HVAC Pricing Strategies: How to Control Costs & Make More Money
By: Paul Redman
All the passion and professionalism in the world can’t make up for a bad HVAC pricing strategy. Your business will only be as successful as your bottom line. As a small company, you must have an effective HVAC pricing strategy that allows you to recover costs and produce a reasonable profit on your services.
Sounds simple, right? Unfortunately, it is a complex and sometimes overwhelming undertaking.
Luckily, there are ways you can control costs, make more money, and ultimately manage your HVAC profit margins.
The Top 5 Basics of a Proper HVAC Pricing Strategy
When it comes to laying out the pricing structure for your business, things can quickly become overwhelming. You know it’s one of the most important pieces to a successful business, but you don’t know where to start.
By taking things one step at a time, you can eliminate the stress and feel confident you are ready to launch your HVAC business successfully.
- Step 1: Identify your level of service. Are you the Dollar Store of HVAC companies or do you strive to be the Nordstrom? If you decide to be a more high-end company, your services, training, supplies, and new hires must all reflect that in order to justify the pricing.
- Step 2: Know all your costs. Once you know the costs associated with each major service offering, you can start to figure out pricing. This means including all labor, parts, marketing investment, lifetime guarantees, etc.
- Step 3: Decide on pricing strategies. Will you be doing promotions? Will you bundle services? Will you offer lifetime guarantees? Free assessments? Depending on the types of services you choose to build into your pricing model, you must account for them in terms of your bottom line.
- Step 4: Define your breakeven figure. After costs are calculated for specific services you must also identify all overhead costs broken down by department. If you are doing paid ads online or using a marketing agency for advertising, all of these things will impact your breakeven figure.
- Step 5: Build a profit margin. Once you know your breakeven figure and have accounted for any promotions you plan to run in the future, you can choose a baseline percentage to mark up your service costs. Don’t sell yourself short. Follow the lead on your costs, your business plan, and price your services to support your goals as a company.
Why HVAC Business Profit Margins are so Important
Proper pricing affects every other area of your business. In fact, if a company doesn’t find a good balance when it comes to profit margins, they might not have the liquidity to continue growing. Having this cash flow is essential to:
- Paying your employees well enough to attract and retain top talent
- Offering competitive benefit packages
- Investing in quality training programs for continued learning
- Paying yourself as the owner a fair salary
- Growing the company with new equipment, new hires, and other technology assets
The goal is to have a 15% operating profit after all of the other important expenses are paid out. You might not get it right the first time, but continue to track your expenses and adjust your pricing model accordingly.
Improve Your Marketing with Contractor Commerce
One of the best ways to improve your HVAC business profit margins is by cutting costs in certain areas of your business. Make your marketing dollars work harder for you with an updated website that allows your customers to buy services online. Learn how simple it can be to sell filters, maintenance agreements, tune-ups, and fully-installed systems with Contractor Commerce.
Contractor Commerce is a plug-and-play service that allows contractors to sell products, maintenance agreements, tune-ups, custom installations, and even fully-installed systems directly on their company website. Join the hundreds of contractors who already use Contractor Commerce and start selling online today.
RECOMMENDED FOR YOU:
HVAC Pricing Strategies: How to Control Costs & Make More Money
By: Paul Redman
All the passion and professionalism in the world can’t make up for a bad HVAC pricing strategy. Your business will only be as successful as your bottom line. As a small company, you must have an effective HVAC pricing strategy that allows you to recover costs and produce a reasonable profit on your services.
Sounds simple, right? Unfortunately, it is a complex and sometimes overwhelming undertaking.
Luckily, there are ways you can control costs, make more money, and ultimately manage your HVAC profit margins.
The Top 5 Basics of a Proper HVAC Pricing Strategy
When it comes to laying out the pricing structure for your business, things can quickly become overwhelming. You know it’s one of the most important pieces to a successful business, but you don’t know where to start.
By taking things one step at a time, you can eliminate the stress and feel confident you are ready to launch your HVAC business successfully.
- Step 1: Identify your level of service. Are you the Dollar Store of HVAC companies or do you strive to be the Nordstrom? If you decide to be a more high-end company, your services, training, supplies, and new hires must all reflect that in order to justify the pricing.
- Step 2: Know all your costs. Once you know the costs associated with each major service offering, you can start to figure out pricing. This means including all labor, parts, marketing investment, lifetime guarantees, etc.
- Step 3: Decide on pricing strategies. Will you be doing promotions? Will you bundle services? Will you offer lifetime guarantees? Free assessments? Depending on the types of services you choose to build into your pricing model, you must account for them in terms of your bottom line.
- Step 4: Define your breakeven figure. After costs are calculated for specific services you must also identify all overhead costs broken down by department. If you are doing paid ads online or using a marketing agency for advertising, all of these things will impact your breakeven figure.
- Step 5: Build a profit margin. Once you know your breakeven figure and have accounted for any promotions you plan to run in the future, you can choose a baseline percentage to mark up your service costs. Don’t sell yourself short. Follow the lead on your costs, your business plan, and price your services to support your goals as a company.
Why HVAC Business Profit Margins are so Important
Proper pricing affects every other area of your business. In fact, if a company doesn’t find a good balance when it comes to profit margins, they might not have the liquidity to continue growing. Having this cash flow is essential to:
- Paying your employees well enough to attract and retain top talent
- Offering competitive benefit packages
- Investing in quality training programs for continued learning
- Paying yourself as the owner a fair salary
- Growing the company with new equipment, new hires, and other technology assets
The goal is to have a 15% operating profit after all of the other important expenses are paid out. You might not get it right the first time, but continue to track your expenses and adjust your pricing model accordingly.
Improve Your Marketing with Contractor Commerce
One of the best ways to improve your HVAC business profit margins is by cutting costs in certain areas of your business. Make your marketing dollars work harder for you with an updated website that allows your customers to buy services online. Learn how simple it can be to sell filters, maintenance agreements, tune-ups, and fully-installed systems with Contractor Commerce.
Contractor Commerce is a plug-and-play service that allows contractors to sell products, maintenance agreements, tune-ups, custom installations, and even fully-installed systems directly on their company website. Join the hundreds of contractors who already use Contractor Commerce and start selling online today.
TRUSTED BY HUNDREDS OF CONTRACTORS
“It’s really easy to set up. I had an online store and was selling products within 48 hours of talking to these guys.”
Jeff K, Ductworks Heating & Air Conditioning“The Contractor Commerce team has been easy to work with and has even customized a few things to fit the needs of my business!”
Chris H, Dick Hill and Sons Heating and Cooling“We have several subscription customers already. This just means recurring revenue for us with no additional overhead or managing.”
Jason C, Advent Air ConditioningRECOMMENDED FOR YOU:
Industry-Leading Contractors Use Contractor Commerce
“The fact is, consumers would rather shop online than in person. If you don’t build an e-commerce presence, you won’t have the opportunity. Now is the time.”
Lou Hobaica, Hobaica Services“It was scary-easy to get set up. It’s plug and play. I drive people to the site, and I collect on the backend. Contractor Commerce takes the order, processes the order, and ships it…any HVAC company would be crazy not to start an online store with Contractor Commerce.”
Bob Reilly, Courtney's Heating & Cooling“Working with the Contractor Commerce team is simple. It’s great. They’re understanding, and they will do anything possible in their power to accommodate your needs. It’s an added service for us…it’s good for our customers”
Jeremy Shellabarger, Airtron Heating & Air Conditioning“Having our website store powered by Contractor Commerce gives us a unique competitive advantage in our market. Our friends in the industry look at our website and say, ‘Wow! That’s super cool. I don’t know why my company isn’t doing this.”
Lizeth Melisa, Comfort Pro“Having an online store from Contractor Commerce is great for our customers! It is convenient and easy for customers to order filters. It saves time when they can go right to the website, place their order and have the filter delivered within a couple of days. Plus, the Contractor Commerce team is great to work with. They are very responsive and helpful and I know they really care about my success!”
Karen B, Liberty Comfort Systems“It’s really easy to set up. I had an online store and was selling products within 48 hours of talking to these guys.”
Jeff K, Ductworks Heating & Air Conditioning“The Contractor Commerce team has been easy to work with and has even customized a few things to fit the needs of my business!”
Chris H, Dick Hill and Sons Heating and Cooling“We have several subscription customers already. This just means recurring revenue for us with no additional overhead or managing.”
Jason C, Advent Air Conditioning