Why is HVAC Repair So #*#@ Expensive?

Posted: June 18, 2012 in HVAC

Let’s face it, we all cringe when we have to call for HVAC repair…the repair bills are rarely dirt cheap.  Many customers assume that HVAC contractors are economic rapists and rolling in the dough–how can they not with the prices they charge?

As an HVAC contractor, WE cringe when we quote repair bills, and unfortunately we are NOT rolling in the dough.  The profit margins for this business are low.   

Here’s the straight skinny.  To get a qualified and experienced service technicnan out to your home, in a truck outfitted with freon and the multitudinous parts and pieces needed for the on-the-spot repair, and with all the various tools needed to facilitate repairs…it costs the contractor around $75-$85 per HOUR. 

How is this calculated? 

First of all, almost half of that figure is the technician’s hourly wage.  They make good money, and deservedly so….they must have a tremendous book of knowledge coupled with tremendous diagnotic skills.  Add this to the fact that they are always working in extreme temperature conditions, and you come up with an exctremely demanding job.  They are rather like doctors thart have to work in temperatures from bone-chilling cold to blistering heat (as an example, evaporator coil changeouts in attics can have the tech in temperatures as high as 120 degrees). 

Now,. take a look at the technician’s service vehicle.  It is outfitted with thousands of dollars worth of capacitors, relays, freon, specialty tools, motors, fuses, freon, nitrogen, oxygen…the list goes on and on.  Now consider what the insurance rate is on a vehicle that carries this kind of inventory PLUS hazardous chemicals.  It’s outrageous.  Add rising fuel costs to the picture (gas mileage on a weighed-down vehicle is poor to say the least).  We all know the cost to own and maintain a vehicle…not cheap, even if you aren’t driving it all day, every day. 

The final piece to the puzzle are all the usual fees, taxes, and insurance premiums that small businesses must pay to keep employees employed.  These alone are startingly high, and unfortinately with the current political and economic climate, they are only getting worse. 

Add all this up…the picture is bleak for offering low-cost repair fees.  When you see compnaies offering rock-bottom service call rates, you can rest assured that they are banking on making their money back with upsells and unnecesary repairs.  Buyer beware when you see service calls being advertised for anything lower that $80!

While we know this blog doesn’t make writing HVAC repair checks any less painful, but hopefully it has helped to understand why this industry is so $#&% expensive! 

Check out www.comfortheatingandac.com for helpful DIY tips that will help keep your system running at its most efficient, and help keep those repair bills at bay!

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Comments
  1. Barry says:

    Explain to me why $500 in parts and a 4 hour job comes out to $2800. That is over $500 an hour for labor! I would gladly pay the $75-85 you quote.

    • Captain AC says:

      Barry –

      Let’s face it, we all cringe when we have to call for HVAC repair…the repair bills are rarely dirt cheap. Many customers assume that HVAC contractors are economic rapists and rolling in the dough–how can they not with the prices they charge?

      The truth is that HVAC companies struggle to keep their doors open, experiencing extremely high overhead and low profit margins. How is this possible? Where’s the money going? Let’s follow it.

      The first bite is the technician’s hourly wage—hiring an experienced technician isn’t cheap—they make a godo hourly wage, and deservedly so. They must have a tremendous book of knowledge, spot-on diagnostic skills, physical stamina, and excellent customer service skills. When I first started in the industry as a dispatcher, I asked to be sent on the very service calls I was scheduling—it was an eye-opening experience. My first call was for an evaporator coil change-out, in an attic, in the heat of summer. The temperature up there was around 120 degrees, and when the tech fired up a blowtorch I thought we was messing with me…he wasn’t. It was beyond grueling just to be a helper, much less the man responsible for an extremely delicate repair. I left the call exhausted and soaked in sweat…and then the tech cheerfully informed me we had three more of these to go. The next was in an extremely tight crawlspace, where I got to meet a few rodents, a snake, again in 100+ temperatures. I watched the tech squirm and sweat his way around another complex repair, come out of there with a smile on his face for the customer, and I realized that these guys are some of the most under-appreciated people in the service industry. They deserve a good hourly wage.
      .
      Now,. take a look at the technician’s service vehicle. It is outfitted with thousands of dollars worth of parts—capacitors; relays; freon (R-22 is now incredibly expensive); motors; fuses; nitrogen, and oxygen…the list goes on and on. Add to that the cost of the tech’s gauges and highly specialized tools. Now consider what the insurance rate is on a vehicle that carries this kind of inventory PLUS hazardous chemicals. It’s outrageous. Now add rising fuel costs to the picture (gas mileage on a weighed-down vehicle is poor to say the least). Now add regular maintenance costs for a vehicle that is on the road 6-7 days a week. We all know the cost to own and maintain a vehicle…not cheap, even if you aren’t driving it all day, every day.
      Follow the technician back to the office, and another host of costs present themselves. Office space, office equipment, and office supplies are considerable sums–the cost of my first office supply order to Staples floored me…price a ream of paper and it alone is an eye opener. Talk to a small business owner about the costs involved in employing a single office staffer. You will be amazed.

      Another piece to the puzzle are all the fees, taxes, and insurance premiums that any small business must pay to keep employees employed and the office doors open. These alone are startlingly high, and unfortunately with the current political and economic climate, they are only getting worse. I now work on the HVAC distribution side of the fence, having lost my job with my beloved contractor family due to their need for financial belt-tightening—something I fully understood armed with all the knowledge I have shared above. Most of my customers are running businesses with less than 30 employees. Over and over I hear that despite “running lean” and cutting as many expenses as possible, most employers have to pay between $75K and $90K per month to keep their doors open—and this does not include tech wages. You read this correctly—that’s nearly a hundred thousand dollars per month.

      Add all this up…the picture is bleak for offering low-cost repair fees. When you see companies offering rock-bottom service call rates, you can rest assured that they are banking on making their money back with upsells and/or unnecessary repairs. Buyer beware when you see service calls being advertised for anything lower that $80!

      Let’s face it—people go into business to make money. Profit has to play a role in the equation, and is indeed the final piece in the puzzle. Profit margins in the HVAC industry are some of the lowest in the service industry as a whole—there is an extremely fine line between making a profit and operating at a loss. Look at a phone book from five years ago and check out how many HVAC contractors were in yoru area. Look at that same list now, and I can promise you there is a lot of attrition. HVAC contractors are closing their doors right and left, simply unable to afford the cost of doing business.

      I know this information doesn’t ease the burden of doling out your hard-earned money on HVAC repairs, but I hope it helps give a clearer picture of where your money is going.

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