RECURRING REVENUE VS BACKLOG.
Backlog is signed work not yet performed. It's finite, it burns down as crews build it, and it's worth the margin still sitting inside it. A service business signs agreements instead of scopes, so nothing burns down: the contract book either renews or churns. That changes what you measure every month, what a bank underwrites, and what a buyer will pay.
The trouble starts when a service owner opens a backlog report and sees close to zero. Nothing is wrong with the business and nothing is wrong with the report. Backlog counts contracted scope waiting to be built, and a service agreement is a standing right to order work. An owner who reads that empty report as a warning will go chase volume the business never needed.
WHAT IT MEANS.
A contract book is the set of recurring service agreements a business holds: the customers who have committed to ordering work, rather than the work itself. It's the service equivalent of backlog, and it behaves nothing like it.
We publish no service business margin benchmarks, and we won't price your book against one. Labor rates, drive time, competitive density, and what a market will pay for a recurring agreement vary more between two metros than they do between two trades, so a national average is wrong almost everywhere somebody reads it. The 48 trade benchmark set we do publish is project based construction data and it doesn't transfer to a service book. Your targets get built from your own agreements, your own renewal history, and your own cost per stop, which is less comfortable than an average and considerably more useful.
This confusion is common because most service businesses are run by people who came out of project work, or because the same company does both. The instincts carry over even when the instruments don't. An owner who spent fifteen years reading a schedule of values will keep looking for the document that tells him how much work is committed, and in a service business that document has to be built rather than borrowed.
WHY THE BACKLOG REPORT READS EMPTY.
The backlog report has nothing to report
A service business signs agreements, not scopes of work, so there's no contracted quantity sitting there waiting to be performed. Open a backlog schedule and it reads close to zero even when the business has more predictable revenue than any project contractor on the street. The report isn't broken. It's answering a question this business doesn't ask.
Churn doesn't announce itself
A project contractor watches backlog fall every month and knows the day he has to sell again. A contract book gives no such signal, because a customer who is about to stop renewing looks like a paying customer right up until the renewal is skipped. Without a renewal rate calculated monthly, the first sign of trouble is a revenue decline that began three quarters earlier.
A backlog mindset sends the effort to the wrong place
Backlog thinking says the answer to a soft month is more sold work, so the owner puts every dollar of attention into new sales. In a service book the cheapest revenue in the building is the agreement already signed, and one lost renewal costs the entire future stream rather than one job's margin. Owners running on backlog instincts routinely spend more winning a replacement customer than they would have spent keeping the one who left.
The bank and the buyer are reading a different asset
A lender treats backlog as a finite pipeline and discounts it to the margin it still carries, because once it's built it's gone. A contract book gets underwritten as a renewing revenue stream, so the questions become renewal rate, contract length, customer concentration, and how much of the book sits under a written agreement rather than a long standing habit. An owner who presents a service business as though it has backlog gives the bank the weaker of the two true stories about the same company.
WHAT IT LOOKS LIKE IN DOLLARS.
Take a book of 120 agreements producing $1,440,000 of contracted revenue in a year. That's $12,000 per agreement, which is the figure that tells you what a single renewal is worth. Lose 12 of them and $144,000 of next year's revenue is gone before anybody makes a sale. Those are example figures we built to show the arithmetic, and they carry no industry authority.
Start with $2,000,000 of recurring revenue and sell nothing new. At an 85 percent renewal rate the book produces $1,700,000, then $1,445,000, then roughly $1,228,000 across three years. At 95 percent it produces $1,900,000, then $1,805,000, then about $1,715,000. Ten points of renewal is close to half a million dollars of difference by year three on the same book, and the rates here are illustrations chosen to demonstrate the mechanism rather than targets anybody should price against.
Assume $1,000,000 of backlog carrying $150,000 of margin. It contributes $150,000 once and then it's finished. Assume instead $1,000,000 of annual recurring revenue renewing at 90 percent: it produces $900,000 next year with no sale made, and it keeps producing after that. Same headline dollar figure, completely different asset. The margin and renewal rate in that comparison are ours for the sake of the math.
WHAT REPLACES BACKLOG.
Every agreement is listed with its start date, its term, its renewal date, its billing frequency, and its annual contracted value. That schedule is the service equivalent of a WIP report and it's the document the monthly meeting runs off. It tells you what's contracted, what comes up for renewal inside the next 90 days, and how much of your revenue sits under agreement rather than being ordered at will.
Renewal rate is the share of agreements up for renewal that renewed, calculated every month instead of once a year when it's too late to do anything about it. Revenue per agreement tells you what one renewal is worth and whether the book is growing by customer count or by price. Together they replace the two things backlog gave a project contractor: how much future revenue is committed, and how fast it's disappearing.
A service business bills on a cycle and not on progress, which makes the 13 week cash forecast easier to build and no less necessary. Recurring invoices go in on their billing dates, work order revenue goes in on collection history, and the funding decision gets made before the week starts. Books close by the tenth so the forecast runs off finished numbers rather than estimates.
The schedule that runs your month is the same schedule a lender or an acquirer wants to see, with renewal history attached to it. Written agreements, contract terms, renewal rate over time, and customer concentration are what turn recurring revenue into an asset somebody will underwrite or pay a multiple for. Verbal arrangements with loyal customers count for nothing in that conversation, however reliable they have been for you.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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