Maintenance and service contracts for roofers -- should you offer them?
Have you ever considered offering maintenance or service contracts with your roof coating projects?
I used to hear about them, but always thought they must be for the “big guys” or companies with dedicated service departments. Nobody I learned from offered them. Wouldn’t somebody have taught me about them if they were appropriate for small to mid-sized roofing companies?
Maintenance and service contracts for roofers can be a great way to turn one-time projects into an ongoing source of revenue. They can be shaped and customized to fit your business model.
Here are a few points to consider when deciding if offering maintenance or service contracts is right for your business.
ADVANTAGES OF MAINTENANCE CONTRACTS
Let's simplify the numbers a bit.
For our example, we’ll take a mid-sized roofing company called XYZ Roofers. XYZ sells about 20 roofs per year and each roof averages 10K square feet. Without maintenance contracts, XYZ gets paid for 200K square feet/year but has no ongoing relationship with each roof. This is a big loss of opportunity for XYZ, and it also puts each of their clients at risk of losing their manufacturer's warranty. Without regular inspections, even a small issue can grow and become expensive.
Now XYZ Roofers starts offering service contracts on each of the roofs they sell. This puts XYZ and the building owner in a win-win situation. XYZ will collect a pre-determined fee 2-3 times annually, which helps to increase revenue and smooth out the peaks and valleys of commercial roofing. Their client gets a detailed report for each inspection which helps them maintain the manufacturer’s warranty and makes them aware of any new issues as early as possible. This can save thousands of dollars when damage is caught early.
Pricing will vary greatly depending on which region your business is in and what services you wish to include with your contract. Remember, these are your contracts and you can negotiate as many or as few services as needed to meet the client’s needs.
To illustrate the benefits to your bottom line, we’ll just use some example numbers. Let’s say that XYZ charges $0.07/square foot annually for 2 inspections or $350 per inspection. It's common to include repairs up to the inspection amount based on your current shop rates. Let’s assume that half of XYZ’s customers agree to maintenance contracts.
XYZ is now adding $7,000 in recurring revenue every year, while staying in front of their customers and likely earning even more in additional repairs.
GOING EVEN FURTHER
XYZ is now 5 years in and has added $35,000 in recurring, dependable revenue. They are also seeing great growth in repairs and referrals because they are regularly showing their clients great customer service.
But, they want to kick it up a notch. Because most of their roof coatings include a repairable topcoat, they start offering a topcoat refresher every 10 years. The topcoat they offer is originally applied at 25 mils and will degrade by up to a mil a year. By applying a single 12 mil layer every 10 years, they are increasing the coating thickness and ensuring that the roof is always in peak condition.
Because their topcoat requires only pressure washing to accept a new layer, prep is easy. They can offer this at a fraction of the price of a new project while earning a healthy margin.
That’s a true win-win!
MAINTENANCE AND SERVICE CONTRACTS FOR ROOFERS
Maintenance and service contracts for roofers are a great way to generate ongoing revenue and build loyal customers. It can benefit both the customer and the roofing company!
Written by: Jef McCurdy
National Training Manager - Castagra