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Two tune-ups at burdened rates plus a 10% member discount cost $184/yr — the classic $199 agreement nets 7.5%, and a real margin starts at $230.
Most shops underprice their maintenance agreements because they count the visits and skip the discount. Two tune-up visits a year at a burdened $37.25/hr plus parts run $153; admin adds $15; and the 10% member repair discount — which members actually use — adds $16 of expected cost against 0.4 repairs a year on a $400 ticket. True cost: $184. The industry-standard $199 agreement nets $14.88, a 7.5% margin that one callback visit erases; a 20% margin requires $230. The agreement's real value is retention and shoulder-season utilization — but that justifies thin margins, never negative ones. This calculator builds the true cost line by line and shows exactly what the discount costs.
HVAC and service shops use it before printing the price sheet: two tune-ups at burdened rates plus the member discount cost $184/yr — the classic $199 agreement nets 7.5%, and one callback erases the year.
Because members use it — that's the point of the agreement from their side. If 40% of member households need a repair in a year at a $400 average ticket, a 10% discount costs you $16 per contract per year in expectation. Skipping it prices the agreement on revenue you'll never collect. The discount does real work — it locks the customer to you for the repair instead of price-shopping, and that loyalty is worth buying — but it's bought with dollars, so it belongs in the cost stack. The framing that keeps agreements profitable: the discount is the retention budget, and like any budget it needs a number, a cap, and a line in the price build-up.
When shoulder-season utilization and retention value are counted honestly — and even then, only thin, never negative. Utilization: a tune-up performed in an idle April week costs the burdened rate on paper but displaces nothing; run a second scenario at the marginal cost of otherwise-idle labor and the agreement's economics brighten. Retention: member households call YOU for the repair (no lead cost) and buy replacements from you at multiples of retail lead cost — a $50/yr subsidy can be rational against $200/yr of avoided marketing and higher close rates. The hard rule: breakage is not a business model. Pricing below true cost while counting on members NOT using the visits is the gym-membership logic that ends in complaints, refunds, and regulators — price so the agreement wins when fully used.
It shortens the payback window to one year, which disciplines everything. Agreement churn runs 15–25% annually in most markets — a quarter of your book won't renew, and acquisition cost (tech time selling it, the sign-up incentive, the first-visit scheduling scramble) lands in year one. An agreement priced to "make it up in year three" is financing someone else's future customer. So: price to cover true cost within year one at a real margin; treat renewals as the profit multiplier they are (renewal cost is near zero — the second year of an agreement is the profitable one); and attack churn operationally — the shops with 90% renewal are the ones who schedule the next visit before the tech leaves the driveway, not the ones with the cheapest plan. This calculator prices year one honestly; your renewal rate decides the rest.