Almost every equipment service company sells contracts — for air conditioners, lifts, generators, fire systems, RO plants, compressors, medical equipment and much more. Yet the word "contract" covers very different promises. One customer expects four scheduled visits a year; another expects you to turn up within four hours whenever something fails; a third expects you to replace any part that breaks. When these promises aren't clearly separated, contracts become unprofitable, customers feel let down and technicians don't know what they are supposed to do on site.
This guide explains the main contract types, how to scope and deliver each, and how to measure whether they make money.
The three common contract types
Preventive maintenance (PM) contracts
A PM contract covers a fixed number of scheduled visits per year. At each visit, the technician follows a checklist — inspect, clean, test, lubricate, tighten, replace filters or other consumables — and records readings. Breakdowns between visits are charged separately, often at a discounted rate. PM contracts are predictable: you know how many visits you owe, when, and roughly how long each takes.
Breakdown-only contracts
A breakdown contract commits you to attend failures, usually within an agreed response time, without charging a visit fee. Parts are typically charged extra. The workload is unpredictable — some customers never call; others call every week — so pricing must reflect the equipment's age, condition and usage.
Comprehensive contracts
A comprehensive contract combines scheduled PM visits, breakdown attendance and most parts, with listed exclusions such as physical damage, consumables or major components. It gives customers the most certainty and carries the most risk for you. It works well for equipment you know thoroughly and can maintain properly.
Scoping each contract clearly
Most contract disputes come from vague scope. Every contract should define:
- Assets covered — make, model, serial number and location of each unit.
- PM frequency and checklist — what is done at each visit.
- Breakdown response — response and resolution targets, working hours, emergency cover.
- Parts and consumables — included, discounted or chargeable, with exclusions listed.
- Customer responsibilities — access, power, safe working conditions, reporting faults promptly.
- Reporting — what the customer receives after each visit and periodically.
Writing this once as a template per equipment type, and attaching the asset list per customer, keeps contracts consistent across sales staff and branches.
Delivering PM visits reliably
The biggest failure in PM contracts is simply not doing the visits. When visits depend on someone remembering, they slip during busy periods — exactly when customers notice. Generate every visit automatically from the contract start date and frequency, assign them a few weeks ahead, and give supervisors a daily list of visits due and overdue. Technicians should complete the checklist on a mobile app with photos and readings, and the customer should receive the report automatically. See our technician app guide.
Managing breakdown risk
Breakdown and comprehensive contracts need closer attention to cost. Before quoting, survey the equipment: age, condition, service history and operating hours. Price older or heavily used equipment higher, or exclude specific high-cost components. During the contract, track calls per asset. A few assets usually generate most calls; these are candidates for repair-or-replace recommendations, revised pricing at renewal, or root-cause fixes.
Linking PM to fewer breakdowns
Good PM should reduce breakdowns. Compare breakdown calls per asset for customers with PM contracts against those without, and for assets whose PM visits were completed on time against those that were late. This data helps you sell PM more convincingly and shows customers the value of what they pay for.
Measuring contract profitability
For each contract, compare revenue with the cost of delivering it: technician time on PM and breakdown visits, travel, parts and consumables. Many service companies discover that a handful of contracts lose money because of old equipment, distant sites or customers who call for minor issues. Profitability by contract, customer, equipment type and branch shows where to adjust pricing or scope at renewal.
Renewals
Contracts are only valuable if they renew. Alert sales teams sixty to ninety days before expiry, share a summary of visits completed, breakdowns attended and recommendations with the customer, and propose the renewal with any scope or price changes justified by the data. See AMC renewal management.
Common mistakes
- Selling comprehensive cover on old equipment without a survey.
- Leaving parts inclusion vague, leading to disputes on every invoice.
- Missing PM visits during peak season.
- Never measuring cost per contract, so loss-making contracts renew automatically.
- Not showing customers what they received for their money.
How software helps
Field service software holds contract templates, asset lists, PM schedules, breakdown tickets, parts used and time spent in one place. That makes it possible to deliver every visit, respond within SLA, and see the profitability of each contract before renewal. See field service management software.
Talk to us about software built around your contract types.
Frequently asked questions
What is the difference between a preventive and a breakdown contract?
A preventive contract covers scheduled visits to inspect, clean, adjust and replace wear parts. A breakdown contract covers attending failures when they happen. Many contracts combine both, with clear rules on what's included.
Which contract type is more profitable?
It depends on how well each is scoped and delivered. Preventive contracts are predictable to deliver; breakdown contracts carry more risk but can be priced for it. Tracking actual cost per contract is the only way to know.
Should parts be included in the contract?
Some businesses include consumables only; others offer comprehensive contracts that include most parts with listed exclusions. The key is writing the inclusions and exclusions clearly.
How do we stop PM visits from being skipped?
Generate visits automatically from contract start dates and frequencies, assign them in advance, and track overdue visits daily on a dashboard.
Can customers see their contract visits?
Yes. A customer portal or automatic WhatsApp/email reports can show scheduled and completed visits, reports and open issues per contract.
