How much should my business charge for my HVAC service agreements?

A lot of factors go into pricing HVAC service agreements. Find out what makes sense for your business.

Preventative maintenance helps your customers keep things running smoothly while giving HVAC companies a great, rare source of recurring revenue. But how do you price these all-important arrangements? Do you undercut the competition? Or set the price high to focus on wealthier customers? Offering maintenance during the offseason means you can charge less, and offer greater flexibility in scheduling.

Needless to say, there’s a lot to consider.

Types of HVAC Service Agreements

First, you need to determine the kind of agreements or contracts you will offer. One example: a full labor contract. These cover the entire cost of labor and maintenance, which would leave the customer on the hook for parts. Other preventative maintenance plans might amount to just a very basic service call in which your technician runs some standard diagnostics, checks for worn parts, and cleans and tests various components necessary to the function of the unit(s). A full coverage plan would cover all of the above and could benefit customers with larger systems, as they typically require you to check multiple different components such as belts, blower motors, and filters. All these different options will cost different amounts of money.

Service Agreement Pricing

Take these factors into consideration when deciding on pricing for your service agreements: the equipment list, the type and size of the equipment, the accessibility of the equipment, and the time it takes to repair or replace a certain element of a system.

If you have a single rooftop unit, your customer’s contract should cost them significantly less than a contract for a large warehouse with multiple roof units or multiple levels. The accessibility of the system also matters. If you just have to climb up a ladder to access the system, it should cost less than if you have to work in a more cluttered environment that will affect the speed and safety of the technician.

You should also take a look at the number of visits you will offer in these agreements. Typically two service calls a year will keep any standard HVAC system in tip-top shape. If your customers run their systems all day, every day, you’ll probably want to increase the number of visits included in the contract.

Condition and age of the products serviced should also go into the pricing decision for your agreements or contracts. A more modern system should cost less than an older or deteriorating system to maintain, as you’ll have an easier time tracking down the necessary parts. 

Take industry standards and the local competition into account. Are you severely undercutting the competition? Are you underpricing your services and losing out on money? These answers all depend on your local market. 

Use HVAC software to manage your service agreements.

How do you keep track of all these pricing considerations? HVAC software can greatly ease the difficulties of managing customers and contracts. Smart Service gives you a place to keep track of your contracts, making your job and your technicians’ jobs a lot easier. Smart Service offers complete scheduling functionality, routing abilities, service agreement management, and many other features that you may find useful as your HVAC company grows. Click here to schedule a free demo and learn more.