Here are three things that will be different this summer and what you can do about them.
1. Rapid Inflation
The government types might insist that inflation is moderate and manageable. Yeah. The feds might as well ask, “Who are you going to trust, the government or your own lying eyes?”
Equipment costs more. Parts cost more. Copper costs more. Refrigerant costs more. Gas costs more. And, when gas costs more, everything costs more.
You must adjust your pricing weekly, if not daily. Do not worry about consumer complaints. Consumers do not have a great frame of reference. They won’t think you’re expensive today, but were a bargain yesterday. They thought you were expensive yesterday too.
In inflationary times, it’s a good idea to price ahead of the next inflation surge.
Keep raising your prices to protect your margins. If overhead increases, you need to adjust your gross margin to keep your net stable. In inflationary times, it’s a good idea to price ahead of the next inflation surge.
2. Equipment ShortagesCoil shortages are rampant. The highest efficiency products are hard to come by. This will test your relationship with your distributor. If you have been faithful to your distributor in the past, let your distributor know you expect the same in return this year. If you beat up your distributor over price and showed little loyalty in the past, expect to find yourself at the end of the line this year.
Set the right expectations with homeowners. Let them know there are shortages industry wide and it might take a few weeks to get your hands on a particular product configuration. If they think there’s a problem with their air conditioner, they should be proactive on getting you to look at it. Do not wait until it fails.
If you normally sell 18 and 20 SEER, but cannot get your hands on any, flip to 14 and 16 SEER, but do not reduce your gross profit. You should price to get the same amount of gross profit dollars. In fact, you might even use your 18 and 20 SEER pricing. If that seems wrong, visit a car dealer. Vehicles are hard to come by, so they are selling over sticker.
Send the homeowner a letter offering to credit the cost of the repair against a system replacement IF the replacement is performed in this calendar year.
If you cannot get equipment or if the homeowner balks at the pricing, repair it. However, this is only a delayed sale, not a lost one if you play it right. Send the homeowner a letter offering to credit the cost of the repair against a system replacement IF the replacement is performed in this calendar year. When the equipment shortages work themselves out and the weather cools off, reach back out to every customer who repaired instead of replacing and remind them of the offer. Tell them they have a second chance to replace with the full cost of the repair credited against the sale.
If the homeowner is willing to buy, but you cannot get the equipment or cannot get an installation crew free for a week, consider renting the homeowner an old condensing unit that will provide some measure of relief. Credit the rent against the price of the new system. It’s a good idea to get a down payment before installing the old unit in case the homeowner finds someone else with equipment and it becomes hard to collect the rent.
If you do not have any old condensing units that still work, buy a dozen window units and deploy the same strategy. If it’s hot and people are miserable, they will buy from the first company who can provide them relief.
If you do not have any old condensing units that still work, buy a dozen window units and deploy the same strategy. If it’s hot and people are miserable, they will buy from the first company who can provide them relief.
Above all, do not make promises you cannot keep. Do not sell equipment you do not have and have not gotten assurances from the distributor you can pick it up.
3. Different Sales Channels
One thing COVID did was change the way many consumers buy things and the way businesses sold merchandise. There is a lot more tele-selling and now, video selling going on. More companies are building websites with the tools to help contractors configure systems. Frankly, the industry was edging its way in this direction before COVID.
DO NOT sell equipment you do not have.
Marketing research has indicated the replacement sales cycle is lengthening. Expect it to be shorter this summer. When you have a tech in the home, find a way to close on the spot or risk losing the sale.
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