How to Price a Preventive Maintenance Contract
Price a preventive maintenance contract from the number of visits per year times your visit cost (labor hours plus travel plus consumables), add a margin, then bill it as equal monthly payments rather than per visit. Include the inspection, consumables, and a written report; exclude parts and repairs, which are billed separately at a stated agreement-holder rate; and price priority response as a named benefit rather than an unlimited promise.
Build the price from the visit up
- Labor — realistic hours on site, not optimistic ones
- Travel — both directions, at your real cost
- Consumables — filters, gaskets, chemicals, lubricants
- Reporting — the ten minutes writing it up
- Margin — this is a product, not a loss leader
Visit cost times visits per year gives you the annual contract price. Then divide by twelve and bill monthly.
Include the visit, exclude the repair
A PM contract should cover:
- Scheduled inspections at a stated frequency
- Consumables listed by name
- A written report left on site
- Priority response, precisely defined
- A discounted labor rate on repairs
It shouldn’t cover parts or repair labor, though. An all-inclusive contract is basically insurance you’re underwriting with no data — and the customer whose equipment is oldest will be the first one to sign up.
Discount repairs, never the PM itself
The instinct is to price PM visits cheaply to win the contract. That’s backwards — PM visits are the recurring revenue you’re actually trying to build.
Discount the repair labor rate instead. It makes the agreement feel valuable at exactly the moment the customer’s unhappy, which is when loyalty is really decided.
Bill monthly, always
Quarterly and seasonal work billed as it happens produces lumpy invoices and gives the customer four chances a year to reconsider. Equal monthly billing matches how businesses budget and quietly takes the decision off the table.
Define priority response numerically
“Priority service” doesn’t mean much on its own. “On site within four business hours” does — it can actually be delivered, and it’s worth real money, especially to a business whose equipment failing means closing the doors.
Promise only what you can honor during your busiest week, not your average one.
Review the price annually
Equipment ages, visit times grow, and your costs rise. Put a stated annual escalator in the contract — 3–5% — so the price keeps up without a renegotiation that puts the whole account back in play.
Frequently asked questions
Should a PM contract include repairs?
No. Include the inspection, consumables, and the report; bill parts and repairs separately at a discounted agreement-holder rate. A contract that includes repairs is an insurance policy you're pricing without actuarial data, and it goes wrong on the one customer whose equipment is worst.
How much should I discount for a contract?
Discount the repair labor rate for agreement holders — 10–15% — not the PM visits themselves. The PM visits are the product; discounting them shrinks the recurring revenue you were building. Discounting repairs makes the agreement feel valuable every time something breaks.
Bill monthly or per visit?
Monthly, in equal installments, even when visits are quarterly or seasonal. It smooths your cash flow, matches how businesses budget, and — most importantly — the customer stops re-deciding whether to have you come, because the decision was already made.
What's priority response actually worth?
A great deal, and it's the benefit customers value most. Define it precisely — 'on site within X hours during business hours' — rather than promising unlimited urgency, because a promise you can't keep during a busy week costs you the account.