Tree service
Tree Service Recurring Revenue Calculator
Works recurring revenue, which is rarer in tree care and worth more because of it.
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 AuditHow the calculation works
Agreements in force times the annual fee, less the cost to deliver them, plus the profit on additional work those customers generate during the year. Retention determines how many are still there next year. In tree care recurring agreements are less common than in lawn or pool service, which is precisely why they are valuable: they provide base load in quiet months and a reason to be on the property when other trees need attention.
What moves the number
- Number of agreements and the annual fee each carries.
- Cost to deliver, which for inspection-based agreements is modest.
- Additional work generated per agreement, which is usually the larger value.
- Retention, which compounds the base over years.
Where this one goes wrong
The agreement fee is rarely where the value sits. An inspection and maintenance agreement earns modestly on its own and generates the removals, pruning and emergency work that the inspection identifies, so the additional work per agreement is usually worth more than the fee. That means pricing the agreement to be easy to accept is often better than pricing it for its own margin. It also provides something tree care otherwise lacks: predictable quiet season revenue and a scheduled reason to be in front of the customer before a competitor is.
Before you quote
- Value agreements on the additional work they generate, not the fee.
- Price them to be accepted rather than for their own margin.
- Use them for quiet season base load and scheduling.
Questions
About this calculator
Does recurring revenue work in tree care?
Less commonly than in lawn or pool service, which is why it is valuable where it does. Inspection and maintenance agreements provide quiet season base load and a scheduled reason to be on the property, which is worth more than the fee itself.
Where is the value in a maintenance agreement?
In the work it generates rather than the fee. An inspection identifies pruning, removals and hazards, and that additional work is usually worth considerably more than the agreement charges. Pricing the agreement to be easy to accept is often better than pricing it for margin.
Why does retention matter so much?
Because the base compounds. An agreement held for five years generates five inspections and whatever work each reveals, and it keeps a competitor from being the one who finds the hazardous limb. Retention is also far cheaper than winning a replacement customer.
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 $0.
- Cost to deliver one ($). Enter your own figure; the page starts at $0.
- Renewal rate (%). Enter your own figure; the page starts at 76%.
- Extra work per member per year ($). Repairs and replacements members buy because you are already there.
- Margin on that work (%). Enter your own figure; the page starts at 46%.
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 | $0 |
| Cost to deliver one | $0 |
| Renewal rate | 76% |
| Extra work per member per year | $190 |
| Margin on that work | 46% |
What comes out
| Result | Value |
|---|---|
| Recurring revenue main result | $0 |
| Profit on the agreements | $0 |
| Profit on pull-through work | $15,732 |
| Total gross profit | $15,732 |
| Members still there next year | 137 |
$0 of recurring revenue, earning $0 on the agreements themselves and $15,732 on the work members bring back. The second number is usually the reason to sell them.
What each figure means
- Agreements in force
- A number, between 0 and 100000, starting at 180.
- Annual fee ($)
- A money amount, starting at $0.
- Cost to deliver one ($)
- A money amount, starting at $0.
- Renewal rate (%)
- A percentage, between 0 and 100, starting at 76%.
- Extra work per member per year ($)
- Repairs and replacements members buy because you are already there.
- Margin on that work (%)
- A percentage, between 0 and 95, starting at 46%.
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. |
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.