The First Word: Should Customers Pay Now or Pay Later?

The First Word: Should Customers Pay Now or Pay Later?

Last month I talked about some of the economic issues facing this industry and how HVAC contractors could “weather” them. Now let’s take that one step further — how can HVAC contractors help their customers get through this period of slowdown?

First, a little recap: Housing starts are down. Energy costs are up. Fuel costs are up.

More facts: product shipments, according to both the Air Conditioning and Refrigeration Institute (ARI) and the Gas Appliance Manufacturers Association (GAMA) are down through March 2007 when compared to last year.

Consumers are seeing their wallets squeezed more severely than they have in a long time, and many are tightening their belts.

You see this when their furnace, boiler, and/or air conditioning system hits the skids. For the majority of them, who do not have maintenance agreements covering their systems, repair is an unforseen, but seemingly affordable expense.

With the new efficiency standards and higher energy costs, many consumers lean more heavily toward system repairs. The proof is in the large increase in sales of service parts versus equipment shipments.

As contractors, your job is to consult with your homeowners and help them make the best decisions possible. The repair vs. replace question is one YOU should be expert enough to answer.

Some things to consider: Over the past 20 years, HVAC system efficiencies have more than doubled. The equipment itself is larger, and the cost for raw materials has risen considerably as well. So yes, the initial cost of new equipment is high.

That’s why now is the time teach your customers about life cycle costing. Help them look beyond the initial investment and consider the impact of preventive maintenance, system servicing, future repairs, and energy costs over the life of the equipment.

If their equipment is 10 years old or more, these costs can be significant and the initial cost of a new system won’t look to be as great as they thought. Better yet, the savings they thought they’d achieve by repairing will be far less, making the decision to replace more palatable. Add in the significant energy savings (lower utility bills), and increased comfort, and the idea of replacing equipment becomes exciting.

The point is, you, the contractor, are the expert who can help consumers understand that repair isn’t always in their best interest. Those of you who do do this are setting yourselves apart from your competitors and establishing strong credibility that translates into better profitability for your company.

Here are some examples I found on the web of contractors making the repair vs. replace proposition work to their customers’ and their own benefit:

Aire-Serv has posted a homeowner’s repair vs. replacement calculator that helps consumers make smarter investment decisions. Go to to check it out.

Another good website is owned by Art Newsome, Inc. Heating and Air Conditioning, an HVAC contractor located in Newport News, VA. Go to and see the article on life cycle costing they posted for their homeowner customers.

A different, but still excellent, example of contractors addressing this issue can be found here: (Click on “Repair or Replace”). This is a repair vs. replace checklist.

These are only three ways to that you can address the replace vs. repair proposition. In the end, customers will either have to pay now, or they’ll pay later. You job is to help them decide which is in their best interest.

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