Running Service Step Six: Repair vs. Replace

March 1, 2010
Editor's Note: Charlie Greer is in the midst of a year-long primer designed to teach you what to do when running service calls, and how to maximize each

Editor’s Note: Charlie Greer is in the midst of a year-long primer designed to teach you what to do when running service calls, and how to maximize each call in an honest and professional manner. “I’ll tell you everything I do; from the moment the call is dispatched, to the greeting at the front door, to closing and handling objections, down to what I do to prevent ‘buyer’s remorse,’” Charlie says. Here is installment number 6.

At this stage of the game, I’ve looked everything over and written up my Paper Towel Close (see installment #5 of this series).

I’ve listed the bare minimum that needs to be done to get the customer’s existing equipment running, and struck a subtotal.

I’ve also noted other things that need to be done to get the equipment operating as close to the manufacturer’s specs as possible, and struck another subtotal.

At the bottom of the page, I’ve listed some additional products or services that were not mandatory, but would be nice to have, such as indoor air quality (IAQ) products.

Repair vs. Replace

All of that is just for repairs. But there are times when the customer’s best option is to replace the equipment.

Repair vs. Replace

I always act as though I’m prepared and willing to repair customers’ old equipment, no matter what condition it’s in. I always write up the repair quote, no matter how foolish (in my opinion) it would be to repair it. I find this actually makes it easier to sell the replacement. The closer the dollar amount to repair the old equipment is to the price to replace it, the easier it is to sell a new system.

Refusing to write up the repair quote could cost you a customer.

I’ve run calls with techs who refuse to quote repairs to equipment when they feel it would be in the customer’s best interest to replace it. The customer says, “I understand that, in your opinion, I should replace it, but how much would it be to repair it?”

The tech says, “So much that it wouldn’t be worth your while. You need a new one.”

The customer asks again, “Yes, but how much would it be to repair it?”

The tech says, “So much it wouldn’t be worth your while. You need a new one.”

I’ve seen that circular argument go back and forth for what seems like an eternity before I’ve stepped in to stop it. When your customers really want a repair quote, and you refuse to give it to them, they have no other choice but to pay your minimum charge and call another contractor so they can make an informed decision based on hard numbers.

I don’t make my customers’ decisions for them. People do things for their own reasons. Sometimes these reasons are good, and sometimes they’re bad. My customers are allowed to sink good money into bad equipment. It’s their equipment, it’s their money, and it’s their decision to make. Haven’t we all owned a car into which we sank too much money?

The Paper Towel Close Format

When customers opt to repair equipment you feel should have been replaced, just make a brief note on your invoice that shows you quoted the replacement. You don’t even have to write “Customer declined to replace,” or anything negative like that.

Whatever decision the customer makes, support it willingly. Don’t make them feel bad or stupid.

For the record, when you think long-term, you make more money when customers opt for the repair. You get one repair now, possibly a few more down the road, then a higher price (due to inflation) when they ultimately replace it.

The Paper Towel Close Format (download PDF)

When quoting repair vs. replace:
• Write up the repairs the same way you normally would
• Subtract the dollar amount of the repairs from the dollar amount of the replacement
• Below the total amount of the repairs, write “Add to replace” and put the difference between the replacement cost and the repair cost in the “Today” column
• Make a subtotal
• Add the IAQ products and/or an option to replace the complete system or upgrade to higher priced equipment
• Add up the final total.

In the example shown, the cost to bring this customer’s existing furnace up to manufacturer’s specs is $1,530, under the terms of a service agreement. The price for a new furnace is $4,545, installed.

For only another $2,929 more than the customer already has to spend on a furnace that’s breaking down, he or she can have a brand new, high-efficiency furnace with a warranty.

It makes the $4,545 for a new furnace easier to swallow.

Note that there is no price to replace the equipment under the “separate” column. That’s because everyone who invests in replacement equipment gets a one-year service agreement, which automatically makes them a customer who is entitled to discounts. I suggest pricing your equipment such that the service agreement price is the price you want, and just make that the price everyone is quoted.

Charlie Greer is the instructor of “Charlie Greer’s 4-Day Sales Survival School.” The Spring, 2010 sessions are March 30-April 2 for HVAC Service Techs, and April 6-9 for HVAC Salespeople. For more information, or to request of copy of his current catalog, go to www.hvacprofitboosters.comor call 800/963-HVAC (4822). E-mail Charlie at [email protected].