HVACR BUSINESS FEBRUARY 2022 by HVACR Business

10 Questions to Fine-Tune Your Marketing Strategy Terry Tanker 5

Find The Right People Ben Hubbert 6

Financial Basics For Contractors: Part 2 Skip Snyder 10

Selling ‘Comfort’ to Customers Richard Hartman 15

The Super Rich’s Three Big Fears Keven Prather 18

HVACRBUSINESS.COM FEBRUARY 2022 / VOL.17 / NO.2

RESIDENTIAL SERVICE AGREEMENTS PART 2:

BUILDING A DYNAMIC & HIGHLY PROFITABLE HVAC RETAIL BUSINESS page 12

ALSO INSIDE » Ruth King: Pricing Using Net Profit Per Hour Gives You Ultimate Flexibility........................................19 Product Focus ............................................................20 20 Questions with Luke Caldwell, Star of HGTV’s Boise Boys..........................................22

MATTHEW HOLTKAMP Owner

BUILDING A HIGHER STANDARD. ONE DEALER AT A TIME. American Standard is proud that our dealers set the standard. From a welcoming smile on the side of their trucks to supporting the local arts and business communities, this dealership has become a ubiquitous and standout member of their local community in Northeast Atlanta. Congratulations to Holtkamp Heating & Air for your 2021 Building a Higher Standard Award.

See how you can become a dealer at

amsd.us

SEE THEIR STORY AT

AMSD.US/HOLTKAMP

CONTENTS

FEBRUARY 2022 / VOL.17 / NO.2

F E AT U R E S

6 10

Find The Right People Why you need people smarter than you. Ben Hubbert

D E PA R T M E N T S

A successful marketing communications strategy is no different than any other part of your business operation — you get out what you put in. By Terry Tanker

Financial Basics For Contractors Part 2: Formulas For Success: Commercial Contractors Adhering to business principles spells the difference between profit and loss. Skip Snyder

Publisher’s Page

Residential Service Agreements Part 2: Building A Dynamic & Highly Profitable HVAC Retail Business

Products

Why some service agreements work and others flop. Ron Smith

20 Questions with Luke Caldwell,

Selling ‘Comfort’ to Customers It’s a mix of health and quality that helps close the deal. Richard Hartman

C O LU M N

The Super Rich’s Three Big Fears – and How They Work to Overcome Them

Pricing Using Net Profit Per Hour Gives You Ultimate Flexibility

Yes, the rich are different (including their fears). This is why. Keven Prather Do the math and learn the subtleties that make net profit per hour work for you. Ruth King

Star of HGTV’s Boise Boys

What is the Estimated Value of Your Business? Scan the QR Code or Visit tinyurl.com/transitionext to Start your Complimentary Business Evaluation

www.TransitioNextAdvisors.com n 440.895.7515

Keven Prather of TransitioNext Advisors is a monthly columnist for HVACR Business. Securities, investment advisory and financial planning services offered through qualified registered representatives of MML Investors Services, LLC Member SIPC (www.sipc.org) OSJ: 2012 W. 25th St., Ste. 900 Cleveland, OH 44113. 216.621.5680. TransitioNext Advisors® is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. CRN202501-1630930. TransitioNext Advisors® does not provide qualified business valuations. For a qualified or certified business valuation, consult a properly credentialed appraiser.

THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker Publisher ttanker@hvacrbusiness.com MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

ADVERTISING STAFF ERIC Hagerman National Sales Manager Tel 216-409-3246 ehagerman@hvacrbusiness.com TERRY Tanker Publisher Tel 440-731-8600 ttanker@hvacrbusiness.com

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

HVACR Business, founded January 1981, is a monthly national trade magazine serving contractors, mechanical engineers, manufacturers, manufacturer representatives, wholesalers, distributors, trade associations, and others in the heating, ventilating, air conditioning and refrigeration (HVACR) industry primarily in the U.S. The editorial focus and mission of HVACR Business is to provide business owners and managers with the very best business management concepts available. Critical topics covered include leadership, management, strategy, finance, sales, marketing, training, education, staffing, operations, human resources, legal issues, customer service and more. We are dedicated to helping contractors master these key management skills and provide them with the resources necessary to build strong, profitable companies. Every effort is made to provide accurate information, however, the publisher assumes no responsibility for accuracy of submitted advertising and editorial information. Copyright©2022 by JFT Properties LLC. No part of this publication may be reproduced or retransmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees. This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the authors nor the publisher may be held liable in any way for any interpretation or use of the information in this publication. The authors will make recommendations for solutions for you to explore. Any recommendation is always based on the authors’ research and experience. The information contained herein is accurate to the best of the publisher’s and authors’ knowledge; however, the publisher and authors can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. Subscription Rates: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: U.S. and possessions: 1 year $48; 2 years $75; 3 years $96; Canadian and foreign, 1-year $108 U.S. funds only. Single copies $8. Subscriptions are prepaid, and check or money orders only. Subscriber Services: To order a subscription or change your address, write to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039 or call (440) 731-8600; or visit our Web site at www.hvacrbusiness.com. For questions regarding your subscription, please contact bkerr@hvacrbusiness.com. HVACR Business (ISSN 2153-2877) Copyright ©2022 is published monthly by JFT Properties LLC,31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039, Phone: 440731-8600. Periodicals postage is paid at North Ridgeville, OH and additional mailing offices. (USPS 025-431) POSTMASTER: Send address changes to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039.

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600 Web site: www.hvacrbusiness.com (ISSN: 2153-2877)

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PUBLISHER’S PAGE

BY TERRY TANKER

10 Questions to Fine-Tune Your Marketing Strategy

well-designed marketing strategy is a key component of driving short- and long-term revenue and growth. Here are 10 critical questions your management team can use to build highly effective communications between your company, your customers, and your prospects.

A successful marketing communications strategy is no different than any other part of your business operation — you get out what you put in.

1. Who is the consumer of our products and services? While this seems like a simple question, the answer is anything but. Customers fall into income groups, male or female, housing value (low, medium, or high), age categories, commercial categories, titles, ethnicity, etc. What’s important is to gather as much information as possible about who will buy your products and services and why. All will have different reasons and rationale for buying. 2. How do our products and services fit the group(s) we’ve identified? What do they do for customers/ prospects (in their eyes)? How is your product/service different from your competitors’? How do customers/ prospects perceive differences in the products and services in the marketplace? 3. How do our major competitors communicate to customers/prospects? Do your programs compete for time and attention? (Think about this not just with HVACR, but also with the entire home-investment marketplace.) It’s important to know what you are competing against if you want to have the upper hand in communications. Also, evaluate the competition for strengths and weaknesses. It’s logical to exploit their vulnerability. 4. What information will make customers/prospects believe in the benefits of our products and services? Most importantly, do you understand enough about the customers’ needs and expectations to put together this type of information? 5. Does our company have a personality or a brand that separates us from competitors? Can you use your brand to further define your products and services and to add value to the selling proposition?

to request a brochure; call for an appointment; or possibly come to an open house to see your showroom and a product demonstration?

7. Have we established measurements whenever and wherever possible for our program? Marketers who complain they can’t document the ROI on their marketing communication plan fall into two categories: Too lazy and way too lazy. For every marketing program you can think of, there are ways to measure it. If you follow the guideline in No. 6, you will have a potential measurement for the message or the medium. If you don’t get the behavior you’re looking for, modify or change the message — and do it until you see the result you are after.

8. Have we done enough research on our existing customers? Use every means possible to gain feedback. Ask a question or two from every caller, conduct website inquiries, and use your customer service call center. Keep track of the questions and the answers and use them to tweak the communications. List the types of research you will need in the future to enhance the effectiveness of your program. 9. Have we established a database of customers/ prospects? Populate it with critical buying information for specific targeting programs, such as spring or fall tuneups, specials on accessories, IAQ issues, duct cleaning etc. Use all of your resources (phone, in-person calls, mailings and more) to collect this critical data. 10. Do we know enough about social media? To be competitive you not only need a great website but a social media presence as well. To be effective, and to be competitive, you will have to both understand and use a multitude of platforms. We’ve written extensively on the subject, and articles are available for review in our archive at www.hvacrbusiness.com. A successful marketing communications strategy is no different than any other part of your business operation — you get out what you put in. As the leader of your organization, you have to know what you are communicating to the marketplace, how you are communicating it, and how you are analyzing the results. u

6. What do we want the customer/prospect to do when they see, hear, or read our marketing message? This is a critical question for moving a potential buyer’s behavior along to the eventual sale. Do you want them

HVACR BUSINESS FEBRUARY 2022

FIND THE RIGHT PEOPLE

Recruiting should be a constant process, and interviewing should take time BY BEN HUBBERT

ecruiting and hiring is not easy. It’s a challenging responsibility that involves finding the precise fit to fill a specific position in your company, almost like finding a needle in a haystack. It doesn’t matter what size your company is, where you’re located or what the predominant service is you’re providing, hiring will always be of highest importance in moving your business forward.

Hire people who are smarter than you and more qualified for the position than you are, because they’ll be doing the work that moves your company forward. To create a well-oiled machine, each part has to perform its own function at its optimal capability. The same can be said for the team members you hire. You need to have the best people performing the

HVACR BUSINESS FEBRUARY 2022

right functions To get those people, the interview process must be more than a one-hour question-and-answer session. Keep your interviews constant. Don’t simply look

for the A players when someone quits or you have a position to fill. Create a virtual bench of individuals you’d like to have working with you, regardless of circumstances.

ALWAYS BE LOOKING Include a call to action on your website that states your company is always on the lookout for qualified candidates. Don’t put the hiring process in a box. Open it up so you can cast a large net, then select those best suited to be on your team.

www.hvacrbusiness.com

Be sure to provide a job description to interested individuals for the position so you clearly communicate the responsibilities, as well as the culture and environment of your company.

Create a virtual bench of individuals you’d like to have working with you, regardless of circumstances.

Don’t interview everyone. Sort through the resumes you receive and separate them into three piles: Yes, Maybe and No.

Some qualifying questions may include:

Yes, there have been times when candidates have flat out told me they haven’t visited our website or they cannot provide any answer with substance in describing our company or what they know about us. This is an instant red flag.

www.hvacrbusiness.com

Have a conversation, not a question barrage. Get to know what purpose they want to serve, what excites them and how they enjoy being managed. The resume should show you their skill sets. Ask questions about skills to confirm what is on paper, but make sure you go beyond skill.

Delegate one of your team members to call the individuals you designated as a yes or maybe, then create a list of qualifying questions to further filter your pool and focus your energy on interviewing those who are closest to what you envision as your ideal candidate.

What do you know about our company, and why do you think you’d be a great fit?

face-to-face time to get to know them as well as possible. Learn about the person, not just his or her skills.

What is your desired salary range? This is an obvious question that will give you a good idea of whether or not your expectations align.

What are you passionate about (or what motivates you)? This is a good question for an in-person

interview, but is also a great qualifying question. If the individual seems far more passionate about something that does not align with your company’s mission, purpose, product or service in any way, perhaps they’d be better fit to follow a job that can serve that passion. Once you select the candidates you want to interview in person, use the

Look out for individuals who are hungry and humble. Hire people who are smarter than you and more qualified for the position than you are, because they’ll be doing the work that moves your company forward. This will give you more time to work on the business while they work in it — finding better technologies to serve your customers, providing higher quality products or finding ways to deliver the services with more time efficiency.

USE YOUR CORE VALUES We share our core values with potential continued on page 8

HVACR BUSINESS FEBRUARY 2022

continued from page 7

candidates prior to interviewing them: Under promise and over deliver. Treat customers like family. Play to our strengths. Ask when you need help. Think

before reacting. Always do what is in the customer’s best interest. Do what you say and say what you mean. Always deal in facts, not assumptions. We then incorporate these values into the interviews — integrating them into

ADRIAN STEEL .667

questions with on-the-job scenarios or questions about how they use these values in their personal and professional lives. If they can share genuine answers, this provides great insight into their character, values and how they would align with

those whom they are working alongside each day.

COACH UP When we hire, we don’t just consider bringing in a person who will fit the role; we also think about whether we may ultimately foresee that person serving as a leader of our company. We want candidates to know that being a part of Champion AC means there will be opportunities to grow, move up the ladder and lead the way for future team members.

When we hire, we don’t just consider bringing in a person who will fit the role; we also think about whether we may ultimately foresee that person serving as a leader of our company. This will instill a feeling of belonging for the person you decide to hire and will provide them with a sense of ownership to the role, their work and the mission and success of the company. Lastly, take your time hiring. Ensure you have the right people in the right seats headed in the right direction. Spending adequate time finding team members who will make your company better and be with you for the long haul makes the energy worth the while. u

Ben Hubbert, co-owner of Champion AC, is a former member of Special Operations in the Air Force (Combat Control) who’s now committed to helping the San Antonio community reduce its demands on the energy grid. Ben is a firm believer in education and constantly teaches new customer service approaches and techniques. Visit www.championac.com for additional information.

HVACR BUSINESS FEBRUARY 2022

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FINANCIAL BASICS FOR CONTRACTORS PART 2:

Formulas For Success: Commercial Contractors Editor’s Note: Part 1 of this two-part series, which appeared in the January issue, covered “Five Crucial Measures for a Sound Company.”

BY SKIP SNYDER

hope last month’s column convinced you to learn more about business finance. Once you have, you may start to rethink some of the financialmanagement methods that you’ve used in the past. I have compiled some of the highlights of what I’ve learned over the years as a teacher and commercial contractor. It’s important to understand that this information is based on my business experience, my business model (commercial; no residential), and my outlooks and opinions. What is presented here are guidelines. Learning more about your own business will help you understand how these concepts might apply.

Make an effort to learn about your own business and how these concepts might apply. JOB COSTING AND OTHER FORMULAS Job costing has many facets. In last month’s column, we spoke about the cost of delivering a talented technician to the customer on an hourly basis by adding in your personal return on investment and the impact of market dynamics. Additionally, most of us have slow seasons no matter how hard we try to take seasonality out of our business. Pricing a

HVACR BUSINESS FEBRUARY 2022

bid that will give us work during our slow season requires additional factors such as the value of subsidizing payroll to provide our employees a 40-hour workweek.

• sub-contract costs........................... $500 • sales tax............................................ $180 • warranty........................................... $500 • other................................................. $250 • total............................................... $ 4,430 • material, sub-contract,. warranty mark up ...................................................... 35% • total costs without labor....... $5,980.50

Here’s an example for a commercial contractor that shows how to quote a job:

• add labor at prevailing hourly rate ($100 per hour)........................... $4,000

• material costs.................................. $500

• total quote.............................. $9,980.50

• equipment costs...........................$2,500

Another major challenge is collecting accounts receivables. Here is a simple formula that will give you an idea if your

• direct labor costs................................. $0 ($50 per hour for 40 hours)

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collections are helping or hindering your business.

decide if the net income you generate is adequate. Here are some guidelines:

split up among different people and departments.

Accounts receivable collection days: Accounts Receivable divided by Annual Sales, multiplied by 365 days

• Excellent................... Greater than 10%

• Secure unused checks and check signing stamps/plates.

In general, the chart below will indicate whether you are operating an efficient commercial business: • Excellent..... Less than 30 days to collect • Good........ Less than 60 days to collect • Fair ........... Less than 90 days to collect • Poor..................................... Over 90 days Sometimes you may run into the 60- to 90-day period at times due to customer billing cycles. If you know (and you

• Good..................... Between 6% to 10% • Fair........................... Between 3% to 5% • Poor.................................... Less than 3% Return on total assets: Net Income divided by Total Assets (assume annual number) This formula reflects the return (income to yourself in addition to a salary) you should expect on your investment. Many business owners neglect to take their return on investment out of their business annually. Here are some guidelines:

Pricing a bid that will give us work during our slow season requires additional factors such as the value of subsidizing payroll to provide our employees a 40-hour workweek. should) that a customer will take 90 days to pay a bill due to administrative issues and not due to marginal business practices, we factor in the cost of not having that money for at least 60 days. What would it cost us to borrow this money from a bank? We take this value and add it to the job.

WORKING CAPITAL: TOTAL CURRENT ASSETS MINUS TOTAL CURRENT LIABILITIES Simply put, you need cash to pay your bills. It can come from the sale of stock, loans, and lines of credit. Your working capital should be at least 10% or more of your annual sales. Depending upon billing cycles and collecting accounts receivables and the type of business you operate (such as new construction or service and repair), this percentage will vary. In my business we target 25% of annual sales for funding our business.

RETURN ON SALES: NET INCOME DIVIDED BY GROSS SALES (ASSUME ANNUAL NUMBERS) This figure will give you an idea whether your business is generating adequate income for the exposure (gross sales). Remember, you need to look at your equity exposure to the risk of business to

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• Segregate check writing and bank reconciliation. • Bank statements/canceled checks should be mailed to the owner’s home. • Only sign checks with proper support documentation.

•

Minimize use of manual checks and account for all check numbers. u

Skip Snyder was president of Snyder Company Inc., Upper Darby, Pa.; was the 2004 chairman of ACCA; and was chairman of NATE from 2000 to 2003.

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• Excellent....................Greater than 20% • Good............... Between 11% and 20% • Fair.......................Between 5% and 10% • Poor.....................................Less than 5%

DEBT-TO-EQUITY RATIOS: TOTAL LIABILITIES DIVIDED BY TOTAL EQUITY

Comprehensive Online Courses Available On-Demand

This is a quick way to find out how liquid your company is. Here are some guidelines: • Excellent.......................... Less than 0.50 • Good......................Between .50 to 1.25 • Fair....................... Between 1.26 to 2.00 • Poor............................ Greater than 2.00

GETTING STARTED One easy way to improve your financial responsibility as a business owner is to follow this checklist: • No one person or department should handle all aspects of a transaction from beginning to end. •

Perform a periodic physical inventory and augment with cycle counts.

• The receiving, disbursing, and reconciliation of cash should be

NATE Training Academy is an online training platform to prepare HVACR technicians for NATE certification. The interactive and online classes include voice over PowerPoints, "field like" 3D and VR simulations, and knowledge checks.

Learn more at:

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HVACR BUSINESS FEBRUARY 2022

RESIDENTIAL SERVICE AGREEMENTS PART 2:

BUILDING A DYNAMIC & HIGHLY PROFITABLE HVAC RETAIL BUSINESS With Residential Service Agreements BY RON SMITH This year, in each issue of HVACR Business we’ll be publishing an article from our archive based on popularity and website traffic. This is the second in a series from Ron Smith. We hope you enjoy.

n the January issue I introduced readers to the lucrative world of service agreements. For the second installment, I will discuss and recommend specific steps required to get your company moving toward a highly successful residential service-agreement program. It is important to start with a structured and organized approach. A high percentage of contractors have a service-agreement program, but a surprisingly small

A high percentage of contractors have a service-agreement program, but a surprisingly small percentage of contractors have been successful with their programs. percentage of contractors have been successful with their programs. In fact, I have seen many contractors experience service agreement “false starts,” which result in

HVACR BUSINESS FEBRUARY 2022

dwindling enthusiasm for the program. Once you’ve decided to embark on a successful service-agreement journey,

there are several initial steps you must take. Next month, the final installment of this series will help you fine tune your approach. For now, I ask that you focus on this logical and sequential order:

OWNER BUY-IN Without complete commitment and understanding of a service-agreement program by the owner, as well as other company leaders, the program will not succeed. www.hvacrbusiness.com

In all companies, the owner sets the example. Other leaders and coworkers emulate and follow their lead. As mentioned last month, the owner must exhibit the same enthusiasm for a $150 service agreement sale as a $15,000 equipment replacement sale. The owner and other leaders must remember that service agreements are an investment in the future.

me to budget at least two hours for this meeting.

Indeed, if properly serviced and marketed, your company will achieve an annual average of over $700 per service agreement customer with very little price resistance and minimum marketing costs.

To facilitate the discussion, use a whiteboard and make three columns: “What should we do?” “How should we do it?” and “Approximately how much money could a customer save each year?”

Company leaders that have the proper commitment and enthusiasm can create and maintain a service-agreement culture within the entire company.

In this first meeting address only air conditioning tune-up procedures. In another meeting address heating tune-up procedures.

To ignite enthusiasm with new consulting clients, I always insist that the company owner be the first to invest in a service agreement. By signing as the homeowner on an agreement that has been presented by one of the company’s service technicians, it forges confidence that the program is important.

The management technique I’m suggesting is inclusion through participation. Thinking leads to involvement, involvement leads to commitment. By asking technicians to help you come up with the solution, you are involving them in the process. When you finalize the initial steps of the program and start actively selling service agreements and performing the tune up procedures that they helped determine, they will cooperate in selling them — it is their program because they were involved in the decision-making process.

To serve as a constant reminder, the signed agreement, as well as a copy of the personal check made out to the company, is framed and displayed in a prominent area in the company office. By doing so, the owner has sent an obvious message to other co-workers that this program has his seal of approval. The owner also should encourage other leaders to do likewise.

TECHNICIAN TRAINING How to perform a quality precision tune-up and professional cleaning is a crucial step to the program’s success. And, rather than telling technicians what these precision tune-ups have to include you should be asking them for their input on what the best practice procedures are. Residential service agreements should also include two precision tune-ups per year. One in the spring and the other in the fall. Here is how it is accomplished: In a meeting with all your technicians ask, “If we are going to have a first rate serviceagreement program and we want to perform the very best, highest quality tune-up in the area, what exactly should we include?” My experience has taught www.hvacrbusiness.com

Residential service agreements should also include two precision tune-ups per year. One in the spring and the other in the fall.

A typical meeting often goes like this: Let’s suppose the first “What should we do?” answer is “Clean the condenser coil.” Put that answer on the whiteboard and move to the next question, “How should we do it?” Eventually, a decision will be made on the very best procedure and the best product to use. Two things have already happened, you now have the best procedure for cleaning condenser coils and you have a policy for how everyone in the company now cleans condenser coils. The last question on condenser coils: “Approximately how much money could a customer save each year?” The technicians will give you a range and the number will be significant. Continue the meeting by listing all of the technicians’ tune-up information in the three columns. Total the approximate annual savings — you’ll be amazed by the dollar amount. Indeed, I have gone through this

training exercise with service technicians literally hundreds of times and their approximate annual savings has always exceeded the customer’s dollar investment in the service agreement. This is a powerful marketing tool. Once you’ve arrived at the best procedures, you can call them precision tune-ups, professional cleanings, and safety inspections — rather than clean and checks or inspections. Keep in mind that what is mapped out on the whiteboard is exactly what must be delivered to your customers. Otherwise the technicians were simply manipulated.

SUPPORT STAFF TRAINING There are several administrative duties associated with service agreements and this is an area that has certainly contributed to “false starts” in serviceagreement programs. This is largely due to the lack of training. It’s very important that you have the policies, procedures and processes in place and that the support staff is well trained in their use. This means that the inside support staff must have the required processes in place to record new service agreements, pre-schedule precision tune-ups in the determined months, work closely with customers in scheduling, route the collected payments for deposit, track commissions, track sales leads generated by service technicians, and process the renewals of existing service agreements.

PRICING STRATEGY Your pricing must address two products: First, non-service-agreement tune-ups, second, service agreements. Marketing and performing non-serviceagreement tune-ups is the most effective method of selling service agreements. It places your technicians in the home and gives the customer first-hand experience with your expertise. Once you’ve gained their confidence, you can sell them yearly service agreements.

Let’s suppose, as an example, you would like to market non-service-agreement tune-ups at a 65% gross profit and your calculations produce a sales price of $135. With this information, the decision is made to price the tune-ups at a list price of $140. This allows you to offer them a discounted price of $130. (I have marketed non-service-agreement tune-ups in the $130 to $150 range for many years and have, as a result, literally sold thousands of service agreements.) Staying with the $130 example, what about customers who have two or more systems? If the value of a tune-up on system No. 1 is $130, the value of a tuneup on any additional systems should also be $130. Many contractors make the mistake of offering a second system tune-up for a lot less than $130 because “they are already there” — this is not necessary and lessens the value of the tune-up. After determining the sales price of non-service- agreement tune-ups you can use them as a base to price the service agreements. As a result, service agreements will produce about the same gross profit. It is very important that you do not price your service agreements at a lower incremental number than the non-service agreement tune-ups. Let’s use the non-service-agreement example of $140, which is often discounted to $130. Continuing on, suppose your service agreements include two precision tune-ups per year — totaling $260. If your service agreements are priced at or more than $260, you will sell fewer service agreements and risk offending your service-agreement customers when they see you marketing non-service-agreement tune-ups at $140. It is very easy for them to forget they are getting a lot more benefits than just the two tune-ups each year (Refer to the first article in the January issue). As a result, they will not be happy. For an example of a Service Agreement Investment, see the chart on next page. The example pricing matrix in the chart covers only the air conditioning and heating system(s). With many customers, that is all that is required. However, an increasing number of homes continued on page 14

HVACR BUSINESS FEBRUARY 2022

continued from page 13

also have system accessory products such as electronic air cleaners, media filters, ultra violet air purification systems, and humidifiers. You must develop your service agreement add-on pricing for the accessory products. The price for those products is simply added to base pricing. Of course, your company’s pricing of non-service-agreement precision tuneups and service agreements, as well as all other products, is determined by you based on prevailing wages and other local conditions.

SERVICE AGREEMENT DOCUMENT There are many names for service agreements (the form signed by the customer and company representative) including energy saving agreements, maintenance agreements, service agreements, money saving agreements,

Marketing and performing non-service-agreement tune-ups is the most effective method of selling service agreements. It places your technicians in the home and gives the customer first-hand experience with your expertise. Once you’ve gained their confidence, you can sell them yearly service agreements. service contracts, and maximum comfort agreements.

CO-WORKER SPIFFS Co-workers will be enthusiastic and do what you want them to do when they share in the rewards. A spiff (commission) program for the sale and renewal of service agreements fits this principle perfectly. I recommend paying technicians $15-$20 per system per year. Consequently, a onesystem one-year agreement pays $15, a one system three year agreement pays $45, and

two system two year agreement pays $60. To recognize and reward inside service and service-agreement support staff I recommend allocating an additional $5-6 for each agreement sold. These funds are split evenly among the support staff. All spiffs are paid once monthly on a separate payroll check.

Next month’s article will present more information including marketing and getting service agreements, benchmarks, converting service calls and precision tune-ups to service agreements, and how to renew service agreements. Until then, here’s to a successful start for your service-agreement program. u

Ron Smith is a well-known authority in the HVACR business with more than 50 years of experience as a contractor, franchisor, consolidator, and consultant. He is the author of HVAC Spells Wealth, More and New HVAC Spells Wealth and HVAC Light Commercial Service Agreements.

I am a huge fan of processes and systems. They are critical to the success of a company. Also, it is the responsibility of management to make things as easy as possible for

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2 Ye $260 ars 3 Ser vi ce ag $520 techn reem 3 Ye $488 e ic ars ment ian, whe nts are pa $780 . In th ther i $ d 978 in ful the c e exa and $ 733 l for us ad m $1,4 for th ditional ple, we h tomer inv the entir $ 6 1 6 e syste e e ent a , 466 sts in term ve ap m ir inves t in a e term of s. Remem plied a 6 a one-ye when the $2,1 the a y ber, a two% 99 r, tw are dis y g or th ree-y reement ou have count pe o-year o presente . r ear a d r t gree The 6% d he use of year for t three-yea by the ment iscou he ad r t h agre e . cu nt is a d n inc stomer’s itional ye eentiv p e for repaid f ars u the c ustom nds er to

HVACR BUSINESS FEBRUARY 2022

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SELLING ‘COMFORT’ TO CUSTOMERS How Hartman Brothers sells high-end systems as solutions to homeowners’ health and quality concerns.

Clean Air

Less Dust

Even Temperature

No Drafts

BY RICHARD HARTMAN

very time you walk through a customer’s door, you have an opportunity to educate and sell. That’s why scheduling system check-ups is as important as making sure the customer’s system is working properly. At Hartman, we realize that these appointments give us the opportunity to discuss home comfort and how highend systems can improve it. We’ve taken strategic steps to educate customers about solutions that will make their homes more comfortable. In this article, I will share those steps, which we have used to successfully sell high-end systems. As is common throughout this industry, hot and cold weather tends to drive our business. We can’t control this, but we can control our ability to respond quickly to emergency calls. Sometimes, this even requires that managers jump in to handle the workload. Many hvacr contractors know that giving customers a positive experience on emergency calls is a way to gain new customers, but it is also a way to introduce the idea of investing in high-end systems. Of course, the priority is to get the customer’s system running, but after that is

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What we find, over and over, in talking with customers is that people live with poor IAQ because they don’t know any better! They think draftiness in their homes is just a fact of winter, and that warm upstairs bedrooms are part of summer. accomplished, use the opportunity to talk with the homeowner about their heating/ cooling system and discuss indoor air quality (IAQ) issues they may be having. We start with some basic questions:

COMMUNICATING HIGH-END BENEFITS

• Is your house really dry in the winter?

Product knowledge is key to successful sales. We put a lot of stock in this at Hartman Brothers, so to make sure all our employees know about high-end hvacr systems, we’ve installed them in their homes. This gives me confidence as a leader that the feedback and advice our employees give to customers is going to be honest, real, and believable.

Find out what really concerns the homeowner, determine solutions that address those concerns, and present those to the homeowner. More often than not, customers are living with older systems that just don’t perform to the standards of today’s high-end systems. This is where educating begins!

Since we’re located in Indiana, we experience a pretty wide range of weather extremes, from brutal cold winters to sticky, humid summers. What we find, over and over, in talking with customers is that people live with poor IAQ because they don’t know any better! They think draftiness in their homes is just a fact of

• Is your house drafty? • Do you have a lot of dust? • Do you get condensation on your windows?

winter, and that warm upstairs bedrooms are part of summer. However, because they live with superior two-stage systems in their own homes, our technicians have an open door to talk about many different facets of home comfort, including these major points:

EVEN, CONSISTENT TEMPERATURES Temperature stratification, draftiness, and uneven heating are just facts of life with many homeowners, like weeds in flowerbeds. Homeowners generally understand that heat rises and keeps upstairs temperature higher, and that the sun shining on the south side of a building will increase a room’s temperature dramatically. What they don’t realize is that something can be done to even out these temperatures. By asking homeowners whether they experience uneven temperatures in their homes, we open the door to discuss the related benefits of a two-stage system coupled with zone controls. When we explain how the zone thermostats control the airflow throughout the house independently, and how the two-stage continued on page 16

HVACR BUSINESS FEBRUARY 2022

continued from page 15

system keeps the air moving, we can see the light bulb go on for customers as they realize how technology can benefit them.

CLEAN, BREATHABLE AIR During our discussion of the two-stage system, we ask our customers about their families’ allergies and breathing problems. We do this because the two-stage system

is key to improving IAQ, and those with allergies or smokers in the house need to know about the superiority of a HEPA filtration system. Whether people have allergies or not, every home can benefit from a HEPA filtration system equipped with an ECM motor. A HEPA filter removes up to 99.97% of all respirable particles .3 microns or larger by running air through three filters:

• a polyester filter that removes larger, visible particles • a charcoal filter that removes smoke and odors • the HEPA filter, which removes the most minute respirable particles from the air A HEPA system makes a noticeable difference in air quality — not just for those with allergies and asthma, but also

Option 1

Premium ultra high-efficiency multi-stage gas burner furnace AFUE 95% with ultra high efficiency add-on electric two-stage heat pump SEER 17 with upgraded external air filter, premium evolution thermostat, humidifier, 10-year parts and labor warranty, and complete installation. System cost

$16,740

Less 10% (Hartman Brothers discount)

$1,674

Less manufacturer’s rebate

$350 paid directly to you

Less NIPSCO gas utility discount

$265 paid directly to you, if applicable

Less federal tax incentive

$500 paid directly to you, if applicable

Your total out-of-pocket

$13,591

Annual operating cost: $1,290; savings of $1,315 System payback 10.6 years

for households with pets and smokers in the family.

PROPER HUMIDITY CONTROL

Indiana’s climate makes us desperate to escape the humidity in the summer, and then desperate for a little humidity during the cold, dry winters. And of course, we’re not alone — cold, dry winter air is the bane of homeowners throughout much of the country, and the reason why so many homeowners invest in humidifiers to make their homes more comfortable in the winter. Humidifiers can make a tremendous difference in IAQ, and they also help to lower heating bills because humidified air feels warmer. So, a 69° F temperature at 35% humidity feels just as warm as 72° F at 19% humidity. A whole-house humidifier attached to the ductwork in a home is the most efficient way to control humidity throughout the entire house. Coupled with an ECM motor running on continuous mode, a humidifier set at a comfortable relative humidity will allow the homeowner to lower the thermostat three degrees, thus reducing heating bills by up to 5%.

WHISPER-QUIET OPERATION

Option 2

Same premium ultra high-efficiency multi-stage gas burner furnace AFUE 95% with top-of-the-line two-stage air conditioner SEER 17, with upgraded external air filter, premium evolution thermostat, humidifier, 10-year parts and labor warranty, and complete installation. System cost

$15,130

Less 10% (Hartman Brothers discount)

$1,513

Less manufacturer’s rebate

$300 paid directly to you

Less NIPSCO discount

$265 paid directly to you, if applicable

Less federal tax incentive

$500 paid directly to you, if applicable

Your total out-of-pocket

$12,552

Annual operating cost: $1,370; savings of $1,130 System payback 10.10 years

Option 3 Second-best two-stage high-efficiency gas furnace AFUE 93% with third best single-stage standard efficiency air conditioner SEER 13, upgraded external filter cabinet, humidifier, 10-year parts and labor warranty, and complete installation. System cost

$9,290

Your total out-of-pocket

$9,290

Annual operating cost: $1,570; savings of $810

Most people don’t notice that their furnace is noisy until they’ve been around one that isn’t. The reality is that conventional hvacr motors are pretty noisy because they run only at full-speed. In contrast for example, a two-stage variable-speed Genteq ECM motor runs slower (and quieter) in low stage, and it slowly ramps up to high-speed operation, eliminating that sudden blast of air we associate with the furnace turning on.

ENERGY-EXPENSE REDUCTIONS If you want to get the customer’s immediate attention, talk about cost savings! Everybody is looking for ways to save money these days, so the reduced energy costs associated with a two-stage system are very appealing for consumers. About 85% of the systems we install these days are high-end furnaces and twospeed heat pumps, and a significant selling point is the long-term energy savings. When the system is run on continuousfan mode, not only is the house heated and cooled evenly, but it also will result in a savings of about $250 each year.

System payback 11.47 years

HVACR BUSINESS FEBRUARY 2022

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EXPLAINING REBATES AND OTHER COST INCENTIVES Fortunately, we’re in an economic climate where we can present our customers with savings opportunities on top of yet more savings opportunities, which makes purchasing a high-end system really attractive. In our area, we have been able to clue our customers in to some local rebates being offered to homeowners by our regional gas company; when added to some manufacturers’ rebates and the federal tax incentives for installing energy-efficient systems, these can amount to a couple of thousand dollars off the bottom line of a SEER 17 system. We always present our customers with a comparison of expenses, rebates, and energy reduction costs for several systems, so they clearly can see the benefits of various systems, the expected operating costs, and the period of time in which the system will pay for itself. More often than not, the educated customer will choose to install some form of high-end system that is cost-effective for them.

On the previous page is an example of the comparison of options for new systems that we provide for our customers. We keep track of the rebates and discounts being provided by both OEMs and the local utilities, but these same deals may not be available in your area. In our experience, homeowners want to know more about the technologies available to them. Homeowners with older homes are extremely interested in making their houses less drafty and dusty; those with newer homes are eager to replace the barebones, “builder’s model” furnaces that barely get the job done. In addition to discussing options such as add-on humidifiers and air-filtration systems, we talk a little about the “green” component of modern hvacr systems – for example, the energy savings made possible by ultraefficient Genteq ECM motors. We find that the combination of this efficiency with the other factors mentioned above – improved IAQ, even air temperature, increased air flow, quieter operation – are easily understood and compelling factors for homeowners.

Successware is the only end-to-end business management software solution on the market for the HVAC industry. We offer everything from call taking to dispatching to sales & marketing and reporting, all from the convenience of one platform.

Expense is a huge concern for people, but so is reliability and long-term benefit. We remind them that, even though budget is a significant factor in the decision to upgrade their hvacr system, it is nearly impossible to undo a sub-standard, less-than-adequate heating and cooling system without a lot of inconvenience and expense. Any lingering fears a customer may have about installing a high-end system are usually put to rest by our 10-year parts and labor warranty, which covers any repair on the entire system. Hartman Brothers advocates these high-end systems because of their efficiency, superior performance, and tremendous value. And since we have the systems in our homes, we know first hand how much more comfortable we are, and we are not shy about saying so! u

Richard Hartman is the President of Hartman Brothers Heating & Air Conditioning, New Haven, Indiana.

About Hartman Brothers Heating & Air Conditioning Life is good in a small town. My father, Arnie, started a heating and cooling business in New Haven, Ind., in 1963 and built a reputation on being service-oriented. I grew up in the family business, and now Hartman Brothers Heating & Air Conditioning Inc. has 19 employees, and more than 59 years worth of solid relationships with residential customers in town. It’s gratifying to have the confidence of so many residents, especially when they refer new customers to us.

— Richard Hartman

Complete End-To-End Analytics-Driven Business Management Solution

VISIT bit.ly/growwithsuccessware TO LEARN MORE

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HVACR BUSINESS FEBRUARY 2022

EXIT PLANNING

PROVIDED BY KEVEN PRATHER, CFBS

The Super Rich’s Three Big Fears – and How They Work to Overcome Them

S fears.

ignificant wealth can reduce many of life’s troubles—but it can’t eliminate them entirely. Even the richest among us have

What’s more, they often share many of the same worries the rest of us have. But there is one difference. In our experience working with the Super Rich— people with a net worth of at least $500 million—we find that they frequently take some highly effective steps to address those worries and, quite often, overcome them. With that in mind, here’s a look at three fears they tell us they struggle with—and some ways they combat those fears. If you share one or more of these fears, consider taking a page from the Super Rich playbook to tackle it.

HEALTH, FAMILY AND WEALTH The Super Rich tell us that they struggle with three main fears about their lives and the lives of their families: • Severe health problems for themselves or loved ones • Dysfunctional family members doing substantial damage • Losing their wealth

Fear #1: Severe health problems Severe health concerns for you or the people you care most about can easily distract you and drain you—emotionally, physically and even financially. Dealing with them is a top priority for the Super Rich, as it is for most everyone else. Of course, the Super Rich are in a stronger position than many others to potentially mitigate the possibility of severe health problems—as well as very effectively deal with them when they arise. But the fact is, anyone can have heart disease or get cancer or contract a debilitating illness. Genetics can be a strong counterbalance to

We find they frequently take some highly effective steps to address their worries. the power of personal wealth. To address health-related concerns, consider these Super Rich steps: 1. Join a concierge medical practice. Concierge medicine is a membership model: For a fee, you get access to “boutique” medical practices with relatively small ratios of patients to physicians—enabling faster appointments, longer visits and significantly more personalized care given (in many cases) by physicians with far greater expertise than the typical care providers. Concierge practices might also offer tech-enabled care such as telemedicine through smartphones. 2. Pursue a longer life. Concerns over possible severe health problems are prompting more people to work on ways to extend their longevity. One example is personal genome sequencing—a process that can reveal a person’s specific future health risks so they can be addressed early on. Longevityfocused care providers are increasingly in demand, and common, as well.

Fear #2: Dysfunctional family members Most families across the wealth spectrum have some conflicts. But familyrelated issues can get especially challenging when there’s wealth involved. Consider “bad seed” family members who exploit their families (and sometimes their family businesses) for personal gain, to the detriment of other family members and the company. Bad seed family members can destroy family harmony as well as family wealth and the future prospects of that wealth.

HVACR BUSINESS FEBRUARY 2022

Another common problem is selfabsorbed and entitled children. Some of these more hedonistic kids get themselves into jams such as being arrested or being center stage in lawsuits. The most forwarding-thinking Super Rich parents tend to combat these and similar problems in two ways: 1. Financial solutions. Trusts with builtin oversight of an overprivileged child’s inheritance can be an effective way to protect the child and other people. Such trusts might also help protect assets from creditors and others. Of course, the best way to use a trust will depend on the particular situation. 2. Personal solutions. Crisis management and behavioral professionals are tapped to address any damages, provide counseling and rehabilitation, and help families take other steps to transition the child into more responsible behavioral patterns.

Fear #3: Losing their wealth Despite their wealth—or perhaps because of it—the Super Rich worry about the emotional and financial pain of losing their affluence and all that accompanies it. That’s especially true among the Super Rich who have the other two worries noted. After all, severe health problems and family dysfunction can certainly contribute to the Super Rich losing their wealth. That said, the Super Rich also worry about people who might maliciously try to take their wealth. Their affluence makes them targets, in many cases, of actual criminals—as well as targets of lawsuits, creditors, former spouses and others. Solutions that can help prevent the loss of wealth are many and various, and include:

1. Finding and working with reliable financial professionals. Advisors with proven integrity and full operational transparency are crucial. Typically, such high-caliber advisors are found through referrals from trusted peers and other professionals. 2. Implementing asset protection strategies. Various forms of insurance (such as an umbrella policy) and trusts can discourage others from attempting to take your wealth via unfounded lawsuits and similar attacks. Placing assets in the name of someone else, such as a spouse, may also help build a moat around wealth. 3. Shoring up physical protections. The Super Rich often make use of advanced security and monitoring systems that employ technology such as infrared cameras and sensors. But even setting a realistic-looking fake security system can deter many thieves.

Implications To varying degrees, families who are not Super Rich can use many of the same approaches to dealing with these types of fears and challenges. For example, concierge medicine is becoming increasingly cost-effective and available to a broader array of people. Likewise, many high-caliber financial professionals now serve the “merely affluent.” Bringing Super Rich approaches to your issues can potentially allow you to conquer your fears and achieve results you never thought possible—enabling you and the people you care about most to live great lives. u Keven P. Prather is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. Call 216-592-7314, send an email to kprather@financialguide.com or visit transitionextadvisors.com for additional information.

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FINANCE

BY RUTH KING

Pricing Using Net Profit Per Hour Gives You Ultimate Flexibility

wo contractors had a 10% net operating profit. One contractor earned $10/hr the other earned $50/ hr. Which would you rather be? Obviously, the $50/hr contractor. The percentages don’t matter. The dollars do. Gross margins don’t matter either. Here’s why. The figure below is the job cost analysis from a contractor I worked with. Customers JE and HT each had a 40% gross margin. Yet, Customer JE had a $73.34 net profit per hour and Customer HT lost $21.37 per hour. Same gross margins. Vastly different net profits. Customer DG had a 64.50% gross margin and customer LP had a 19.41% gross margin. The 19% gross margin earned more per hour than the 64.5% gross margin. Net profit per hour is net operating profit divided by billable (revenue producing) hours. Overhead cost per hour is total overhead divided by billable hours. You can keep the net profit per hour consistent for every billable hour. Or, you can adjust it based on seasonality. In slower times of the year, you could lower your desired net profit per hour and raise it in busier times. Here’s an example: A commercial contractor had several field employees who only worked on project work. The company finished a major project in October and had nothing major on the books until spring of the following year. The owner didn’t want to lay them off because he’d never get the crews back. A public works job came up for bid. It was perfect – started in December and finished in the spring. The contractor had to get that job. He bid it at $5 net profit per hour, essentially break even, and won the job. The hours estimate was critical in this bid. When the job finished, job costing showed a little over $6 net profit per hour. The contractor kept his crews and paid his overhead with this job.

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Customer

Sell Price

OH/hr

# Hours

Net Profit

Net Profit/hr

$12,903.00

$5,227.01

40.51%

60.20

39.00

$2,879.21

$73.83

CF EK

$15,078.00 $9,686.00

$7,074.60 $4,495.27

46.92% 46.41%

60.20 60.20

38.00 49.50

$4,787.00 $1,515.37

$125.97 $30.61

RP MR

IR GP

$11,293.00 $13,248.00

$23,752.00 $3,948.00

$11,809.49 $2,488.82

$12,082.00 $10,363.00

$6,498.91 $4,990.82

HT DT

$5,644.00 $11,020.00

HG DP

RR KP

DG DG LP ML RT RS TJ

Customer

$4,918.10 $5,119.03

43.55% 38.64%

49.72% 63.04%

60.20 60.20

53.50 48.50

81.50 25.00

$1,697.40 $2,199.33

$6,903.19 $983.82

$31.73 $45.35

$84.70 $39.35

$2,272.84 $4,971.12

40.27% 45.11%

60.20 60.20

59.00 72.00

-$1,278.96 $636.72

-$21.68 $8.84

$16,620.00 $30,352.00

$6,852.43 $11,712.84

41.23% 38.59%

60.20 60.20

103.00 150.00

$651.83 $2,682.84

$6.33 $17.89

$9,868.00

$3,910.69

60.20

60.00

$2,519.00 $8,534.00 $8,822.00 $7,489.00 $8,545.00 $10,931.00

$1,624.76 $4,336.98 $1,712.35 $3,808.91 $4,390.42 $3,559.13

Sell Price

53.79% 48.16%

64.50% 50.82% 19.41% 50.86% 51.38% 32.56%

39.63%

60.20 60.20

60.20 60.20 60.20 60.20 60.20 60.20

OH/hr

54.00 32.75

14.75 54.00 15.25 39.00 30.25 90.00

# Hours

$3,248.11 $3,019.27

$736.81 $1,086.18 $794.30 $1,461.11 $2,569.37 -$1,858.87

$298.69

Net Profit

$60.15 $92.19

$49.95 $20.11 $52.09 $37.46 $84.94 -$20.65

$4.98

Net Profit/hr

JE RP MR CF EK IR GP HT DT RR KP HG

$12,903.00 $11,293.00 $13,248.00 $15,078.00 $9,686.00 $23,752.00 $3,948.00 $5,644.00 $11,020.00 $12,082.00 $10,363.00 $16,620.00

$5,227.01 $4,918.10 $5,119.03 $7,074.60 $4,495.27 $11,809.49 $2,488.82 $2,272.84 $4,971.12 $6,498.91 $4,990.82 $6,852.43

40.51% 43.55% 38.64% 46.92% 46.41% 49.72% 63.04% 40.27% 45.11% 53.79% 48.16% 41.23%

60.20 60.20 60.20 60.20 60.20 60.20 60.20 60.20 60.20 60.20 60.20 60.20

39.00 53.50 48.50 38.00 49.50 81.50 25.00 59.00 72.00 54.00 32.75 103.00

$2,879.21 $1,697.40 $2,199.33 $4,787.00 $1,515.37 $6,903.19 $983.82 -$1,278.96 $636.72 $3,248.11 $3,019.27 $651.83

$73.83 $31.73 $45.35 $125.97 $30.61 $84.70 $39.35 -$21.68 $8.84 $60.15 $92.19 $6.33

ML RT RS

$7,489.00 $8,545.00 $10,931.00

$3,808.91 $4,390.42 $3,559.13

50.86% 51.38% 32.56%

60.20 60.20 60.20

39.00 30.25 90.00

$1,461.11 $2,569.37 -$1,858.87

$37.46 $84.94 -$20.65

DP DG DG LP

Customer

$30,352.00 $2,519.00 $8,534.00 $8,822.00

$9,868.00

Sell Price

$11,712.84 $1,624.76 $4,336.98 $1,712.35

$3,910.69

JE RP

$12,903.00 $11,293.00

$5,227.01 $4,918.10

EK IR GP

$9,686.00 $23,752.00 $3,948.00

$4,495.27 $11,809.49 $2,488.82

$12,082.00 $10,363.00 $16,620.00

$6,498.91 $4,990.82 $6,852.43

MR CF

$13,248.00 $15,078.00

HT DT

$5,644.00 $11,020.00

DP DG

RR KP HG

DG LP ML

RT RS TJ

$5,119.03 $7,074.60

38.59% 64.50% 50.82% 19.41%

39.63%

40.51% 43.55%

38.64% 46.92%

46.41% 49.72% 63.04%

60.20 60.20 60.20 60.20

60.20

OH/hr

60.20 60.20

60.20 60.20 60.20

$2,272.84 $4,971.12

40.27% 45.11%

60.20 60.20

$30,352.00 $2,519.00

$11,712.84 $1,624.76

38.59% 64.50%

60.20 60.20

$8,545.00 $10,931.00

$4,390.42 $3,559.13

$8,534.00 $8,822.00 $7,489.00

$9,868.00

$4,336.98 $1,712.35 $3,808.91

$3,910.69

53.79% 48.16% 41.23%

50.82% 19.41% 50.86%

51.38% 32.56%

39.63%

150.00 14.75 54.00 15.25

60.00

# Hours

39.00 53.50

48.50 38.00

Net Profit

$2,879.21 $1,697.40

$4.98

Net Profit/hr

$73.83 $31.73

$45.35 $125.97

59.00 72.00

-$1,278.96 $636.72

-$21.68 $8.84

150.00 14.75

$2,682.84 $736.81

$17.89 $49.95

49.50 81.50 25.00

54.00 32.75 103.00

60.20 60.20 60.20

54.00 15.25 39.00

60.20

$298.69

$17.89 $49.95 $20.11 $52.09

$2,199.33 $4,787.00

60.20 60.20 60.20

60.20 60.20

$2,682.84 $736.81 $1,086.18 $794.30

30.25 90.00

60.00

$1,515.37 $6,903.19 $983.82

$3,248.11 $3,019.27 $651.83

$1,086.18 $794.30 $1,461.11

$2,569.37 -$1,858.87

$298.69

$30.61 $84.70 $39.35

$60.15 $92.19 $6.33

$20.11 $52.09 $37.46

$84.94 -$20.65

$4.98

Using net profit per hour calculations, you know how low you can go with respect to pricing. Question: It’s February and you want to at least break even. What’s the lowest price you can offer your customers and still break even? First, your labor hours have to be accurate. Whenever possible, tell the crew the number of hours they have to install the job. If it comes in at or under those hours, you give them a bonus for making those hours. (I usually put an additional dollar amount in the estimate for this bonus). For a 16-hour job, I add $80 to the job estimate. Your crews should like a $5/hr raise for completing the job on time. Here’s how to price: 1. Estimate the number of hours. 2. Multiply your desired net profit per hour times the estimated hours. 3. Multiply your overhead cost per hour times the estimated hours. 4. Determine the direct cost for the job. (Make sure you include commission and credit card/financing fees). Add 2 through 4. This is the price to the customer. In February, a traditionally slower time of year, your desired net profit per hour might be $5 an hour. In July, when you are busy, it might be $200 per hour. With net profit per hour pricing, you have the ultimate decision on how much profit you want to earn at different times of the year. u

Ruth King has more than 25 years of experience in the HVACR industry and has worked with contractors, distributors and manufacturers to help grow their companies and become more profitable. Contact Ruth at ruthking@hvacchannel.tv or at 770-729-0258.

HVACR BUSINESS FEBRUARY 2022

PRODUCT FOCUS » AHR EXPO ROUNDUP

BRADFORD WHITE

CLEAVER-BROOKS

DANFOSS

EMBRACO

Bradford White Water Heaters, introduces the KwickShot®, a reliable and easily installed tankless electric water heater available in thermostatic and non-thermostatic models. KwickShot® provides silent operation and its compact size delivers easy installation, flexibility and convenient access for maintenance. Intelligent controls provide active protection and self-diagnostics. Dry-fire protection prevents potential equipment damage, and the heater’s high temperature limit ensures safe operation in a variety of conditions. A safe control system that activates the heater only on demand. An LED indicator communicates system status and heater operation feedback.

The Cleaver-Brooks ProFire SBR-30 low-NOx, dual-fuel burner is capable of less than 30 ppm NOx emissions without flue gas recirculation (FGR). It features a unique firing head design to achieve controlled combustion, leading to low emissions with 3 percent O2. Advanced technology allows the SBR-30 to offer low-NOx, low CO emissions and up to 10:1 turndown on natural gas. The burner provides silent operation with an advanced combustion air fan wheel that uses less horsepower with less noise. It is reliable and energy efficient and features the lowest NOx emissions and low excess air operation for high efficiency.

The new VLT® Soft Starter MCD 600 Enclosed provides a flexible solution to potentially long lead times in the industry. This product is in stock and ready to ship quickly — including the NEMA 3R enclosure. The new MCD 600 Enclosed offers the latest soft start motor control and protection for superior performance in fixed-speed applications wherever drives are used. The product provides all the features and functions as a standard MCD 600 Soft Starter in a compact NEMA12 or NEMA3R enclosure, with a circuit breaker, keypad, and operators on the door. Standard and heavy-duty models are available.

» cleaverbrooks.com

>> danfoss.com

Embraco’s new condensing units portfolio, the Evaporative Drain Pan lineup, is designed for reach-ins and under-counters in the food service segment. These condensing units are among the most compact in the market, starting from 10.4 inches high. The versions for reach-ins can deliver from ¼ to 1 HP of cooling capacity, while the versions for under-counter go from ⅛ to 1 ½ HP. Equipped with highly energy efficient Embraco compressors, the new lineup has a vast array of options in natural refrigerant R290 - which are in line with all global warming potential regulations - and includes, as well, options using variable speed compressors.

» bradfordwhite.com

» embraco.com

FIELDPIECE

MARS/HEAT CONTROLLER

MILWAUKEE TOOL

MITSUBISHI

Fieldpiece Instruments announces the launch of Fieldpiece University, a new online training platform dedicated to providing application-based training to HVACR field pros, distributors and sales reps to help them do their job easier, faster, and better. Fieldpiece University features two modules: one channel to help HVACR distributors, sales reps and counter reps match HVACR technicians with the right tools; another provides technicians with technical training to become masters of the trade with the latest best practices, industry insights, tips and tools.

MARS/Heat Controller is proud to announce the addition of a new variable speed, air-to-air, 18 SEER + Heat Pump for Comfort-Aire and Century unitary brands: The HRG18-Series. Available in either 3T or 5T capacities, the inverterdriven compressor heat pump provides extremely quiet top-discharge operation and some of the industry’s highest efficiencies. The HRG18-Series sports a proprietary aluminum-alloy fin and-tube coil construction for superb corrosionresistance and louvered panels for durability and premium aesthetics.

Milwaukee Tool continues to innovate the cordless SDS Plus rotary hammer market with the second generation of their M18 FUEL 1-1/8”SDS Plus Rotary Hammer w/ONE-KEY, delivering advanced performance and productivity on the jobsite. The new generation M18 FUEL 1-1/8”SDS Plus Rotary Hammer w/ONE-KEY is the fastest drilling and hardest hitting hammer in its class with over 20% faster drilling. Alongside this new rotary hammer, Milwaukee® also introduces a next-generation M18 FUEL HAMMERVAC 1-1/8”Dedicated Dust Extractor.

Mitsubishi Electric Trane HVAC US (METUS) announced updates to the P-Series Wall-mounted Indoor Units (PKA) lineup for residential and commercial single-zone applications. Two new PKA models, 12 KBTU/H and 18 KBTU/H, are now available. PKA Wallmounted Indoor Units provide consistent, reliable zoned comfort for a variety of spaces. Engineered to provide peace of mind to the building owner and its occupants, the new models operate at nearly whisper-quiet sound levels as low as 34 dB(A). They offer a sleek, compact design with simple installation ideal for light commercial spaces, including churches, classrooms, daycare centers, small offices or equipment rooms.

» marsdelivers.com

» fieldpiece.com

» milwaukeetool.com

» MitsubishiComfort.com

HVACR BUSINESS FEBRUARY 2022

www.hvacrbusiness.com

PRODUCT FOCUS » AHR EXPO ROUNDUP

NAPOLEON

NAVAC

PROMETHA

RECTORSEAL

Napoleon has introduced a new all-inone heating and cooling system series, including the NS18 Heat Pump and the 18 Seer Air Handler. The heat pump has newer, more efficient technology featuring a variable inverter compressor and vapor injection technology to heat a home in temperatures as low as -30°C (-22°F) and cool it on sweltering days as hot as 54°C (129°F) — the widest operating range in the category. It also operates on electricity, helping homeowners reduce their carbon footprint. The NS18 series is compatible with any standard heat pump thermostats, smart thermostats or smart home systems working on 24V.

NAVAC’s battery-driven NTE11L BreakFree™ Power Tube Expander offers effortless, efficient and precision expansion for tubes in the 3/8” to 1-1/8” range. The BreakFree™ Power Tube Expander can perform its duties in just 12 seconds with the touch of a single button. Its long-lasting, rechargeable lithium battery allows up to 200 expansions per charge and recharges in just 30 minutes. Other features include an LED flashlight, a battery power indicator and a “Quick-Connect” design to switch expanding heads in just two seconds.

Prometha Connected Boiler Solutions is now available as an app on Apple and Android devices. The new app enables authorized users to remotely view boiler system performance 24/7, and when a condition is suboptimal, they are notified in real-time via an alarm or alert. Additionally, using the app, users have direct-dial access to local authorized service representatives within the Cleaver-Brooks network for quick troubleshooting and issue resolution. Prometha’s streamlined secure access ensures a facility’s data stays safe.

RectorSeal® releases Weather-resistant Big Foot® Multi Frame XL, which provides a cost-effective and flexible support system for a wide variety of HVAC rooftop applications. With the modular Multi Frame XL product series release, Big Foot Frames now offers an additional 20 inches in length for high capacity VRV/VRF HVAC systems. After the initial frame is built – with extension kits – it can be extended from any side. All hardware is included in the boxed kits. Roof penetration is not required during installation. Mounting brackets, adjustable cross bars, connectors, and extension kits will accommodate HVAC units of all sizes.

» prometha.com

» www.navacglobal.net

» www.napoleon.com

» rectorseal.com

REGAL BELOIT

RLS PRESS FITTINGS

TEMPMASTER

VIEGA

Regal Beloit Corporation has unveiled its enhanced Power Transmission Solutions (PTS) Edge tools. Regal Edge tools include product selection modules for belt drive, bearing and gearing products and mechanical power components, as well as bearing registration and a belt drive efficiency calculator. These improved Edge tools are easier to use, mobile-friendly and fully integrated to the regalbeloit.com online product catalog. Edge product selection modules assist users in selecting the right power transmission mechanical components based on their specific application requirements.

Klauke® 19 kN Press Tool and Jaws’ lightweight, compact design increases productivity thanks to a short pressing cycle that connects fittings in less than 10 seconds, plus a 350° jaw rotation that allows technicians to install in tight spaces. Its high-quality, powerful Makita Li-Ion technology provides 100150 presses per charge, with a charging time of just 15 minutes (2.0 Ah). Pressing force is 19 kN; minimum press pressure is 525 bar/7,613 psi. Comes with a 24-month warranty from date of purchase.

Johnson Controls has, through its TempMaster brand, expanded its line of premium commercial rooftop units, which is now available in 25-80 tons. The TempMaster Omni Premier platform is designed to provide building owners best-in-class efficiency levels that significantly reduce operational costs over the life of the unit. The units offer the highest standard efficiency levels in their class and meet aggressive Department of Energy 2023 energy efficiency standards. Units are offered in standard efficiency (up to 10.9 EER/15.8 IEER), high capacity or high efficiency (up to 11.4 EER/16.9 IEER).

Viega is introducing MegaPress®G valves in sizes ½” to 2”. These valves, are approved for use in gas and fuel oil applications. The valves are suitable for use with ASTM Schedule 5 to Schedule 40 carbon steel pipe. Viega also is launching larger sizes of its MegaPress 3-piece ball valves, the first press ball valve of its kind in the 2½” to 4” range. In addition, ProPress® valves are now available in sizes 2½” to 4” for use with copper and stainless CTS pipes. Regardless of the application or product line, using Viega valves and fittings means no open flames, faster connections and greater labor savings, resulting in safer and more efficient projects that come in on time and on budget.

» regalbeloit.com

» rapidlockingsystem.com

» tempmaster-hvac.com

» viega.us

www.hvacrbusiness.com

HVACR BUSINESS FEBRUARY 2022

20QUESTIONS >>

with LUKE CALDWELL

Publisher Terry Tanker sat down with Luke Caldwell the other half of the hit HGTV series the Boise Boys (Terry interviewed Clint Robertson in September of 2021). The two discussed crypto currency, mentors, scaling a company, managing in a pandemic, and leading by example. Luke and Clint are both spokesmen for American Standard Heating and Air Conditioning. 1. What’s your secret ambition?

I truly hope that my life will create value for today and the future – especially for my kids.

2. Would you rather hit a hole in one, throw a touchdown pass or hit a home run? I’d have to say a hole in one.

3. Do you own any crypto currency? Yes!

4. What’s your favorite possession? Cards my kids have made for me. Nothing more special than a homemade gift from family.

5. What’s the one thing you wish you would have said yes to when you were younger?

Taking piano lessons! I would love to be able to play for the family, especially around the holidays.

6. Who is your mentor?

Honestly, I respect everyone in my family so much that I tend to always lean on them for advice.

7. Other than finding employees what is your most immediate challenge? Creating systems as I scale our company.

8. How are you addressing that?

Thinking through and creating processes for every detail involved in the multiple businesses I run.

9. In twenty words or less can you describe your company?

Our desire is to serve others while adding value and creating beauty through design and construction for families and communities.

10. What’s the most important quality you have to have as a leader?

to their roles, but I personally feel vision, passion, empathy and humility are the most important to keep your team feeling heard and respected.

11. Supply chain issues are effecting every company. How are you managing this? This has definitely been an interesting issue to navigate. We want to make sure we keep realistic expectations for our clients, so we stay in close communication with them and provide realistic adjustments as needed.

12. What are you forecasting for 2022 or is this really just a guess?

Even though the past two years have been tough, we’ve stayed positive and have continued to run our company as best we can. In 2022, we’re planning for our best year so far!

13. What aspect of managing is most satisfying to you?

Seeing others succeed in their positions within the company really brings me joy. It has been great to see people within our organization grow over the years and really become part of our family.

14. What has been your most recent “the buck stops here moment”? As you probably know, TV shows work on tight schedules so there is really no room for error!

Staying on top of deadlines is imperative to make sure everything runs smoothly and on time.

15. What do you view as your most important management responsibility?

Leading by example. If you come to work with a positive attitude, it can really rub off on the rest of your team. Same goes when you have a bad attitude.

16. How have you kept employees focused working remotely? Thankfully, we have been able to continue working in the office.

17. How do you inspire your managers and other team members?

As a leader, one of my biggest jobs is to ensure my team feels inspired and wants to be at work doing the job as much as I do. While we all work closely and inspire each other, I also feel that listening and learning from those who came before us is a key component to success.

18. Where do you think most leaders really struggle?

Working hand in hand with my team is something that is important to me, and I think at times it can be easy to get stuck in the weeds and not keep looking at the big picture down the road.

19. What can they do to overcome this?

I make it a point to take time every day to prioritize the future and what has to happen to accomplish the goals we have set as a company instead of just living in the moment.

20. What parting words of wisdom do you have for 2022? Something I like to live by – serve others everything else will follow.

Leaders can bring so many beneficial qualities 22

HVACR BUSINESS FEBRUARY 2022

www.hvacrbusiness.com

1972

Pioneers then. Innovators today. DUCTLESS MINI-SPLITS

YEARS 1972-2022

www.comfort-aire.com

2022

Are you looking for more time, money or freedom? We have the training tools for you. Training can provide benefits to both an individual and the business where they work. At Goodman, we believe ongoing training is worth the investment. Training may help develop skills that increase productivity, improve employee morale and help boost a company’s profit margin. Benefits of Ongoing Industry Training: Stay Informed of Industry Changes Increase Job Satisfaction and Internal Promotion Opportunities

Stay Current with the Industry’s Latest Technological Developments

Attract New Employee Talent

Stay Ahead of Competition

Provide an Incentive to Learn

Identify and Reduce Weaknesses and Skill Gaps Maintain Knowledge and Skills

www.GoodmanBusinessToolbox.com

Sales • Business • Technician and Technical Training The Goodman Business Toolbox programs are presented and administered by third-party training organizations. All training programs are designed to support independent HVAC contractors who sell Goodman® brand products. Any costs for the training programs are determined and charged directly by the third-party training organizations. Our continuing commitment to quality products may mean a change in specifications without notice. 2021 Goodman Manufacturing Company, L.P. Houston, Texas USA

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HVACR BUSINESS FEBRUARY 2022

Articles inside

Residential Service Agreements Part 2: Building A Dynamic & Highly Profitable HVAC Retail Business

Find The Right People

Pricing Using Net Profit Per Hour Gives You Ultimate Flexibility

Products

The Super Rich’s Three Big Fears – and How They Work to Overcome Them

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