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Designing an Effective Pricing Structure in the HVAC Market

 In most trade industries contractors are always aware that homeowners often times look at second and even third options, or job quotes, when looking at choosing the right contractor for their HVAC replacement. Every contractor starts out obviously with a cost-plus strategy in the sense that you the contractor purchase the HVAC equipment from a wholesaler and then mark it up a certain percentage to sell to the homeowner or business owner. But, there’s no reason to stop right there, because the homeowner wants to see value in the service and product you are providing them.

               The thing you do not want to do as a HVAC contractor is present a job quote relied upon competition based pricing. This structure just simply means you are looking at the other competition around you and basing your prices either right in the line with them, or maybe even the lowest based on information given to you by the homeowner. It is vitally important in the HVAC market to structure your pricing so that you’re providing the homeowner with value and not necessarily just the cheapest price in your respective market. Because at the end of the day you are not only trying to make the homeowner happy, but also make a decent profit for your sale.

               For a value-based pricing strategy try offering the owner a “Good, Better, Best” option. Offer them a “Good” tier option that includes the cheapest HVAC unit you can provide with all of the same accessories, installation steps and setups. Alongside the good option offer them a “Better” tier option that includes the same installation steps and setups, but instead has a better HVAC unit than the “Good” tier and is step above in price. Finally, also offer a “Best” tier option as this has the best HVAC unit you can provide, but obviously is the most expensive. Giving the owner different tiered pricing options to choose from lets them see which one makes the most sense financially and, also, which one creates the most value for them.

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