Agreement renewal rate
Agreement renewal rate is the percentage of expiring service or maintenance agreements that renew, out of all agreements with a term ending in the period — the clearest measure of whether the recurring book is growing, holding, or leaking.
The inputs.
- Agreements renewedExpiring contracts that renew versus those that lapse or are canceled.
- Agreements expiringContracts with a term ending in the period — the denominator the rate is measured against.
- Watch forMissed PMs and thin maintenance contract margin are the leading indicators of a renewal that won't happen.
What to know.
How to calculate agreement renewal rate
Agreement renewal rate equals the number of expiring agreements that renewed divided by the number of agreements with a term ending in the period. Most contractors also weight the rate by contract value, since losing one large multi-site agreement moves the count-based rate far less than the revenue it represents. Read both — count tells you how many conversations you're winning, value tells you what they're worth.
Why agreement renewal rate matters for commercial contractors
Recurring agreement revenue is the base that smooths out the seasonality of reactive calls, and a declining renewal rate is the earliest reliable signal that the recurring book is eroding — it shows up in renewals months before it shows up as a revenue decline. Renewal is also where the margin conversation happens: a contract that's underwater is a repricing or lapse conversation, not a renewal. The rate is the aggregate view of all those conversations.
What drives agreement renewals down
The leading indicators are missed PMs, thin maintenance contract margin from under-priced agreements, and missed SLA windows. Facilities managers increasingly renew based on evidence of delivered coverage — proof that the PM visits happened and the SLA held. Churn rarely starts at the renewal date; it starts months earlier when a PM is deferred or an arrival window is missed, and the renewal is just where it becomes visible.
How Thermal supports renewals
Agreement records in Thermal hold the term, covered equipment, margin, and PM compliance history together, so the renewal conversation starts from data rather than promises. Renewal reporting rolls up expiring agreements with their margin and compliance attached, which turns renewal from a date you get surprised by into a number you can work months in advance.
Questions attached to this term.
What's a good agreement renewal rate?
There's no single defensible target — it varies by book and market. What matters is the trend and catching a declining pattern early, before it compounds into a shrinking recurring base.
Should renewal rate be counted by contract or by revenue?
Both — count shows how many agreements you're keeping, value shows what they're worth. They diverge when you lose a few large accounts or churn a lot of small ones.
What causes agreements not to renew?
Missed PM visits, missed SLA windows, under-priced agreements that make renewal a bad deal, and account relationships that drifted. The common thread is usually visible months before the renewal date.
How far before expiry should renewal work start?
Start the conversation 60 to 90 days out, with the agreement's compliance and margin data in hand — that's early enough to fix a coverage gap or reprice a thin contract instead of losing the account.
These numbers, on your own book.
If you want to see them calculated from real work orders and agreements rather than a spreadsheet, that's a demo.