Plumbing
Plumbing Recurring Revenue Calculator
Model the recurring portion of the business and what it is worth against one-off work.
Result
Agreements often earn little on the fee alone. They are worth having for the access, the retention and the work members buy without shopping around, so judging them on the fee margin alone undervalues them.
Get a Free Business AuditWhat moves the number
- Monthly or annual recurring value per customer.
- Retention, which is what makes recurring revenue worth more than its face value.
- Delivery cost, since recurring revenue carries recurring obligation.
Where this one goes wrong
Valuing recurring revenue without its delivery cost. The obligation arrives with the money, and a plan book that cannot be serviced becomes a churn problem rather than an asset.
Questions
About this calculator
Why is recurring revenue worth more?
Because it is predictable, it smooths seasonality, it raises retention and it is generally viewed favourably if the business is ever valued. Those are real advantages beyond the amount.
What is the risk?
Obligation. Every recurring pound owes a visit, and a book that outgrows capacity produces missed visits and cancellations.
How do I measure it properly?
Net of churn and net of delivery cost. Gross recurring revenue flatters a book that is losing members or that costs more to service than it brings in.
The formula
recurring revenue = members x annual fee; total profit adds the margin on pull-through work
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How to use this calculator
- Agreements in force. Enter your own figure; the page starts at 180.
- Annual fee ($). Enter your own figure; the page starts at $189.
- Cost to deliver one ($). Enter your own figure; the page starts at $82.
- Renewal rate (%). Enter your own figure; the page starts at 76%.
- Extra work per member per year ($). Repairs and replacements members buy because you are already there.
- Margin on that work (%). Enter your own figure; the page starts at 50%.
The result updates as you type, so you can try a figure, see what it does to recurring revenue, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Agreements in force | 180 |
| Annual fee | $189 |
| Cost to deliver one | $82 |
| Renewal rate | 76% |
| Extra work per member per year | $190 |
| Margin on that work | 50% |
What comes out
| Result | Value |
|---|---|
| Recurring revenue main result | $34,020 |
| Profit on the agreements | $19,260 |
| Profit on pull-through work | $17,100 |
| Total gross profit | $36,360 |
| Members still there next year | 137 |
$34,020 of recurring revenue, earning $19,260 on the agreements themselves and $17,100 on the work members bring back. The second number is usually the reason to sell them.
How sensitive the answer is
Holding everything else steady and changing only annual fee, this is what happens to recurring revenue. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Annual fee ($) | Recurring revenue |
|---|---|
| $95 | $17,100 |
| $142 | $25,560 |
| $189 example above | $34,020 |
| $284 | $51,120 |
| $378 | $68,040 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Agreements in force
- A number, between 0 and 100000, starting at 180.
- Annual fee ($)
- A money amount, starting at $189.
- Cost to deliver one ($)
- A money amount, starting at $82.
- Renewal rate (%)
- A percentage, between 0 and 100, starting at 76%.
- Extra work per member per year ($)
- Repairs and replacements members buy because you are already there.
- Margin on that work (%)
- A percentage, between 0 and 95, starting at 50%.
What the results tell you
| Result | What it is |
|---|---|
| Recurring revenue | The headline result. A money figure. |
| Profit on the agreements | A money figure. |
| Profit on pull-through work | A money figure. |
| Total gross profit | A money figure. |
| Members still there next year | A number. |
Before you rely on this number
Pipe sizing, flow and pressure figures depend on the actual fittings, the run, the material and local code. Code requirements vary by jurisdiction and override any general calculation, so check what applies where the work is happening.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.