Tag Archives: hvac

This commercial energy management controller will blow your mind!

When building owners and operators are looking for a control system that will help their rooftops and split systems run more efficiently and will save them time & money, they are turning to ecobee. Ecobee has a very unique way of simplifying the user experience so much, that controlling your HVAC equipment has never been easier or more enjoyable. But don’t take our word for it, here is what actual business owners/operators and mechanical contractors are saying. Continue reading

cfm Tech Tips – SSE (Simplicity Smart Equipment) Control Boards

York Commercial Equipment is currently manufactured with Simplicity SE controls. These controls are dynamic and versatile. An SSE Control Board can be programmed (in the Factory or the Field) for use in a Constant Volume unit, Variable Volume unit, Single Zone VAV unit, Fixed Variable (also known as Intelli-Speed), Reheat Unit, Split System Condensing Unit or Heat Pump. The control board comes with a Joystick, Enter Button, Cancel Button and Display Screen to facilitate programming in the field without a computer. This Tech Tip will help familiarize you with the programming steps for SSE Control Boards.

Factory Programming & Default Settings

New units are pre-programmed at the factory with default settings to accommodate unit operation as built. Every RTU is built with 3 sensors – Supply Air, Return Air and Outdoor Air. As shipped – any RTU can operate stand alone with the on-board sensors, or can operate from thermostat inputs. This results in flexibility when changing out a unit. Say you need to operate the unit immediately after the changeout and intend to operate from a thermostat, but the thermostat cable needs replacing and you need the unit to operate while pulling new thermostat wire. Simply set the unit to run on sensor operation. It will operate from its Return Air sensor until you connect the thermostat. Communication (BacNet, N2, Modbus, etc) is also available for BAS operation.

The Unit Control Board

The Unit Control Board communicates with the Economizer via the SA Bus, thus all programming is done through the Unit Control Board, making economizer setup very simple.

To program from the front of the board, use the joystick to scroll down to the desired menu option. With the cursor (>) in front of the desired option, press the enter button. Use the joystick to scroll to the next required option and again hit enter. Once you get to the desired setting, move the joystick sideways to change information while the display is flashing. Hit enter to save the information. The attached points lists are divided into sections for ease of finding information and navigating the control to make changes.

Example: Details > Control > Econ > Setup > Econ-MinPos

This shows the pathway in to change the economizer minimum position setting.

programming options

Use the example scenario & programming guide below as a reference while replacing a Unit Control Board.

A control board needs to be replaced in an existing unit.

Option:
  1. Available if the board is powered and displaying information on the screen.(Best Option)
    1. Plug a flash drive into the USB Port on the front of the control board in the unit.
    2. Using the attached points list, navigate to Update > Backup, and hit Enter.
    3. The current setpoints will be saved to the Flash Drive.
    4. Install the new Control Board and power it up.
    5. After countdown is complete, insert the Flash Drive into the new Control Board.
    6. Navigate to Update > Restore, and hit Enter.
    7. The original settings will be uploaded to the new control including Model and Serial numbers.
  2. If a flash drive isn’t available when the control board is replaced.
    • Use the ‘Quick Points List’ making sure all points marked with an asterisk are set correctly for the unit.

Not every scenario can be listed in this article, but the method is the same for any programming requirement. Use these Additional Materials for ease of navigation.

Additional Materials:

Quick Points List – Partial list of program points, for use when replacing a board or commissioning a unit.

SSE Master Points List – Full list of program points, for use as needed.

Sensor and Fault information

SSECombo1HR.jpg

This is the Guardian logo specializing in HVAC parts and equipment.

Guardian – A Great Addition to Your Offering

Today’s residential HVAC replacement system buyers come in all flavors, but what we find is that most of them are looking first and foremost for a contractor that they trust. Internet searches, word-of-mouth, and great truck graphics may bring these consumers to your website or telephone! From that point on, it is up to the contractor to identify what the primary purchase motivation is for the consumer. It may be continued comfort, fixing trouble spots in their home, high energy efficiency, ability to finance the purchase, or one of many other ‘hot buttons’ that will motivate the consumer to choose your company to install a new system.

For some consumers, the unanticipated purchase of a replacement HVAC system may be an unsettling financial development that they are unprepared for. Beyond consumer financing, these consumers may place a high importance on first cost of the new system. Some consumers default to ‘price’ because they simply do not know what is available to make their home a “comfort castle”. Once introduced to higher efficiency systems, indoor air quality features, wifi smart enabled control, or other advanced features, many consumers who started out looking for the ‘best price’ wind up selecting the ‘best system’ for their home. But some consumers are not able to afford the technology that brings these advanced comfort and efficiency features along. This is the truly ‘price-conscious’ consumer. While this ‘price conscious’ consumer is nothing new, today’s consumer demands many better attributes or features in their entry level purchase.

That’s where Guardian comes in! This product line is backed by Johnson Controls, LLP and cfm Distributors, Inc. We stock the equipment and replacement parts locally, and provide technical support from our factory trained technical support department to professional dealers who install it. Guardian products and designed and built in Wichita, Kansas so the consumer who likes to “buy local” knows that they are supporting engineers, factory assembly workers, and their families right here in the Midwest.

The sheet metal dimensions for the Guardian product are the same as for comparable products that we sell from York and Coleman, so there’s nothing new to learn about the physical requirements for the ductwork of these systems. The cabinets are robust, and the fit and finish of the products are pleasing to the eye. These ‘no frills’ products may be ideal choice for that consumer of yours who needs to save a little money, but still wants the services of a professional contractor like you to make the job a success! Who knows? That price-conscious consumer might be the same one who buys an advanced technology comfort system from you a few years from now when financial circumstances change.

cfm currently stocks the 4 position Guardian furnace – available at 95 AFUE, 13 SEER split system air conditioners, and 14 SEER split system heat pumps. Guardian is a product line that can really be the perfect fit for that entry-level system offering for your price-conscious buyer.

Energy Analysis Case Study – Unit Heaters vs Tube Heaters – Part II

Earlier this spring we wrote a blog post discussing why you might choose unit heaters or tube heaters for your heating only project. The article detailed how each type of system worked, which applications were ideal for each style, and which applications were not ideal. But it was missing something. Where was the real world example? How do we actually determine which heater style is best not just in theory, but with numbers to back it up? Great questions! Let’s look at a real world example now.

A couple weeks ago we received a call from one of our really good customers who asked for some product selection assistance on a project he was working on; a 96′ by 78′ workshop with a multi-tiered roof line. We were asked to do a load calculation and help the contractor select the best type of system to heat the space based on the customer needs. Here’s how it all went down.

We met with the customer on the first cold morning of the year. It was about 40 degrees outside with a 20 MPH north wind, and the day before was 77. The regret for not meeting 24 hours earlier was sky high, but since you really don’t care we will keep moving on.

This is a large, 3 section barn under construction with most of the steel frame still exposed.

This barn will be the project site for our energy analysis.

The owner was not on site when we arrived, so we started to assess the half constructed building so we could get an idea on heat load. The structure was a butler style building with a metal shell, and the walls and ceiling had R-13 plastic wrapped insulation. The long side walls were 10′ tall, and as you moved to the center there was a pair of 18′ peaks, and then a 26′ peak in the center. The long north wall had six 10′ x 10′ overhead doors, and the east and west side each had one 15′ x 12′ and two 12′ x 10′ overhead doors.

The owner finally arrived as we started to put on our thinking caps. After doing hundreds of load calcs similar to this building, we estimated 45 btuh per square foot which came out to about 335,000 btuh of heat load. But before coming up with a solution, we better ask the owner what he wants. After all, it’s his building. Who cares what I think he should do.

cfm: “So what are you looking to do with your space?”
Owner: “Just want to keep it from freezing. We might have a gathering in here every once in a while, but we aren’t that particular on keeping it really warm”
cfm: “What temperature do you want to maintain on the coldest day of the year?”
Owner: (after a long drawn out story about all the examples he might run into) “There might be times we would like it to be 60 degrees”
cfm: What type of power do you have?
Owner: “We don’t have natural gas. We are bringing electricity over here next week”
cfm: “Would you be interested in using propane? It will save you a ton of money on utilities”
Owner: “Yes”

The conversation continued, and we got into what type of equipment he wanted. The owner had done some research and he was interested in tube heaters, although he wasn’t totally convinced yet. We all agreed with tube heaters (for now) and came up with a good product selection based on the 335,000 btuh load, and then mentioned it was subject to running the numbers. We of course checked our clearances based on the tables in the installation manual to make sure we weren’t going to be too close to any combustibles. We also discussed how the heat distribution patterns would work, with most of the heat coming from the burner boxes and then a decreasing intensity the further away you went. So far the owner liked what he was hearing.

Load Calculation & Energy Analysis Results

So here is the really fun part- now that we have all the information, what is the best solution for this customer? Infrared like he asked for? Or are unit heaters a better option? We certainly don’t want to try to “sell him” unit heaters when he asked for tube heaters, but one or two of you (being a little facetious here) may have an experience in the past with an owner “wanting” something, but then changing their mind once they see the price. So how do we quantify the right solution? We run a cost analysis showing payback and return on investment (ROI).

Here are screen shots from the load calculation and the energy analysis we ran. You might notice that the load ended up being about 315,000 btuh, close enough to the estimated 335,000 load from earlier that we did not make any selection changes.

Load calculation assumptions and building sensible loads:

Image showing the results of a load calculation for determining heat load.

Load calculation assumptions and building sensible loads.

Load calculation net loads:

This is a chart showing the load calculation net loads for the case study site.

Load Calculation Net Loads

Energy payback analysis:

This is a visual comparison between the two heating options and their cost of ownership.

*The price of propane we used was $1.75 per gallon
**Owner equipment cost is estimated and does NOT include installation labor, gas or flue piping, electrical, thermostat wire or hanging hardware for the unit heaters.

Analysis Results:

The tricky part about running an energy analysis on infrared is there are no published efficiencies. So what do we use? Well, we know the flue gases don’t condense, so our combustion efficiency can be no more than about 82 or 83%. But one thing we do know is infrared keeps the heat down low to the floor, which will reduce the heat load on the roof (our delta T between the ceiling and ambient air will be far less with tube heaters which will reduce overall load). And our air changes will also be reduced, especially since the ceiling is 26’ tall in the center. With forced air, the ceiling air will be warmer and it will want to leave the building much faster than the radiant solution. So to account for both of these factors, we reduced the roof load and the air changes per hour to come up with an effective “radiant heat” heat load of 270,000 btuhs.

Chart showing the energy analysis results for payback and ROI.

In this particular case, based on our results we can see that installing tube heaters would be the best option.

The moral of the story will be different for every job. But for this project, it probably makes sense for the owner to proceed with tube heaters. A 3.7 year payback is pretty good, and it’s hard to argue with a 26.7% ROI. You won’t find that kind of return in the stock market, unless your name is Warren Buffett. And in that case you’re probably not reading this article.

What has been your experience with tube heaters and their energy efficiency compared to 80% unit heaters? Do you have any jobs that we can help you look at? Just ask us in the comments below, or give us a call toll-free @ 1-800-322-9675

Blue image with text which reads the title of the blog article

Tube Heaters or Unit Heaters? Let the Debate Begin

This is one of the most common questions we get during the fall and winter seasons. Owners want to know what type of heating equipment they should use for their commercial warehouses and buildings, especially in their heating only applications. And for good reason; it is a tricky question. Before we get started, keep in mind that tube heaters and unit heaters aren’t the ONLY solutions. The application might be better served with makeup air units, air rotation units, packaged rooftop units, etc. But the majority of the owners are deciding between these two solutions, so for now let’s focus here. So, should you install tube heaters or unit heaters in your space? Well…? It depends.

The short answer is, if you have a lot of air infiltration from dock doors, or have a partially outdoor space (like we do at the cfm Distributors dock), tube heaters are typically a much better solution. Why? It is all in how the tube heater is engineered to deliver heat to the space. Infrared tube heaters consist of two main sections, the burner box and, typically, 4″ round metal tubes that are anywhere from roughly 20′-80′ long with polished reflectors. The burner box delivers hot gas to the tubes, making the tubes extremely hot, and the heat radiates from the tubes to the space. That radiation heat warms everything in the space, except the air. It heats the floor, it heats the walls, it heats the people and everything else in the space. So even if you have a rush of cold air coming in, it still feels warm with the radiation hitting you.

We experience this same exact radiation every day from the sun. Imagine it is a brisk 45 degrees outside, which would normally feel chilly, but if the sun is out and shinning on you, you might actually be warm. Or, when you are driving in your car and it is cold outside. You probably have a jacket on and the heater turned up; but, if the sun is out, you would start to get hot after a while. These are both examples of how infrared tube heaters work.

Shop Reznor Unit & Tube Heaters now on the cfm eStorefront @ cfmkc.com/goreznor

Shop Reznor Tube & Unit Heaters now on the cfm eStorefront @ cfmkc.com/goreznor

Tube Heater Layout Design

This is a lot easier than you might think. There are just a few things to keep in mind when designing a tube heater job. Let’s say the application you are working on is a 10,000 sq/ft warehouse, with 20 dock doors. This process of designing a tube heater job can be broken down into two steps:

  1. Load Calculation
  2. The first thing to do is a load calculation; which, if you need help with this, please call your territory manager for assistance. We would love to help! Remember too, it is important to know when you are running your load calculation if you have decided on tube heaters or unit heaters. Why? Because with tube heaters you can maintain a lower space temperature, and the “feels like” temperature will be the same as forced air. For example, with forced air equipment you might need the space to be at 70 degrees to be comfortable. But, if you are using tube heaters, a very conservative space design temp might be 65 (or a couple of degrees less). Since your space temperature design is lower, you now have a smaller delta T with the outside; therefore, your heat load is lower.
  3. Tube Heater Placement
  4. So after running your heat load you come up with 480,000 btuh required. Now we need to find the efficiency of the tube heater you are using and divide the capacity (btuhs) required by that number. For example- if the tube heater is 80% AFUE, you take 480,000 divided by 0.80 and you get 600,000 btuhs of input required. Now it is time to design the layout. How many tube heaters will you need? And where do you install them? In most cases, as long as you get the btuh’s to the space, and the heaters are evenly spaced, you will not have any issues. But here are a few things to consider when designing the layout:
    • Most of the heat comes out near the burner box.
    • The best way to visualize the heat distribution map of a tube heater with a straight tube, is to picture a Christmas tree laying on its side, and assuming the base of the tree is the burner box. You get a lot of heat at one end, and you slowly lose heat by the end of the tubes. Use this to your advantage by placing burner box ends near dock doors, outside walls, or the largest infiltration areas. If you need a more even distribution throughout the length of the tube, most manufactures have “U-Bends” that you can install. Adding a U bend will make the tube section into the shape of a U, and can even out your heat distribution.
    • Watch out for clearances
    • Check the installation manual for these distances before quoting your project. In certain capacities and tube lengths you might need 7-8′ of clearance to combustibles. Sometimes tilting the tube heater can reduce this clearance by a few feet, but double check the manual first!
    • Mounting height is critical
    • Since tube heat is radiative heat, it follows the inverse square law. When you double the height, you get 1/4 of the heat. So mounting height becomes a delicate balance between maintaining minimum clearances and being cognizant of losing effective heat when mounted too high.

But enough about tube heaters. When should you use forced air unit heaters?

When to Use Forced Air Unit Heaters

  • Minimal air infiltration applications
  • If your space will not have a lot of air infiltration, and you are looking for a more comfortable, even temperature distribution for creature comfort, unit heaters may be the best way to go. Since hot air rises, if you have really tall ceilings and you decide to go with unit heaters, consider adding some ceiling fans to keep the hot air near the floor.
  • Larger and more capacity options
  • You can also find unit heaters in much bigger sizes. Typically, the biggest tube heater you can find is 200,000 btuhs input, while standard unit heaters are available up to 400,000 btuh input. So on a 400,000 btuh application, there is a chance you could use one forced air unit heater, as opposed to two tube heaters. This will cut down on installation cost- less electrical, gas piping, roof penetrations etc.
  • Lower upfront cost
  • Upfront cost is another reason you might choose unit heaters over tube heaters. Unit heaters on average can give you up to DOUBLE the heat per dollar you spend on the equipment. So if the owner is on a very tight (upfront) budget, unit heaters will typically cost less to install. However, keep in mind that if the space is better suited for tube heaters, the unit heater option will more than likely cost more in utilities, and the owner might have to spend time warding off comfort complaints.

When it comes time to choose between tube heaters and unit heaters, the answer may not be as easy as you think. But that is why we are here, to help you make these challenging application decisions. Are you working on a project that we can help with today? Give us at cfm a call @ 1-800-322-9675, post a comment below, or message us on Facebook or Twitter @cfmdistributors. We’re always happy to assist our customers in project planning.

A person with two paths to choose from, and one side has more money than the other.

Overhead Costs | HVAC Pricing Series Part 4

There are two kinds of costs in any company: direct costs and overhead costs. In our last article, Direct Costs | HVAC Pricing Series Part 3, we covered some of the more common types of direct costs you have because you get a job. In Part 4 of this Finding the Right Price HVAC Series, we turn our focus towards overhead costs — which are the costs you have whether you get a job or not.

Overhead costs are all the costs you have in your company that are not specifically related to a job. These costs are varied and in a few cases they are difficult to identify and determine. But most of these costs are pretty straightforward and here are some examples: rent or mortgage payments on your shop, utilities, employee benefits, advertising, insurance, shop furniture and equipment, office supplies, some types of taxes, office salaries and FICA taxes, vehicles, gas and vehicle maintenance, training, travel and entertainment expenses, governmental compliance expenses, legal and accounting expenses, communications expenses, computer and software expenses including ongoing support/training, consumer financing expenses (points paid). These overhead costs are easy to determine because they have invoices, bills and paychecks associated with each of them.

The Top Four Hardest to Determine Overhead Costs:

Cell Phone Expenses:

Cell phone expense has grown into one of the biggest expenses in a service based HVAC company. Your employees use their cell phones in an amazing variety of ways to help themselves and your company, everything from driving instructions to tech support on the job to receiving their next service call. It is important to continually update to the latest phones and phone service to be able to take advantage of the latest technology. However, it is just as important to be diligent in watching these expense to be sure they are paying for themselves in increased production and to be sure that you are getting the best service and coverage for the lowest price. It is up to you to monitor the cell phone service providers to be sure you are getting the most for your money.

Owner Salary Expenses:

When the owner of the business actually works in the field on specific installation jobs or when he runs service calls, the dollars he earns for that work are considered direct costs and need to be shown as part of those direct costs when setting the right price for a job. However, as the business grows the owner usually is less active in actual jobs and spends more time “working in the office.” Therefore, it is usually appropriate to split an owner’s salary into both direct costs and overhead costs based on the estimated percentage of both office work and field work.

Warranty Expenses:

Most new HVAC companies neglect to accrue dollars into a warranty expense account. However, in any service business, especially HVAC businesses, warranty expenses are real and reoccurring expenses. In fact, most HVAC companies actually offer their own warranty for most of their work, usually a one year parts and labor warranty on most jobs performed. But, techs don’t always fix things correctly or install equipment properly, equipment will break down occasionally, service parts don’t always work. It costs you money to send someone back to a job, so a smart business owner will accrue dollars into a warranty expense account to cover those future expenses. Oftentimes that accrual will be as high as 2% of the company’s total sales (revenue).

Unapplied Labor Expenses:

This is one of the largest overhead costs in most service companies, and one that is almost always overlooked. Unapplied labor expense happens when you pay your employees that normally work on specific jobs for work that is not specific to any job. This is most common for installation or service techs. Examples of unapplied labor include paying your techs to come into the shop every morning to get their daily assignments, drive time to and between jobs, time to pick up parts at a supply house, training, and employee meetings. Many of these expenses are good and necessary, but these expenses add up fast and need to be watched carefully. Every business owner should be diligent about reducing unapplied labor. Every business owner should track unapplied labor and include those expenses into their overhead costs. The best tip I can give a business owner is to NOT have techs come into the shop except when absolutely necessary: route your employees to their first jobs by text or email or computer communication from their homes.

Overhead costs are accumulated and calculated into a multitude of different categories, many of which were discussed above. Those categories are then added together to get the final overhead cost for a company. That final overhead cost is then used specifically in the calculation of the right price for any job. That final overhead cost is generally shown as a percentage of company’s total sales.

The right price you set for any job must cover the entire amount of the direct costs you have for that specific job. And, it must cover its share of the overhead costs. No one job will cover all the overhead costs for the company for the entire year, so each job must cover its fair share of the overhead costs. Therefore, all the combined jobs you get during the year will cover the entire amount of overhead costs the company will have for that year.

Now that we’ve established a general understanding of the types of costs, the next article in the series will help you look at your options to consider when trying to change your costs. I recommend using our free direct costs worksheet, download link provided below, to assist you in determining what some of your costs are. If you have any questions or comments over direct or overhead costs, or any general pricing or HVAC topic, let us know in the comment section below or give us a call toll-free at 1-800-322-9675.

A person with two paths to choose from, and one side has more money than the other.

Direct Costs | HVAC Pricing Series Part 3

Part 1 & 2 of the series covered Pricing Awareness and What is the Right Price. Part 3 will start to take a deeper look into how we can begin thinking about where your bottom line is before you can find the right price point for your products and services. To do this, there are two kinds of costs in any company: Direct Costs and Overhead Costs. Direct costs are the costs you have because you get a job, while overhead costs are the costs you have whether you get a job or not.

Direct costs happen because you actually get a job and you have to buy things to perform that job. These kinds of costs would include most, if not all of the following tasks. Each of these items should be written down and have a cost assigned to it so that there is a record of the materials used on the job. Writing down these amounts makes sure that you don’t forget anything and they act as a permanent record of what you estimated was needed on the job. Having that record helps you do a better estimation for the next job.

The six most common Direct Costs:

Materials:

For a typical HVAC company examples of these items could be furnace, coil, condenser, line set, thermostat, pad, whip, disconnect, wiring supplies, fluing supplies, brazing supplies, gas piping supplies, sheet metal supplies, grills and registers, drain supplies, repair parts, cleaning supplies. Freight costs to deliver these materials to your company or the job site are also included. The costs for each of these items are easily found from your invoices or receipts. Usually you have a very knowledgeable idea what the specific material costs for a specific job will be before the job is performed.

Subcontractors:

These costs are incurred when you hire another contractor to do part of the job. Examples of subcontractors are electricians, chimney sweeps, plumbers, cranes, core cutters and others. You will know before you set your price exactly what the cost will be for these subcontractors because they have bid the job and given you a price (or you can reasonably estimate their prices because of your experience.)

Permits:

These are the state, federal or local permits needed to perform the job legally and to code.

Labor:

These costs are the actual costs of the labor to perform the job. These costs are probably the hardest costs to estimate to be able to come up with the Right Price as they have the largest elements of the unknown. How long will it really take to do a specific job? Who will perform the labor on the job, the fast guy or the slow guy? Do we need a helper on the job? Will we run into unexpected problems such as rain, heat, breakdowns, illness, and customer issues? Most experienced HVAC professionals have a pretty good idea how to estimate the labor for any job based on the prior performance of their techs (or themselves) on similar jobs. So, based on experience determine the number of hours of labor to complete a job for each tech and multiply those hours times the labor rate of each tech. That labor rate should include the fringe benefits you pay such as taxes, FICA, health insurance, vacation, sick leave, etc. So if you pay a tech $10 per hour base rate and he also gets $5 per hour in benefits, that tech has a labor rate of $15 per hour. If it will take 20 hours to perform the job, then multiply 20 hours times $15 per hour to get a total labor cost of $300. When in doubt add a few hours to the job.

Specialty Equipment/Tool Rental or Purchase:

These items could include scissor lifts, fork trucks, unloading equipment, jack hammer rental, lifting devices and others. Oftentimes, an owner will include a portion of the replacement costs of the specialty equipment/tools if the company actually owns the items.

Sales Commission:

This is the money that is paid to your salespeople once the sale is made. It is only paid if there is a sale so it is considered a direct cost.

Once you have written down all your direct costs, add them all together to come up with a final dollar amount. Knowing your actual (or professionally estimated) direct costs is a key number in the mathematical formula used to determine the Right Price for your job. Obviously, the right price must cover the direct costs incurred to perform the job or you will lose money on the job.

Download cfm”s Direct Cost Worksheet to make figuring out your direct costs a little easier. In the next article, Overhead Costs | HVAC Pricing Series Part 4, I will cover overhead costs in more detail, and help you to better understand the complexity that they too add to your price planning. If you have any questions or comments about direct costs, let us know in the comment section below or contact us directly at 1-800-322-9675.

A person with two paths to choose from, and one side has more money than the other.

What Is The Right Price? | HVAC Pricing Series Part 2

In the previous article, “Pricing Awareness,” we discussed how difficult it is to know what price to set for any job you sell.  Will you get the job at that price?  Will you make a profit at that price?  Will you have any profit at that price?  Will you lose money at that price?  Did you forget any costs when setting that price?  The pricing fears go on and on. 

But in actuality, setting the Right Price for any job is really not that hard if you use some basic logic and knowledge to set that price.  So let’s look at the five basic factors that are required for setting the Right Price.

The Right Price is not necessarily the price that gets the job.  Huh?  That doesn’t make sense: if the price you set doesn’t get the job, was it really the Right Price?  This will make more sense when we look at the other factors that go into setting the Right Price for a job.  So, we will come back to this after we look at a few of those other factors.

The Right Price must satisfy the financial constraints of your company.  This is really the important factor for any business if it wants to be profitable.  So what are the financial constraints of your company?  First and foremost, you must recover your costs.  The Right Price must be high enough to cover both your direct costs and your overhead costs.  (We will further define both of those costs in a different article.)  Secondly, the Right Price must allow for some profit for your company.  Profit allows you to fund your future growth and it allows your company to be a great place to work for you, your employees and your customers.  So, the Right Price must be high enough to cover your profit as well as you costs.  The key to setting the Right Price is knowing exactly what the financial constraints of YOUR company really are. 

The Right Price is always determined using simple math.  This simple math can be easily taught and easily learned.  It can be repeated over and over so you will always come up with the Right Price for any job you do. 

There is only ONE Right Price for any job.  That Right Price will cover the financial constraints of your company including what you feel is the appropriate amount of profit at that given time.  And since it uses a simple mathematical formula based on those financial constraints, then there is only ONE right Price for YOUR JOB!

But here’s the rub: your financial constraints are not the financial constraints of your competitor(s), the other folks that are trying to get the same job.  Your competitor’s costs may be lower or higher.  He may not need or want as much profit as you.  He may not even know what his costs are on a job.  He may not even know if he is making money or losing money.  So, his price will NOT be your Right Price.  Therefore, the only rational, prudent way to set your Right Price is to base that Right Price on your company’s needs, costs and profit.

Which takes us back to the first basic factor in setting the Right Price: the Right Price is not necessarily the price that gets the job for your company.  Your competitor will get his fair share of the jobs, even if his prices are exactly the same as yours (or if they are higher or lower than yours.)  That is because people make choices based on lots of factors, with price being merely one of them.  The Right Price for your company must cover all your costs and your profit.  But that Right Price may not be the one that gets the job. 

Finally, the Right Price may change depending on the time of the year or the needs of your company.  First, your Right Price should always cover the costs of the job.  But, at different times of the year the needs of your company will change.  For instance, it is difficult to even find a job to bid on in the cold months of January and February.  Your company may consider bidding a job with a lower profit level in those months compared to the hot summer months when your techs are very busy.  In fact, you may decide to set your Right Price with no profit at all just to be able to keep your techs working.  Conversely, in the hot summer months your Right Price may increase because all your techs and all your competitors’ techs have plenty of work and the market will allow you to make more profit.  The point is that your Right Price can change based on the needs of your company, but it is YOU that is determining what that Right Price should be at any given time.

The important thing to remember is that the Right Price should always cover your costs and the Right Price should always be calculated using the same mathematical formula. 

In Part 3 of the series, “Direct Costs,” I will begin discussing the different types of costs and their affect on finding the right price.   If you have any questions or comments about finding the right price, leave them in comment section below or contact cfm directly at 1-800-322-9675.

A person with two paths to choose from, and one side has more money than the other.

Pricing Awareness | HVAC Pricing Series Part 1

Knowing the Right Price to use when you set a price for a job is difficult to determine. Will you be too high, or too low? Will you make any money? Will you be fair to your customers? Will you be fair to your company, your employees and yourself? Will you get the job? Will your competitors be higher or lower than you? Do you need the job to pay your bills?

And perhaps you always wonder about your pricing after you get the job. Could you have sold this job for more? Should you have added more profit to the job? Will there be ANY profit on this job? Will you even know if you made a profit? Will there be unforeseen problems on the job that will cause you to lose money? Will you get paid on time, or paid at all?

If you have asked yourself any of these questions, then you know there is really not any one perfect answer to know if your price is the “right price”. So, here are some situations to consider that could help you be more “price aware”.

Your pricing may be too low if:

  1. Your sales are steady or growing and your profit is dropping
  2. Very few people discuss or complain about your prices.
  3. You are popular with shoppers who are driven by price
  4. Many of your sales come from Yellow Page or mass marketing leads

Your pricing may be too high if:

  1. More than 20% of your customers/prospects discuss or complain about your prices being too high
  2. Your sales are flat or dropping
  3. Selling a job is getting harder to do
  4. People who buy on quality are asking you to justify your price
Pricing awareness can help you feel more comfortable with the prices you set for your jobs. If you find yourself in some of these situations, you can consider raising or lowering your prices to better fit your market at that time. However, as you will read in future articles, you should actually set your Right Price based on the financial constraints of your company. And you should use a repeatable mathematical formula to figure your correct Right Price on every job you bid.  Part 2 of the series, “What is the Right Price?,” will cover the 5 basic factors required for setting the Right Price.
Increase profits with flat rate service pricing

The Financial Power of Flat Rate Service Pricing

About 95% of all HVAC dealers have one trait in common: they are not charging enough for their service work. So, why is it important to charge enough? Charging enough allows a dealer to stay in business for many years thus ensuring continuous service to his customers. Charging enough allows a dealer to pay his employees good wages and to provide important benefits for those employees so they stay with the dealer for years to come. Charging enough allows a dealer to offer excellent employee training which equates to excellent customer service. Charging enough helps the dealer to provide a good living for his family. Charging enough insures the dealer that there will be enough money for his retirement. Continue reading