eight ways HVAC contractors can utilize co-op promotional funds
Are we entering a time of inflation? It certainly seems so. Over the past six months, we have seen dramatic increases in commodity prices, which is reflected in equipment costs. Here are six things you need to do to stay ahead in times of inflation.
Immediately increase prices when your costs increase. Don’t give up your margins. In fact, it is more sensible to increase prices pending a rise. If you wait, you will be late.
Prepare your technicians and salespeople to push back from consumers on higher prices. Stand firm against price resistance when you come across it. It is better to lose a job now and then than to lose money by not passing on the increase in costs.
As a rule, it is a mistake to have more stock in stock than is immediately needed. It’s like putting a pile of money in your warehouse. In addition, there are accounting costs. Some of your inventory will inevitably be damaged. Some will become obsolete. Some will grow legs and walk away. Consider inventory management costs in your pricing.
In times of inflation, however, inventory is an investment. If prices increase after you buy the inventory, but you are pricing based on the current cost, not the cost you paid in the past when you bought the inventory.
In times of scarcity, typical of the present, it becomes a requirement to have more stock than usual. You can’t sell what you don’t have.
Don’t promise too much
There is currently a worldwide shortage of computer chips. It’s bad enough that it has caused many car manufacturers to temporarily halt production. These same chips are used on higher efficiency, communicating HVAC equipment. If the shortage of chips hits car makers, who have more purchasing power than air conditioning manufacturers, you can expect it to affect us. Don’t be surprised if high-end HVAC equipment is hard to come by this summer.
When citing job openings, make sure you use the product on hand or the product that a distributor has on hand and will reserve for you. If you don’t have a product in stock, don’t assume you can get your hands on it. Check availability before selling anything.
Have a backup line
If you don’t have second line equipment, now is the time to add one. Managing your equipment lines will be a juggling act. Manufacturers are likely to allocate inventory to their most loyal dealers. Still, you need a second line as a backup in case your main supplier has shortages. In order to count on secondary care, you need to present them with enough cases to maintain their interest.
Switch to Performance Pay
The current technician shortage is likely to be exacerbated by pressure to increase wages. You can either pay more directly (further increase your costs) or you can switch to performance-related pay so that your technicians can grant themselves a pay rise at any time. At the very least, consider giving your installation personnel a performance fee.
You probably won’t find much resistance in terms of service pricing. Replacement prices can be a different story. The best way to deal with it is to sell payments. Sell them with every change.
Lower payments by offering installment financing over a term of 10 years. Ten thousand dollars on a 2% rolling plan starts at $ 200 per month. On a ten-year installment plan at 8% interest, it’s just $ 121 a month. Do not rely solely on ongoing funding. List a source of repayment.
Either way, you should be selling payments and using installment financing. As a result of efficiency commitments and changes in refrigerant, the cost of installing a home comfort system has already left most homeowners suffering from sticker shocks. Selling payments is one way to lessen the surprise.
With a summer like this, you need to keep up with the changes happening in the industry. There is no better resource than the Service Roundtable. Join today for $ 50 per month and also take advantage of the largest library of downloadable business content in the industry and the largest purchasing group in the industry. Visit www.ServiceRoundtable.com or call 877.262.3341.