How much new business are you spending just to stand still?
If you run maintenance contracts, cleaning runs or service agreements, some share of them leaves every year. This works out how many, what they were worth, and what proportion of your new business is going into replacing them rather than growing.
Your numbers
The answer
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Revenue lost to churn a year
$77,760
7.2 contracts at $900.00 a month
Change a number and this link updates with it, so whoever opens it lands on the result you are looking at.
Average contract life
5.6 years
1 ÷ 18% churn
Net change in the base
16.8
56.8 contracts at year end
New business spent replacing
30%
3.6 months of winning work
Acquisition cost of replacement
$3,600
7.2 contracts at $500.00
Gross profit lost
$23,328
At 30% margin
Send me this result
We will turn the numbers above into a PDF with your figures, the workings and what they mean — and hand it straight back to you here, to read or to keep.
What to do with this
- You lose about 7.2 contracts a year, taking $77,760 of annual revenue and $23,328 of gross profit with them.
- At 2 new contracts a month, 3.6 months of new business goes into standing still — 30% of everything you win. The remaining 16.8 contracts are the actual growth.
- Replacing what you lost costs about $3,600 a year in acquisition. Cutting churn from 18% to 13% would save $1,000 of that and keep $21,600 of revenue.
- The cheapest retention work in a contract business is a scheduled conversation before the anniversary rather than after a complaint. It costs an hour and it is the only lever on this page that does not need a budget.
How this was worked out
- Contracts lost a year
- 40 × 18% = 7.2
- Revenue lost
- 7.2 × $900.00 × 12 = $77,760
- Average contract life
- 1 ÷ 18% = 5.6 years
- Net change
- (2 × 12) − 7.2 = 16.8
- Replacement cost
- 7.2 × $500.00 = $3,600
The same base at different churn rates
| Annual churn | Contracts lost | Contract life | Revenue lost a year | Base after a year |
|---|---|---|---|---|
| 5% | 2 | 20 years | $21,600 | 62 |
| 10% | 4 | 10 years | $43,200 | 60 |
| 15% | 6 | 6.7 years | $64,800 | 58 |
| 20% | 8 | 5 years | $86,400 | 56 |
| 30% | 12 | 3.3 years | $129,600 | 52 |
Your base bills $432,000 a year in total, so each row is a share of that. No published churn benchmark exists for cleaning, maintenance or facilities contracts in Australia, which is why there is no "good" row marked on this table.
What this does, and how the maths works
What it does
- Turns an annual churn rate into contracts lost, revenue lost, and what it costs to win those contracts back.
- Compares that against the new business you are winning, so you can see whether the base is growing, flat or shrinking.
- Works out the average contract life implied by your churn rate, which is usually shorter than anyone expects.
How to use it
- Enter how many recurring contracts you hold and what an average one bills each month.
- Enter your annual churn as a percentage. If you do not know it, count how many contracts you held twelve months ago and how many of those are still with you.
- Enter how many new contracts you win in an average month and what one costs to win.
- Read the standing-still line before the growth line.
The formula
- Contracts lost a year = contracts × churn rate
- Revenue lost a year = contracts lost × monthly value × 12
- Average contract life = 1 ÷ churn rate, in years
- Net change = (new contracts × 12) − contracts lost
Reading the answer
- If new contracts a year barely exceed contracts lost, the marketing is not failing — the retention is. Buying more enquiries into a leaking base is expensive and slow.
- The replacement cost line is the honest price of churn. It is money spent to end the year where you started.
- Cutting churn by a few points is usually cheaper than winning the equivalent in new contracts, because keeping a client costs a phone call and winning one costs an acquisition.
What it cannot tell you
This models a flat churn rate applied evenly across the year. Real churn clusters — around contract anniversaries, price rises and changes of building manager — so the month-to-month picture is lumpier than this suggests, even when the annual figure is right.
Where every figure on this page came from
Replace the example inputs with your own figures. Sourced inputs link to their reference and identify the original market and currency.
This tool uses editable example inputs. Replace them with your own figures; the result follows the values you enter.
Frequently Asked Questions
Everything you need to know about working with SoudCoh
Have more questions? Let's chat!
Book a callNo published figure exists for Australia, and we are not going to estimate one. The useful way to read your own is through contract life: 10% annual churn is a ten-year average relationship, 20% is five years, 30% is a bit over three. Most operators, asked to guess their churn, name a number that implies a contract life far longer than their own records support — which is the reason this tool asks you to count rather than estimate.
Keeping one, in almost every case, and this tool prices the difference. Winning a replacement costs a full acquisition — the enquiry, the site visit, the quote, the mobilisation. Keeping one usually costs a scheduled conversation before the anniversary. The replacement-cost line on this page is the annual price of not having that conversation.
Take the contracts you held twelve months ago, count how many of those you still hold today, and divide the lost ones by the starting number. Do not include contracts won during the year in the denominator — mixing them in produces a churn rate that is too low, and it is the most common way this figure gets flattered.
This is the calculation that usually answers that. If you win twenty-four contracts a year and lose twenty-two, the advertising is doing its job and the business is standing still. The net-change line separates the two, and it is worth running before any decision to increase the budget — otherwise more spend just replaces losses faster.
The $500 starting value is a hypothetical input chosen to demonstrate the arithmetic. It is not a client result or an industry average. Replace it with advertising, sales and other acquisition costs divided by the contracts you won.
Run these next
One number rarely settles anything on its own. These three answer the questions this one raises.
Customer lifetime value
Add repeat work, retention and referrals to a first job, then set the result against your acquisition cost — with no invented benchmark ratio attached.
Editable example inputs — use your own figures
True cost per booked job
Add management fees, tools and tracking to your media spend, divide by booked jobs rather than leads, and see what is left of the margin after acquisition.
ATO
Marketing budget from a revenue target
Work backwards from an annual revenue target to the monthly ad budget behind it, and see what that budget is as a percentage of the revenue it has to produce.
Editable example inputs — use your own figures
We will read
your real ones.
Send us the account rather than the estimate. We will tell you what it is actually costing to win a job, which part of the chain is leaking, and whether it is worth fixing — before anyone asks you to sign anything.