What is Included in a Club Membership?
A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.
Contractor Question:
“What is included in a club agreement and is that different from a lifetime protection agreement?”
Contractor University Expert Response:
“Most industry models treat a club/maintenance agreement and a lifetime breakdown protection plan as two completely separate products and for good reason.
Product 1: The Club / Maintenance Agreement (~$189/year)
This is your standard Preventative Maintenance Agreement (PMA). It typically includes two tune-ups per year, priority scheduling, waived or reduced diagnostic fees, safety inspections, basic filter replacement, a standard coil rinse, and discounts on repairs.
It does not include refrigerant, major components, coil replacements, duct issues, electrical rewiring, or accessory installation — all of these remain billable. The PMA is intentionally low-risk and predictable from a margin standpoint.
Product 2: Lifetime Breakdown Protection (~$1,200 one-time or annualized)
This is an optional upgrade that covers major repair costs for the remaining life of the unit (not full system replacement). It generally includes compressors, coils, motors, TXVs, boards, refrigerant, and similar components.
Because this is essentially an in-house warranty, it carries real financial risk and should not be bundled with your PMA unless you have the reserves and customer volume to absorb failures.
Why This Matters
With only a handful of customers, one coil, compressor, or ECM blower failure can wipe out all the revenue from the program. For example, five customers paying $1,200 generates $6,000 — but a single coil and blower motor failure could exceed that amount. This is why EGIA generally recommends having 100+ agreements before offering a high-risk warranty product. At scale, the risk spreads across many units, actuarial pricing becomes meaningful, and reserves grow faster than payouts.
How Companies Make Lifetime Protection Profitable
Successful programs rely on large volume, strategic pricing, and disciplined reserve management (often 50–75% of the fee goes into a dedicated reserve). Predictable failure rates allow companies to offer high-value protection without jeopardizing margins.
If You’re Not at Scale Yet
The safe approach is to stick with the $189 PMA and pair it with a no-risk repair discount program (e.g., 15% off repairs, waived diagnostic fees, priority service). Offer lifetime coverage only after you reach 50–100 club members or have the reserves to support the risk.
If You Must Offer Lifetime Protection Now
Price it higher ($1,800–$2,500), limit coverage (no coils, compressors, or refrigerant), cap annual payout amounts, or restrict it to motors and electrical components. Always require ongoing PMA membership.
We have a the scripts and other resources in Section 14 of the Resource Library.”
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