< PreviousSALES MANAGEMENT 20 JULY 2022HIGH-PERFORMANCE HVAC TODAY ing job price calculation method. Get them wrong and you can really mess things up. Keep the Goldilocks Effect in mind -- not too high, not too low, just right! NOTE: As your Overhead Costs and Net Profit goals change, you must re- visit this calculation and adjust ac- cordingly. You don’t have to wait for a year-end P&L to adjust your magic numbers! FIGURING RETAIL PRICES USING OCH AND NPH Now that you have your magic num- bers in hand, it’s time to use them in your new job price formula. Remem- ber, this approach is honoring your non-commodity people power, so es- timated labor hours are the key vari- able. Figure 1 shows the Net Profit Maximizer Equation. Read the rest of this article on- line;ncilink.com/holt2. statement covering your last 12 months, this number is typically listed as something like “Total Op- erating Expense” and includes all costs required to keep the doors open (rent, utilities, insurance, vehicles, equipment, etc.) 3.DetermineNetProfit. From that same Profit & Loss statement, look at the bottom for the Net Profit dollars you earned during the 12-month period. If you are happy with the number, use it. If you are not happy with the re- sult, increase it to what makes you happier! 4.Calculate your magic num- bers. This is the easy part! zOCH = Overhead Cost divided by Billable Man Hours zNPH = Net Profit divided by Bill- able Man Hours. These two numbers are essential ingredients for this profit-maximiz- company that genuinely cared about their personal development. It was a big win for all involved, especially our customers. Well-educated team members are not a commodity. CUSTOMIZED PRODUCTS NEED CUSTOMIZED PRICING TOOLS So how do you pay for all this? The answer is simple: the customer pays for everything. If the customer doesn’t pay for everything, who does? You and your team do, that’s who. I love my customers but I’m not sure I love them enough to pay for their stuff too... are you? What if you could price all your jobs in a way that honored the importance of your well-equipped and educated people? What if all the other direct costs were just passed on to the customer at your cost with NO markup? Blasphemy, you say? How can that be? Read on my friend... Developing a plan to cover all your costs and earn a reasonable net profit requires two very important and mag- ical numbers: Overhead Cost per Billable Man Hour (OCH) and NetProfit per Billable Man Hour (NPH). CALCULATING OCH AND NPH Determining your magic numbers is amazingly simple: 1.Determine Billable Man Hours. The key word here is “billable.” Make sure you sub- tract vacation, holiday, sick time, training, meeting, and other non- billable hours from your total avail- able work hours in a typical year. 2.Determine Overhead Cost. From an accurate Profit&Loss David Holt Was a Presenter at NCI Summit 2022 HVAC SUMMIT 2023 HIGH-PERFORMANCE This article is based on a presentation given by David Holt at National Comfort Institute’s 2022 High-Perfor- mance HVAC Summit in Scottsdale, AZ. The session was titled, “How to Price Profitable Air Upgrades and Duct Renovations.” In this session, David showed High-Performance HVAC contractors why they should consider their work to be high-value craftsmanship that no one else can duplicate. Then he detailed how to price the work accordingly. If you couldn’t attend this year’s Summit, this article should give you the key highlights of what David shared with those who were there. By the way, be sure to mark your calendars for the 2023 Summit which will be held in Branson, MO from April 15-20, 2023 . David Holt is NCI’s director of national accounts and an instructor. You can reach him at ncilink.com/ContactMe with any questions.JULY 2022 21HVACTODAY.COM22 JULY 2022HIGH-PERFORMANCE HVAC TODAYaccess and use at any time. Plus, if you are a Learning Excellence Premium or Learning Excellence Online mem- ber, you have unlimited webinar access, while standard NCI members can access the webinars at a discount. National Comfort Institute profes- sional trainers produce these webinars in technical and non-technical subject areas. Many of the webinars include downloadable materials and tools you can use to put your newfound knowl- edge into practice right away. They are available for you and your team to use 24/7. Our webinar and ar- chived webinar series are helpful to sup- plement in-person training for you and your staff. They are great for training your team at their own pace in the comfort of their homes or your office. They offer the added benefit of refreshing skills your team learned during in-person and on- line live training. These 85 webinars are there for you to use at your discretion and benefit your company, your team members, and ulti- mately, your customers. The 85 webinars are divided into two categories: techni- cal and non-technical. This benefit is for both the public and the NCI membership. You can learn more and see all the available webinars by clicking here: ncilink.com/webinars . Or you can call our Customer Care line at 800/633-7058 for any questions you might have. NCI’s Summer Onsite Training Specials Don’t let the busy season defeat your training plans. Just schedule onsite train- ing between June 1 and August 15, 2022. Save up to $3,000 in extra value and dis- counts by offering private training at your place of business for your team. Think about it: by training your team onsite, there are NO travel expenses for your team, you save money by training as a group instead of as individuals, and there are fewer impacts on your pro- ductivity as your technicians are not out of town. NCI training programs bring measured performance, practical efficiency, and safety to the frontline of your business. We focus on helping contractors de- velop a High-Performance HVAC culture that helps them become more successful. You can experience hands-on, interactive training sessions that provide the best practices and tools necessary to achieve the highest quality and performance. PLUS: if you have NCI Bucks, you can use them to offset the cost of the onsite. Learn more about this year’s Sizzling Summertime Onsite Specials. Just point your browser to the ncilink.com/ 2022SummerOnsites on our website or call your Customer Care specialist at 800- 633-7058. HVAC Summit 2023: Mark Your Calendars National Comfort Institute’s in-person High-Performance HVAC Summit 2023 will be held in Branson, MO from April 16 to 20, 2023 at The Chateau on the Lake in Branson, MO (ncilink.com/Chateau). Branson is an excellent location and a great place to make Summit a work- ing vacation spot for you and your fam- ily. The city is nestled in the heart of the Ozark Mountains in Southwest Missouri and boasts many outdoor activities. Plus, more than 50 theaters and music venues line the main drag known as 76 Country Boulevard within the city. The Chateau on the Lake is NCI’s head- quarters hotel. It’s located on Table Rock Lake, a short 10-minute ride away from Branson’s entertainment district. So be sure to mark your calendars for April 16 to 20, 2023 , and plan to stay and play! Stay tuned here, and remember to check gotosummit.com for more infor- mation on the Summit itself, registra- tion, special NCI member pricing, and ex- ceptional hotel packages as it becomes available. NCI Webinars: Are You Using Them? The NCI Webinar archive contains more than 85 webinars for your team to NCI UPDATE JULY 2022 23HVACTODAY.COM24 JULY 2022HIGH-PERFORMANCE HVAC TODAY HVAC SMART MARTJULY 2022 25HVACTODAY.COM Advertiser Index AD INDEX HIGH-PERFORMANCE HVAC TODAY TM Publisher Dominick Guarino Editor-in-Chief and Associate Publisher Mike Weil Art Director Judy Marquardt Online Development Director Brian Roseman Circulation Manager Andrea Begany-Garsed Advertiser Index To Subscribe to High-Performance HVAC Today: ONLINE: Visit HVACToday.com/subscribe for a FREE digital subscription. PRINT: 1 year/$72; single copy $7. Canada: 1 year/$92; single copy $9. Payable in advance with U.S. funds. Prepaid subscriptions may be sent to: High-Performance HVAC Today, PO Box 147, Avon Lake, OH 44012. Phone: 440-949-1850; toll free 800-633-7058; or visit HVACToday.com/subscribe to order online. Arzel Zoning Technology, Inc. | www.ArzelZoning.com ...................................................... 5 Baker Distributing Company | www.BakerDist.com ........................................................... 24 Duct Saddles | www.DuctSaddles.com ..................................................................................... 16 Evergreen Telemetry | www.EvergreenTelemetry.com ........................................................ 2 Goodman Manufacturing | www.GoodmanMfg.com ....................................................... 19 Lazco Corp. | www.LazcoCorp.com ............................................................................................ 22 R.E. Michel Company | www.REMichel.com .......................................................................... 21 The New Flat Rate | www.TheNewFlatRate.com ................................................................ 24 To Your Success | www.ToYourSuccess.com .......................................................................... 24 Go to ncilink.com/ContactMe with your comments and questions.26 JULY 2022HIGH-PERFORMANCE HVAC TODAY installed systems actually work as promised. As a High-Performance contractor you prove what you are delivering through documented test results — even certified by a third party. • Continually Train Your Employees. Train- ing is not an expense, it’s an investment. It must be ongoing to get the results you want to achieve. The biggest investment in training is not the cost of a class, it’s the lost opportunity cost of not having that person in the field generating reve- nue. This cost needs to factor into your training investment. With good training, your Return on Investment (ROI) should be many times your initial cost. • Build A High-Performance Culture. Main- taining a culture of high performance isn’t just training your employees and putting a stake in the ground that you are now different. It re- quires an effort on your part to keep the fire burning. Our industry has a lot of ingrained bad habits like just swapping out boxes when it comes to re- placements, slapping on the gauges on the con- densing unit before verifying airflow, and so forth. It takes a concerted effort to change these hab- its and keep them from creeping back into your organization. Oftentimes new hires can inadvertently start to drag a company towards the old ways. It’s import- ant to assign a champion in your company who not only helps keep the High-Performance cul- ture alive, but is ever-vigilant to make sure wrong thinking doesn’t creep back in. Of course, there is so much more to each of these ways to SOAR above your competition. But that is exactly what this magazine is all about. Be sure to study both current and archived articles. I know you will find many of the answers you are looking for. I n this month’s Today’s Word, Mike Weil dis- cussed “Five Ways Your High-Performance Business Can SOAR Above your competition.” SOAR stands for Situation, Opportunities, Action, Results. Let’s take a look at fivemoreways to apply a SOAR approach to making your company stand out in your market. • Educate, Don’t Sell. Most contractors learned to sell customers on why they are bet- ter, why they offer the best equipment, and why they should be chosen for the job. The educational approach is very different. It’s not about you, it’s about the customer and their home. By teaching a customer how their system is performing, and involving them in the testing and discovery process, you have moved from someone trying to sell them something to a trusted advisor who is there to help them buy exactly what they need and want. • Make Air Upgrades Part of Every Equip- ment Replacement. Virtually every installed system can benefit from an Air Upgrade. This product ensures equipment can perform per the manufacturer’s specifications. An Air Up- grade makes it possible for equipment to deliv- er it’s designed capacity as close as possible to its rated energy efficiency. • Don’t Just Promise Performance, Prove it. Most contractors promise their work will perform as specified, usually citing SEER and AFUE ratings. Very few can prove that their ONE MORE THING... By Dom Guarino IT TAKES A CONCERTED EFFORT TO CHANGE BAD HABITS AND KEEP THEM FROM CREEPING BACK INTO YOUR ORGANIZATION. Five More Ways to SOAR Above Your Competition Dominick Guarino is publisher of High- Performance HVAC Today magazine and CEO of National Comfort Institute, Inc. He can be reached at ncilink.com/ ContactMe .Next >