Hvac services – How to charge and get profited
March 23, 2022
If the price isn’t correctly established to recover expenses and make a respectable profit for the company, the company will struggle to have the liquidity for their hvac services to grow.
Pricing correctly allows us to carry out the following disciplines:
- Pay your staff well enough to keep them, develop them, and attract new ones.
- To recruit employees, provide competitive perks.
- To increase team productivity, provide high-quality training programmes.
- Maintaining and acquiring new assets, such as vehicles and computers, as well as installing new technologies when needed
- Expand the business.
- Generate a decent amount of operational profit.
Pricing is, of course, just one aspect of establishing a successful contracting firm. Filling a position of hvac technician during a shoulder season when employment may be sparse is one example. That, too, can be a component of a pricing-related promotional opportunity.
After leadership, having a financial framework to know your figures so you can price comes as part of a business structure. Pricing, like the others, is based on basic fundamentals:
- Pricing that is in line with the business model of the company: Do you want to go for a specialized, high value, or a low cost/volume market?
- Pricing schemes include the following: Should you provide a discount during the air conditioning service shoulder season or not? To promote or not to promote?
- Methods and procedures for determining market prices: Whatever is the most effective for which market? For instance, what is the difference between hvac services and installation and hvac maintenance?
- Recovering (and being aware of) your expenses: Is it better to organize by department or by market segment?
- Pricing in accordance with market value: What is the value of your hvac technician’s knowledge? What is the value of your air conditioning service?
- Bundling (for example, a flat-rate “rejuvenation” service that includes hvac repair/s for a single charge)
- Benefits of a product/service, such as a lifetime warranty on repairs: What does that cost, and how much can you charge for hvac maintenance or for such an advantage?
In truth, there is no one-size-fits-all solution for hvac contractors to any of these issues. Only that all your answers should be consistent with the first question, what is a company model for hvac contractors. A company’s brand is what it is seeking to establish in the market, and price conveys that brand.
To begin with, determine your cost structure. Knowing how much it costs to run hvac services –
air conditioning service, hvac repair, hvac maintenance, a service call, an installation, hvac repair, hvac maintenance agreement product, or a commercial work is the first step toward calculating a breakeven point.
Following are some suggestions for preferable pricing techniques once costs have been determined:
- Install: With shoulder season promotions, gross profit per man day, or dual overhead;
- Residential demand service: flat cost with bundling and club membership savings;
- Commercial demand service: Commercial flat fee or time and materials;
- Gross profit per hvac technician/crew day as a commercial substitute;
- Dual overhead in commercial design-build;
- Dual overhead in a new home (custom or spec);
- Breakeven or gross margin % for residential hvac maintenance (this is labor-intensive);
- Breakeven + a goal profit contributed by the building/equipment profile for commercial maintenance.
After the expenses are understood, each market sector may have its own way of determining a price. Pricing is important for any business to succeed. It is disciplined, and while it is both art and science, the science comes first in order to understand a company’s cost structure before the answers to the questions above can be known and the “art” developed.