What kind of crazy person would choose duct cleaning, duct renovation, and duct replacement calls in the heat of a Georgia summer when they could exclusively take HVAC system replacement work?
My brother, Dallas, that’s who. Wait! Don’t stop reading! And Dallas, don’t disown me!
Now, why oh, why would anyone who knows two cents about HVAC prioritize duct leads during prime system replacement season? And if you do choose any of these leads, how do you price them?
So my brother explains it like this: Duct renovations can typically be done in less than a day. This summer, he is focused on scheduling three duct cleanings per day at an average of $1,400 per cleaning. Indeed, these cleanings pave the way to better efficiency, indoor air quality (IAQ), and health discussions with his customers, leading to duct sealing, renovation, and replacement projects.
Maybe Dallas isn’t such a crazy person after all! Perhaps we’ve been missing something!
Know Your Daily Truck Requirement
Many contractors get stuck in the weeds trying to figure out pricing for duct renovations. However, the solution is easier than you might think. The key is to know your daily truck requirement. In other words, you need to know the gross revenue responsibility of each truck each day.
If you don’t know your daily truck requirement, you’ll never know if you’re pricing jobs right or not. If you do know your daily requirement per truck, you can follow the following rule of thumb to find a flat rate price for your work:
Price of job = (Daily Truck Requirement x Portion of Day) + Parts
So, let me break that down. Let’s say your daily requirement for a truck is $2,000 per day for a typical service vehicle. That means each day, each truck is responsible for bringing in $2,000 of gross revenue.
When you get the job, determine how long it will take. If the job is ¼ of a day, that equals two hours, ½ a day (4 hours), or one full day (8 hours). Why not ¾ of a day? Ha, you know why! There’s no such thing as a ¾ day job!
So, if the daily requirement for a truck is $2,000, the breakdown looks like this:
- ¼ day job= $500
- ½ day job=$1000
- One day job=$2000.
For a ½ day job at this rate, then, the price = (2000 x 0.5) + parts = $1000 + parts. A ¼ day job is $500 + parts. And a 1-day job is $2,000 + parts. Notice I keep saying plus parts! You know that the prices of parts and materials are increasing and are all over the board right now. So you must calculate your parts costs separately, or you’ll never break even, let alone make a profit.
This formula works for most types of jobs since it considers the parts variable for the type of job you are on as well as the ever-changing cost of parts.
What’s the problem with this flat rate formula? Just that — it’s a flat rate. This price is just the minimum needed to meet the daily requirement for each truck. So, if you price at this level, if you don’t close every call, or for the calls you do close, you earn the least amount possible.
Price Versus Pricing Profitably
The other problem with this flat rate formula? Not every job has a “minimum” or basic repair. Some jobs take more skill, time, and work than you might anticipate. So, if you use this formula and find you cannot totally fix the problem at that price, you are doing a disservice to your customers, aren’t you? That’s when customers don’t receive value for the money spent.
So, the above formula is an easy way to flat rate your duct renovations but is the bare-bones minimum. How can you fix this problem? By providing your customer options to do several levels of service, you can price your calls profitably.
The question isn’t how to price duct renovations using flat rate systems. The question is how to price duct renovations profitably.
So, you choose. Do you want to price, or do you want to price profitably? If you only want to flat rate price and nothing more, you can stop reading.
That formula was the whole punchline. If you are curious about how to make that pricing profitable, keep tracking with me.
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