A preventive-maintenance agreement book is the closest thing a commercial mechanical contractor has to a subscription business. It pays technicians in slow construction months, it brings repair and retrofit work, and it's often the part of the company a buyer values most. Yet many firms can't say how big their book is, how fast it's growing, or why agreements leave. This guide gives you the four numbers that matter and shows how to work with them.
Read it with your own agreement list open beside you; every example here is hypothetical, and your figures are the ones that count.
The four numbers
The direct answer: annual recurring value (ARV) changes each year by what you add minus what you lose.
- Agreements in force at the start of the year, and their total annual value
- New agreements signed in the year, from turnover and from outreach
- Renewal rate: agreements renewed ÷ agreements due for renewal
- Average agreement value, and whether it's rising or falling
From those:
ARV at year end = ARV at start + value of new agreements − value of lost agreements ± changes in price or scope
Put that in a spreadsheet with one row per agreement: building, owner or property manager, start date, renewal date, annual value, systems covered, and status. That single sheet is the foundation for everything else.
Worked example: a typical-looking book
Here's a hypothetical firm, with numbers chosen to be easy to follow.
- 50 agreements at the start of the year, averaging $6,000: ARV $300,000
- 45 due for renewal in the year; 36 renew (80%), 9 lost: −$54,000
- 25 projects closed; 5 owners sign an agreement at turnover (20%): +$30,000
- 4 agreements won through outreach to property managers: +$24,000
Year-end ARV: $300,000 − $54,000 + $30,000 + $24,000 = $300,000. A busy year, and the book didn't grow.
Lever 1: renewal rate
Lift renewals from 80% to 90%, and the firm loses 4.5 agreements' worth instead of 9 (call it $27,000 instead of $54,000). Year-end ARV: $327,000. That's 9% growth from keeping customers you already had.
Lever 2: turnover conversion
Lift turnover conversion from 20% to 40% of 25 closed projects: 10 agreements instead of 5, so $60,000 instead of $30,000. Year-end ARV, with the renewal improvement too: $357,000.
Lever 3: outreach
Outreach is the slowest and most expensive lever, because new buildings usually have an existing provider. Doubling outreach wins from 4 to 8 adds $24,000. Worth doing, but only after the first two levers.
Lever 4: average value
Raising scope or price changes value across the book, but it also affects renewal. Model it carefully with your service manager; it's a pricing decision more than a marketing one.
The order matters. In this example, renewals and turnover conversion offer the cheapest growth, so fix those before spending money on prospecting.
Fixing renewals
Agreements rarely lapse because of a single bad visit. More often, nobody called before the renewal date, the report format didn't suit the facility manager, or a new property manager arrived and didn't know who you were.
A renewal routine that works:
- 90 days out: a short review of the year: visits completed, issues found, recommended work. Sent to the decision-maker, not only the site contact.
- 60 days out: a call or meeting to discuss scope changes.
- 30 days out: renewal paperwork, with any changes stated plainly.
- Any time a contact changes: an introduction to the new person within two weeks.
Track why agreements are lost, in one word if possible: price, scope, service, contact change, building sold, procurement. After a year, the pattern tells you what to fix.
Fixing turnover conversion
The strongest moment to offer an agreement is before the final walk-through, while the owner still thinks of your firm as the one that knows the building. That means the offer has to be ready before the PM needs it.
A turnover kit:
- a one-page agreement offer for that building type, with the scope in plain language
- a draft task list built from the installed equipment, with placeholders such as [Building], [Equipment list] and [Visit frequency]
- a price prepared by your service manager
- a named service contact for the owner
- a follow-up date set in your calendar before you leave site
Then measure it: agreements offered, agreements signed, by PM and by sector. If one PM converts 50% and another 10%, you've found your training priority.
Outreach to new buildings
When you do prospect, target buildings where you have an advantage:
- buildings similar to ones you already maintain, so your references are relevant
- property management firms where you already hold one agreement
- buildings near existing routes, so service is efficient
- owners whose current agreements are likely to come up for renewal, based on what they tell you
Keep outreach within your consent records; see CASL-compliant outreach. A short, relevant note to a property manager about their building type will do more than a generic introduction.
What to report each month
| Measure | Why it matters |
|---|---|
| ARV, and change since last month | The headline number |
| Agreements due in the next 90 days | Your renewal workload |
| Renewals won and lost, with reasons | The leakage |
| Turnover offers made and signed | The cheapest growth |
| Outreach conversations and wins | The long game |
Five lines. If your service manager and your owner look at them every month, the book will grow.
Why it matters beyond cash flow
A documented, growing agreement book makes a mechanical firm steadier and easier to plan. It also tends to matter when an owner considers succession or a sale, because recurring revenue with renewal history is easier for a buyer to assess than a project backlog. The group's exit brand, BizSell.ca, works on that side alongside Sedighi.ca.
Where we come in
We help package agreements, build the turnover kit, set up the renewal calendar and run outreach; your service manager owns pricing and scope, and your technicians do the work. See service-contract (PM) sales, check pricing, or read the other guides. We're marketers, not a contractor.
Frequently asked questions
What's a healthy renewal rate?
There's no single benchmark we can cite. Measure your own over two or three years and work to raise it; every point of renewal is revenue you don't have to win again.
Should PM agreements be priced to make a profit on their own?
That's a decision for your service manager and accountant. Many firms also value the repair and retrofit work that follows, but don't count on it in the agreement price unless your own data supports it.
How do we count multi-building agreements?
Count by agreement for value and renewal, and by building for coverage. A property manager with five buildings on one agreement is one renewal decision but five sites.
When should we start the renewal conversation?
At least 90 days before the renewal date, with a second contact at 30 days. Earlier for large portfolios, where procurement may run its own process.