Every home services CIM has a slide claiming 40%, 60%, sometimes 80% recurring revenue. Sophisticated buyers reflexively cut those numbers in half. The reason: the word 'recurring' hides at least four different qualities of revenue, and they trade at radically different multiples.
The gold standard is contracted, autopay maintenance revenue: a customer under a written service agreement, billed monthly or annually via ACH or credit card on file, with a defined scope of service. That revenue behaves like a SaaS book — it renews predictably, it churns slowly, and a buyer will underwrite it at 8x, 10x, sometimes higher.
One tier down: uncontracted-but-scheduled maintenance — the customer we visit twice a year for a tune-up, no written agreement, no card on file, but a 15-year relationship. Real revenue. Real retention. But it churns faster in an ownership transition, and it can't be underwritten as a contracted book. Buyers pay for it — just not the same way.
Tier three: route-based transactional revenue — think pest control on a defined schedule that customers can cancel any month, or pool service. Retention is high but structurally not contracted. This is where founders and buyers most often disagree on multiple.
Tier four — and the one where most inflated recurring numbers hide — is repeat customer revenue. A homeowner who called you three times over four years for repair work is a repeat customer. They are not recurring revenue. Repeat is a lagging indicator of quality; recurring is a forward commitment. Sophisticated buyers will not underwrite repeat revenue as recurring, and if a seller's numbers depend on doing so, the LOI comes in lower.
The practical takeaway for founders preparing to sell: segment your revenue by tier before you go to market, be honest about the mix, and — if you have time before you sell — convert as much tier 2 and tier 3 into tier 1 as you can. Every dollar you shift up a tier lifts your enterprise value by 3–5x that dollar's contribution to EBITDA.
