HVAC Pricing - Contractor Talk - Professional Construction and Remodeling Forum

Nate_blaze · 09-13-2005, 02:15 PM

Recently, we've started our own hvac install business. Several jobs we've had told us we were a lot cheaper than many other companies. I recently met with four other contractors, three had no formula. The other said he charges material + 17% and $75 an hour for two techs (of course he estimates the time to do it).

I don't want to cheat the guys working for us or myself. What may be a good formula for furnace and A/C installs, generally speaking. Could you recommend one?

Nate_HVAC

bellerose · 09-13-2005, 03:34 PM

I used to do commercial HVAC and a lot of the guys did side work on residential. Here in Nj for example a 3 ton condenser would cost about 1500.

I would call other epople and pose as a customer and ask how much for this
and that. they will tell you over the phone most of the time.

mdshunk · 09-13-2005, 06:45 PM

I'm curious how you got four other contractors (presumably your competition) to open up and talk about how they price jobs?

HVAC Doc · 09-13-2005, 10:06 PM

I am with MD on this. Even some of my closest friends and I in the biz don't discuss pricing. I mean we have a "general" idea of what each charges, but that is it. As for the calling over the phone and being a customer, I defeat that since I don't have boxed "quotes". If they don't want me to come out and actually look at the job and ductwork and do a load calc., I don't want the job. I will say that my equipment has it's own mark-up rate (different from our parts set- up) and it is done by each piece. So depending on what Furnace, A/C (or heat pump), and evaporator coil you want, it will vary on just the equipment alone depending on the customers wants/needs and the job specs.

Nate_blaze · 09-13-2005, 10:39 PM

Quote:

Originally Posted by mdshunk

I'm curious how you got four other contractors (presumably your competition) to open up and talk about how they price jobs?

All were at a city meeting for emerging business enterprises meeting, checking for open bids and contract guide lines.

Bjd · 09-14-2005, 05:19 AM

Nate
I am also a member of a small select group of contractors, we do get to
meet every month for breakfast. During our meeting we talk about up coming jobs and pricing, bids and what such.

We also compile list of each others tools, so that in the future they can be swapped around.

Many of these guys will open up on pricing, out of the ear shot of some of the other members.

So yea, you can get a group of 4 or more guys together and gather prices.

BJD

Bob Kovacs · 09-14-2005, 05:22 AM

Nate-

There's no "formula" for figuring out the price for a job- you need to understand your overhead costs, your actual labor costs, and your material pricing. The easist way to price work as a specialty contractor is to roll all of your overhead into your labor rates, add for material, and then add profit to the whole thing.

Don't bother trying to compare your pricing to your "competition"- you have no idea what their overhead is, what they pay their help, or what they want to make as a profit. Some of them will be higher than you, and some lower- the only thing that matters is that you're covering YOUR costs, and making a profit. There's nothing wrong with being the low bidder if you're making money doing it- that's not "cheating" anyone.

Bob

Nate_blaze · 09-14-2005, 08:29 PM

Quote:

Originally Posted by Bob Kovacs

Nate-

There's no "formula" for figuring out the price for a job- you need to understand your overhead costs, your actual labor costs, and your material pricing. The easist way to price work as a specialty contractor is to roll all of your overhead into your labor rates, add for material, and then add profit to the whole thing.

Don't bother trying to compare your pricing to your "competition"- you have no idea what their overhead is, what they pay their help, or what they want to make as a profit. Some of them will be higher than you, and some lower- the only thing that matters is that you're covering YOUR costs, and making a profit. There's nothing wrong with being the low bidder if you're making money doing it- that's not "cheating" anyone.

Bob

Hey Bob,

After considering your comments, I have to say, "That's a great peace of advice!" I have all the work I can handle now and make an excellent profit. So I'll stick with my profit method until I have to charge more. :Thumbs:

Humble Abode · 09-14-2005, 08:33 PM

Quote:

Originally Posted by Nate_blaze

All were at a city meeting for emerging business enterprises meeting, checking for open bids and contract guide lines.

Where the heck was I for that?!?

Seriously, not to highjack the thread or anything, It's nice to see someone else from Milwaukee here.

-Joe

mdshunk · 09-20-2005, 09:09 PM

Quote:

Originally Posted by Nate_blaze

All were at a city meeting for emerging business enterprises meeting, checking for open bids and contract guide lines.

And you're considering taking pricing and operational advice from these "emerging" business owners? Talk about the blind leading the blind. Sorry so blunt, but I bit my tongue for several days pondering that comment. Thankfully Bob has you on the right road now.

hauoli63 · 09-21-2005, 04:27 AM

Quote:

Originally Posted by Nate_blaze

...I don't want to cheat the guys working...

Nate_HVAC

You can't cheat the guys working for you ... they accepted a job at a particular rate, whether it's piece work, hourly, or salary ... completely independant from what you charge your customers. What you charge your customers affects your profit.

mdshunk · 09-23-2005, 05:48 PM

Quote:

Originally Posted by hauoli63

You can't cheat the guys working for you ... they accepted a job at a particular rate, whether it's piece work, hourly, or salary ... completely independant from what you charge your customers.

I very strongly disagree with that thought. Just because the guy might not have been a good enough negotiator during the hiring process (either because he was bashful or just really wanted the job and didn't want to seem greedy), that's no reason to still hose the guy for the whole time he works for you. Yes, you certainly can cheat the guys working for you. You may think that they are doing good work for a cheap price, and you're happy. All the while, the guy is silently resentful and combing the classified ads every day when he gets off work. Just because a guy "agreed" to a certain rate does mean that it was right of you to offer it in the first place. There are many, many pressures that will make a man agree to a rate, and few of them have anthing to do with his feelings on his acutal worth.

Charge well so that you can pay well and give the guys the bennies they deserve. Hiring new people all the time sucks, and it's expensive. Treat the ones you have well, so that they stay and you continue to prosper.

hauoli63 · 11-06-2005, 04:22 PM

Our guys are paid well ... with frequent increases ...

Bestheating · 12-03-2005, 01:24 PM

WOW! When you get past the pricing game, you will be successful - I think! I used to spend hours pouring over prices of equipment and cost to install. It didn't do any good. I have two lines of furnaces, better and Best. Most sales are in the 80% or 92% configuration. We don't seem to sell very many 2 stage units.
If you get a typical price, with which you are comfortable, stick with it. Sure, motivated buyers (in the cold) will sometimes bite on anything, but it will come back to haunt you later on.
Remember that if you have a real business and are not just doing this on the side, you must cover your very real overhead.
Bottom line is that you are not just selling a product, it is a service. The customer wants to know that you are knowlegible with your work and will be there every year to clean it and YES YOU DO WANT THE BUSINESS OF THEIR FRIENDS AND FAMILY! Make sure your price AND YOUR WORK reflect that message. My customers sometimes squirm about the price, but they sure like the work.