The cost of doing business will always rise. In order to stay profitable, you’ll need to occasionally adjust pricing and raise HVAC prices.
However, it’s important not to let the fear of losing customers keep you from deciding to raise HVAC prices. After all, as costs go up, it’s only natural that prices need to rise as well. While some customers will inevitably leave when you raise HVAC prices, there are several ways you can reduce the chances of them leaving for the competition
In this article, we’ll discuss some of the best ways to raise HVAC prices while reducing the risk of losing customers.
- Consider all variables when raising prices
- Choose the right time to change pricing
- Release the price increases on the least profitable customers first
- Adequately communicate the price increase to affected customers
- Test and improve the price increase process before rolling it out to profitable customers
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1. Raise HVAC Prices According to Industry Standards
Every year, increased costs affect business. However, within recent years manufacturer prices have widely skyrocketed anywhere from 5% to 18%. This is due to cost increases in materials, labor, transportation rates, and more.
Plus, these rising costs are now paired with a labor shortage and an increase in demand for services. As a result, many HVAC companies have been forced to increase their HVAC pricing, and your business is likely no exception to this.
Now, more than ever, it’s important to continuously re-evaluate prices. In turn, you can find your current break-even point, which furthers the ongoing effort in conquering profit goals.
Although, don’t get caught up in copying or comparing your business to the competition’s pricing. Due to the huge variances in current HVAC pricing, it’s essential to look at both local and state costs and averages during the evaluation process.
2. Increase Prices During the Right Time of Year
One of the best strategies for keeping customers during a price hike is by raising HVAC prices during the right time of the year. In turn, you won’t lose as many customers to the competition if you time it right.
The Worst Time to Raise HVAC Prices
Like most field service industries, the HVAC industry has busy and slow seasons based on the area. For this reason, the worst time of year to raise HVAC prices is during the busy selling season, which is likely during warmer months.
Think of it this way, the competition is itching at the chance to poach your customers. They’ll purposefully start marketing to your customer base with flyers, targeted ads, and just about any other tactic in an attempt to steal them away.
However, there are times when a price increase during this time is unavoidable. For example, if you’re hemorrhaging money on an unprofitable customer, then you need to raise their price regardless. In this instance, it may actually benefit you if they were to leave for the competition.
The Best Times to Raise HVAC Prices
Even though you should always avoid raising HVAC prices during peak selling season, there are a few great times where you can increase it:
- A few months before your busy season
- The end of your busy season
In other words, a good time to raise HVAC prices may be when the competition is too busy to poach your customers. Alternatively, many customers will often forget about the price increase when it happens at the end of your busy season.
3. Raise HVAC Prices on Least Profitable Customers First
Before rolling out your price increase to everyone, it’s a great practice to raise HVAC prices on the least profitable customers first. Test the price increase on unprofitable customers, and work out any kinks in the process. This way, if you lose unprofitable customers while perfecting the process, it won’t hurt the business like it would if you lost profitable accounts.
First, it’s important to re-evaluate repeat customer accounts to determine their profitability. Then, compare it to your business goals to see how new pricing matches up for your least profitable clients.
Plus, reporting tools in FieldEdge can quickly help you evaluate customer prices and profitability. Now, you don’t have to waste countless hours tracking down files and crunching numbers with a pen and paper to determine customer profitability!
4. Send a Price Increase Letter to Affected Customers
It’s essential to send a price increase letter to affected customers of the newly adjusted prices. For example, if you have repeat or recurring customers who receive regular HVAC maintenance services (i.e. tune-ups, air duct cleaning, etc.), then they should receive a letter.
In addition, the price increase letter is a great opportunity to inform customers on the reasoning for raised prices. This is a chance to help customers understand why prices are going up as well as how this new change ensures their continued high-quality service.
Steal This Price Increase Letter Template
[insert HVAC business logo]
Dear [Client Name],
Due to rising economic factors, [HVAC business name] will be adjusting our prices soon.
Our billing reflects the labor, equipment, maintenance, fuel, office/billing expenses and other various costs, which make up the price of our services.
In order to continue providing you with the highest-quality HVAC services you deserve, our HVAC maintenance price for [insert customer’s HVAC maintenance service/agreement] will increase to $XXX.XX on Month, Day, Year.
We will continue to invest in the best materials, equipment and training available to us. This will allow us to send the best HVAC technicians to your home.
We’re continuing our commitment to a complete satisfaction guarantee. If you’re not 100% satisfied with your HVAC services, then we will return, free-of-charge to resolve the issue.
As always, call our office at XXX-XXX-XXXX with any questions, comments, concerns or updates to your scheduled services.
Sincerely,
[HVAC business owner name]
[HVAC business owner signature]
5. Test and Improve the Price Increase Process
After sending the price increase letter to your least profitable customers affected by the increase, then it’s time to use this test on a number of profitable customers. A great way to examine the effectiveness of the price increase communication is by sending out a survey via email or text.
Then, use the feedback your least profitable customers provided to improve the process for your most profitable customers.
Explore how FieldEdge helps evaluate prices and improves the price increase process. Book a demo for free on FieldEdge today!
Successfully Raise HVAC Prices Starting Today
As always, consistently re-evaluate your HVAC pricing to ensure all profit goals are met on a weekly or monthly basis. Don’t be afraid to raise HVAC prices on unprofitable or minimally profitable customers. After all, it’s better to lose a few unprofitable customers than to waste precious resources that could’ve been spent on new, profitable customers.
Remember, price increases don’t have to be feared or overcomplicated. Take advantage of these effective strategies today so you can successfully raise HVAC prices without losing customers!
Related: The Ultimate HVAC Pricing Guide for Business Owners
