Boiler maintenance-plan economics, worked through step by step

Step 1: Count the base you could realistically enrol

Short answer: start with active boiler customers you have served in the last few years, not every name in the system.

Pull a list of households where you have serviced or installed a boiler in, say, the last four years. Remove duplicates, commercial accounts you handle separately and anyone who has moved. Suppose that leaves 1,200 households. That is your enrolment pool.

Next, estimate a first-year sign-up rate. We don't quote an industry figure because we haven't found a Canadian benchmark we can verify, so pick a conservative number and test it. For this example, use 15%, which gives 180 members in year one.

Sources of sign-ups

In most companies, sign-ups come from three places:

• the tech at the end of a visit, usually the strongest source
• the office, when a customer calls to book
• reminders and campaigns to consenting past customers

If you can only improve one, improve the tech conversation. Our plan design service includes a short script for exactly this.

Step 2: Work out what each member is worth in a year

Short answer: plan price minus the full cost of delivering the visit, plus any extra margin members bring.

Assume a plan price of $240 a year (or $20 a month). Now estimate what one maintenance visit costs you:

That leaves $75 of margin per member per year from the plan itself. On 180 members, that is $13,500.

Now add what members bring beyond the plan. If members are more likely to call you for repairs, and each member generates an average of $150 a year in repair revenue at a 40% margin, that is another $60 per member, or $10,800 across the base. Be honest with this number; if you don't track it yet, leave it out and add it later.

Annual value per member in this example: $75 + $60 = $135.

Beware the discounted visit

If you run a tune-up campaign with a $50 discount for members, the plan margin drops from $75 to $25. A small early-booking benefit, such as first choice of appointment times, often works without destroying the arithmetic. Our tune-up campaigns page covers this.

Step 3: Model renewals over three years

Short answer: the renewal rate decides whether the plan grows or leaks, and each point is worth more than it looks.

Take the 180 year-one members and assume no new sign-ups after year one, to isolate the effect of renewal:

At $135 per member-year, the gap between 60% and 90% renewal is 135 member-years, or about $18,200 over three years, from the same initial sign-ups. In reality you keep adding members, which makes the renewal rate matter even more. This is why our renewals and retention service focuses on the 45–60 days before each renewal date.

Step 4: Check tech capacity before you launch

Short answer: make sure the visits fit into weeks you can actually staff, ideally the quiet ones.

Suppose each tech can complete 5 maintenance visits a day when routed sensibly. If you want plan visits done between mid-August and the end of October, that is roughly 11 weeks, or 55 working days. One tech could deliver up to 275 visits in that window if they did nothing else. In practice, repair calls rise in October, so plan for maybe half that: around 135 visits per tech.

For 180 members, you need the equivalent of about 1.3 techs devoted to plan visits through that window, or you need to spread visits across the year. Spreading visits into spring and early summer is often the smarter choice: it fills slow months and leaves room for no-heat calls in the fall.

A quick capacity checklist

1. How many visits per tech per day, realistically?
2. Which weeks are slow enough to absorb plan visits?
3. How many techs can you assign in those weeks?
4. Does that number cover every member, with room to spare?
5. If not, can visits move to spring or early summer?

Step 5: Present the price honestly

Short answer: show the full price, say exactly what it includes, and don't let fees appear at checkout.

The Competition Bureau's drip pricing guidance explains that advertising a price while leaving out mandatory fixed fees can be misleading. If your plan has a mandatory admin fee, include it in the advertised price. Taxes may be shown separately, but say so.

Clear presentation also helps sales. Customers compare plans by what they include, so list the visit steps, the benefits and the renewal terms in plain words on one page.

Common mistakes in plan arithmetic

Short answer: forgetting drive time, assuming everyone renews and ignoring the schedule.

• Counting only tech time. Driving, scheduling and reminders are real costs.
• Assuming 100% renewal. Some members will move, sell or switch. Model a realistic range.
• Pricing from a competitor's flyer. Their costs and inclusions may differ completely from yours.
• Selling more memberships than you can service. A member whose visit never happens will not renew.
• No tracking. Without a scorecard, you can't tell whether the plan is working. See service data and reporting.

What to do next

Short answer: run these five steps with your own numbers, then decide whether to launch, reprice or fix renewals first.

If the numbers work, the next step is designing a plan customers understand. If they don't, the problem is usually visit cost or renewal rate, and both can be improved. Ali and the team can walk through your figures during the free 7-day review described on our pricing page. For the business side of service-agreement pricing in more depth, Boiler.Business covers install pricing and parts margins.