Recurring × 3x EBITDA multiple.

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Disclaimer

This calculator is for estimation purposes only. Results may vary based on local conditions, materials, and building codes. Always consult a licensed professional before making decisions based on these calculations. MyContractorTools is not responsible for any errors or omissions.