Why Your Home Services Business Should Offer Yearly Home Maintenance Contracts

If your home services business depends entirely on major repair jobs or installations, you may be missing out on a source of steady income. You can increase your revenues by providing yearly home maintenance contracts and avoid the “feast or famine” cycle with guaranteed billable work.

In this article, we’ll explain what a yearly home maintenance contract is and how you can start providing them to increase your revenue today.

What Is a Yearly Home Maintenance Contract?

In a home maintenance contract, you agree to make regular visits to the home to provide routine maintenance for HVAC, electrical, plumbing, carpentry and other types of structural concerns. Customers get continuous inspection and repair for home issues for a monthly, semi-annual or annual fee. You may offer your services at a discount in exchange for the yearly contract, and you can be their quick responder in the event of emergencies.

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How You Benefit as a Home Services Provider

A yearly home maintenance contract not only provides benefits to the consumer, but to you as the business owner. Here are some benefits you can expect.

Steady Income

Your revenues don’t fluctuate with the seasons or disasters. You don’t have as many emergency phone calls that can cost you extra for temp workers and overnight shipping for parts and supplies while causing you to postpone a job you are already working on.

More Contact Opportunities With Customers

Your brand and reputation become more valuable each time you interact with a customer. You provide savings and comfort through preventive maintenance, and this goodwill can help you keep clients while acquiring others through word of mouth.

Increased Work

Maintenance and inspections can uncover more severe issues that are not covered in the annual contract (make sure to specify). You will also be the first person the customer calls for installations and remodeling. This “pull-through work” can amount to $1 to $3 in additional income per dollar spent on maintenance.

Better Valuation of Your Business

It can be challenging to determine the value of a home services business to sell it or apply for loans. Your contract base amount determines the value of your business. For example, if you can establish an annual contract base of $500,000, you can assume you will make $2 for each contracted dollar, which equates to a potential income of $1 million. This is the figure you can use to determine how much your business is worth.

How to Structure Your Home-Services Agreements

Your agreements can differ based on services and offerings but should all include the details listed below.

Outlined Inspection

Your agreements must be based on a complete inspection of the customer’s property, with notes about the current condition and potential problems. Put these in writing as a supplement to your agreements.

Coverage Time Period

State the period for the contract. Commonly, customers pay for an annual contract, but if you want to let someone try out your service, you can offer a month-to-month agreement.

Services Covered

It’s important to specify what is covered. Your idea of “routine” maintenance and repair may differ from the customer’s ideas, so spell it out. What constitutes a major job that will not be covered by the contract?


Set a sustainable price. Look at your labor and materials costs for the types of work covered in the agreement and provide a reasonable markup for your profit.

Renewal Policy

State what the renewal policy is in clear terms. If you offer automatic renewals, set up a system to remind customers the renewal is coming up. If you have to resell the agreement each year, keep records showing how well the contract performed so you can tell your customers how they benefited.

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How to Manage Your Agreements

Now that you have an agreement, it’s just as important to manage them efficiently and accurately.

Create a record (database) of each item that will be covered in the contract. This should include serial numbers, sizes for all replacement parts, the tasks you anticipate performing, a checklist of inspection items, the location, the inspection schedule and projected hours and materials. Regarding labor costs, list an amount for hiring temporary employees for peak periods.

Be sure to track your actual costs to compare with your estimated costs. Always make notes about adjustments that need to be made when the contract is renewed.

How to Market Your Agreements

The best time to offer an agreement is after a major repair or installation. Explain the potential savings of having an annual contract. After crunching your numbers, you may provide maintenance and repair services at 50% to 75% discounts.

In cases where you haven’t done a major job for the customer, you can estimate the dollars they could save with an agreement. It is common to set aside 4% of the home’s value for maintenance. If you can beat that figure, you’ve got a sale.

It’s easier to sell low-cost service agreements than to bid on major repairs. Homeowners will find it attractive to spend a little to save a lot.

Wrapping Up

Home services maintenance agreements should be viewed as the lifeblood of your business. They can double your income, smooth out the challenges of seasonal workflows and allow you to plan your labor and materials costs far in advance. Get started with these easy-to-implement tips today.

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