How to Price a Recurring Service Contract
Price a recurring contract by calculating your true cost and time per visit, multiplying by the number of visits across the full term, adding your margin, then dividing into level monthly payments. Never price the recurring rate off a single good day — use your realistic average visit, build in a small annual escalation for rising costs, and set the monthly number so the slow, easy visits and the heavy, hard ones both come out profitable across the year.
Start from cost per visit
Figure your real cost and time for an average visit — labor, materials, fuel, wear, overhead — not your best-case day. If your recurring rate is built on the easy visit, the hard ones eat your margin all year.
Annualize, then divide
For work that varies by season, price the whole year at once:
- List every visit across the term and its realistic effort.
- Total the cost of all of them.
- Add your margin.
- Divide into equal monthly payments.
The customer gets a flat, predictable bill; you get paid correctly on the average.
Discount modestly, not deeply
A contract is worth a small discount off your one-off rate — it’s guaranteed revenue and less admin. But a deep discount means one bad month sinks the account. Keep the incentive modest.
Build in escalation
Include an annual increase from day one — a set percentage the customer agrees to upfront. It’s far easier than trying to raise a flat rate someone’s been paying for two years, and it keeps the contract profitable as costs climb.
Frequently asked questions
Should a recurring rate be lower than one-off pricing?
Usually a bit, yes. A contract gives you predictable revenue and lower per-visit effort once the account is established, so a modest discount off your one-off rate is fair and encourages sign-ups — just not so deep that a hard month loses money.
How do I handle visits that vary in effort?
Annualize. Add up the cost of every visit across the year — the light ones and the heavy ones — then divide into equal monthly payments. The customer gets a flat bill and you get paid correctly on average, even though individual visits differ.
Should I build in price increases?
Yes. Costs rise, so include an annual escalation clause (a set percentage) in the contract from the start. Raising a locked-in flat rate later is much harder than a small increase the customer already agreed to.