3 Smart Tips for Maintenance Agreement Pricing

Today, lots of contracting companies view maintenance agreements as an effective way to earn ongoing business from customers. While the jobs generated by these agreements aren’t generally significant bread-winners, they can involve steady profit, which is important.

In our contractor company training, we teach that the key to a successful maintenance agreement is coming up with correct pricing and sticking to it.

With that in mind, here are three quick tips for establishing your maintenance agreement pricing.

1. Make it a team effort.

First things first: Pull your team together.

Whatever you do, don’t make decisions about your maintenance agreement pricing on your own. For best results, you need to involve your team on decisions.

Ask for their thoughts on:

• What you’re going to offer
• What tasks you’re going to perform (including preventative maintenance agreements)
• If you’re going to provide a maintenance agreement
• And more

To decide on these things, get the team together and ask for their input. After all, these are the people with boots on the ground. They have a right to toss their two cents into the pot.

Getting team buy-in here is going to do a couple of things

First, it gets everybody on the same page, and it ensures that your entire team is going to perform the same maintenance agreement, regardless of who’s doing the work.

Second, it means your team will be doing the job the way they should, and that customers will be happy with the services rendered.

2. Decide how much time it’s going to take.

Next, you need to establish a timeframe for your maintenance agreement pricing. Remember, you have to be realistic about this. You want to think about how long it will actually take to perform each of these tasks, not how long you wish it would take.

This step is critical.

If your team determines that the maintenance agreement should take an hour of wrench time on the job, and techs are getting it done in 45 minutes, you have to ask what the techs are skipping. While it might seem like saving time is smart, keeping your promises is the most important thing. If you agree that your team will perform specific tasks, coming up with a timeframe in which to complete them is a necessary accountability metric.

Since this metric may change over time, don’t hesitate to revisit this conversation routinely.

3. Order the tasks.

Finally, look at the list of tasks that you developed and decide if there is a proper order in which to do them. This is important for many reasons. Mainly, it helps create an order for your techs so that everyone does the jobs in the order that makes sense. It also helps avoid mistakes and errors born from rushing through things.

In some cases, certain parts of the work agreement have to be completed before the others. Make sure your team agrees on what order to complete the tasks in. It may take some time to finalize the order of the tasks, but you have to take the time to get it right from the start. This is especially important in preventative maintenance settings.

Ensuring Maximum Profits for Your Team

In our contractor company training courses, we focus on helping contractors run profitable, reliable companies. One big part of that is coming up with accurate and intelligent maintenance agreement pricing. Even if you’ve struggled with this in the past, it doesn’t have to be as tricky as it sounds. By following the three tips in this post, you can develop maintenance agreement pricing that truly works for your team, your customers, and your business.

To learn more about contractor company training, contact us today. We’ll be happy to help you find the courses you need to run a profitable contracting business!

5 Customer Buying Principles You Need to Know: Principle #1

How does a customer decide on their preferences? Do they come to you with their preferences already defined, or does the way you interact with them have something to do with it? What if we told you that customer buying preferences are shaped by the options you present to them?

In all of our HVAC business training, we cover five customer buying principles that you need to know. This is principal #1.

Here’s what you need to know.

A Brief Overview: The 5 Customer Buying Principals

When it comes to your relationships with your customers, five distinct principles impact the buying pattern. Each customer goes through all five of these steps in the process of making a buying decision, whether that decision is large or small.

The process is always the same. The only thing that differs is how quickly a customer moves through the cycle.

If you’re deciding where to get dinner tonight, for example, you might come to a decision very quickly. If you’re deciding on which new car to buy, though, or where to purchase an investment property, you’ll spend more time working through the principals.

No matter where a customer winds up, they always start at square one: with the first buying principal.

The First Principal: Customer Preference

The first principle in the five customer buying principals is this: a customer’s preferences are shaped by the options your company presents them. This makes perfect sense when you think about it.

If a customer is coming to your HVAC company, they probably don’t have a vast knowledge of the HVAC industry. They know enough to know they need service, but they don’t know what that means exactly. So they’ll ask for your opinion, and then base their decision on the information you provide them.

From a business perspective, this is critically important to you. In fact, it should shape the way you format your customer proposals. After all, customers can’t buy what you’re not offering. If you aren’t telling your customers about all of your available products and services, there’s no way they can interact with them or form an opinion about them.

While this may sound exploitative to some HVAC professionals, there’s another way to look at it.

Your HVAC customers see you as an expert in the industry, and they trust you to offer an honest recommendation. So do just that.

When you do, you can cater to their needs for information. By giving them information about your various products, goods, and services, you’re helping them gather facts and establish a preference.

Without you, it’s tough for buyers to know what to do.

HVAC Business Training Can Help Your Customers

In light of customer buying principal #1, you have a duty to your customers. It’s your job to educate and inform your customers so they can start to form their preferences.

Throughout this process, you have to ask questions and listen carefully. As you do, you’ll start to understand what’s important to your customers, and how you can cater to them as effectively as possible.

No matter what, don’t judge your customers prematurely. Until you’ve spoken to them, you don’t know what they want or need. If you make this mistake, in the end, you’ll only hurt yourself and make it harder to deliver what they need.

With the right HVAC business training, you can help your customers, enhance your authority in the industry, and grow your contracting business the way you deserve.

Why Good Customer Service is Your Biggest Sales Tool

Today, customers aren’t basing their loyalty on price or selection. The fact is, there are so many products out there, and such widespread availability to them, that customers can pretty much find what they’re looking for anywhere. While this sounds scary for companies, it’s actually an opportunity.

With easy access to almost anything, customer service is what really sets one company apart from the next, and it’s one of our biggest focuses when we teach HVAC business growth strategies.

In this post, we’ll discuss why — and how — customer service can be your best marketing tool, and how you can improve yours accordingly.

Why Customer Service Matters

Today, customer service is essential for a few reasons. Of course, there’s the obvious reason that excellent customer service translates into effective customer problem resolution and increased loyalty, but that’s not all. Customer service is also one surefire way to win word-of-mouth advertising and ensure customers are out there recommending your company.

The reason for all this is simple.

Going into business isn’t all that hard these days. With a few dollars and some clicks around the web, virtually anyone can set up a company. What separates great companies from mediocre ones, though, is that the good ones want to serve their customers.

You don’t necessarily need to provide excellent customer service to stay in business. When you do, however, customers recognize your brand as different, and they naturally separate you from the crowd — not to mention, gravitate toward your business.

Customer Service, by the Numbers

Still not convinced customer service is one of your most valuable marketing strategies? Consider these compelling customer service statistics:

• A customer is 4x more likely to purchase from your competitor if they experience a service-related (rather than price or product-related) problem with your company.

• The majority of Americans have decided not to make a purchase because they had a poor customer service experience with a company.

• It takes a whopping twelve positive customer service experiences to make up for one negative experience.

• It costs 6-7x more to attract a new customer than it does to retain and sell to an existing one.

• 70% of customer buying experiences are based on how the customer feels a company treats them.

• 62% of customers will share their bad customer service experiences with others.

• 80% of customers say the experience a company provides is precisely as important as its products or services.

As you can see, customers prioritize customer service.

Your company should, too.

HVAC Business Growth Strategies: How to Improve Your Customer Service

Now that you know why customer service matters, let’s talk about how you can improve your customer service. Here are a few general recommendations from Gitomer:

1. Have your top management leaders make sales calls. This is particularly important in the HVAC industry, which moves quickly and features rapidly adapting needs.

2. Prioritize customer communications, and make it a policy to return all inquiry or complaint calls in one hour or less.

3. Seek to resolve every customer complaint within 24 hours.

4. Have your top management leaders answer every complaint personally.

5. Follow up with customers who have made complaints to verify they received the services they needed and that they’re no longer waiting on anything additional.

6. Create a slogan that puts service at the center of your company’s priorities.

In the HVAC industry, there are even more ways to improve the customer service experience.

For instance, you can wear sharp, professional-looking uniforms and take the time to explain the required work to customers fully.

You can also offer more accurate service time estimates to customers. Rather than relying on the age-old, eight-hour time estimate window, you can narrow that estimate down and give your customers a more accurate estimate of when their tech will arrive.

If you want to start growing your business, begin with improving your customer service. It’s one of many effective HVAC business growth strategies that can help your HVAC company stand out from the rest.

Want to learn even more? Check out our customer service course!

Why Should You Try Online HVAC Tech Training?

If you work in the HVAC industry, you know there’s been an ongoing labor shortage. According to the Bureau of Labor Statistics (BLS), the current HVAC technician shortage is at about 70,000 workers. Within the next four years, the BLS projects that number will rise to 115,000 workers.

Since the current workforce is equal to about 230,000 people, that means an increase of almost 50%!

In light of this labor shortage, many HVAC professionals are turning toward new models of HVAC company training, designed to onboard skilled workers as quickly as possible. One such model is online HVAC tech training.

Here’s what you need to know about HVAC company training, and why you might consider trying it.

What Skills Do New HVAC Techs Need for the Job?

The HVAC industry is growing more rapidly than ever before right now. Most HVAC business owners will see at least a 10% growth within the next year. With a growth rate this fast, it pays to consider what new HVAC techs need to know, and how best to deliver that information for them.

Here are a few critical skills HVAC techs need on the job:

1. A Deep Understanding of System Components

Heating and cooling systems utilize dozens of components. Good HVAC techs need to understand the parts and pieces of those components. They must also know how they work together to contribute to the overall functionality of the system.

2. System Design

While HVAC techs don’t need to know every detail of every system, they do need a strong understanding of the importance of installation and design where the system is concerned.

3. Efficiency Requirements

The U.S. Department of Energy (DOE) has established strict energy efficiency standards for new appliances installed in homes today. HVAC techs need to know what these standards say about HVAC units, and how to ensure their installations remain compliant.

4. System Options

To provide the best possible service to clients, HVAC techs must understand the various system options available on the market today. From mini-splits to duct-free systems, HVAC techs need to understand these various technologies and how each will cater to a customer’s needs.

In addition to the considerations listed above, HVAC techs must also understand things like comfort controls, indoor air quality, and more.

With all that in mind, it’s easy to see why good HVAC company training is so critical.

How Online HVAC Training Helps

Online HVAC training can go a long way toward helping new HVAC techs get the skills they need to thrive in the industry. At Grandy & Associates, we believe in this mission so much that we’ve developed an 8-hour class designed to train and onboard new HVAC techs.

In this course, we’ll teach techs:

• How to understand both major and minor systems components.

• The importance of proper system installation and design.

• Pressing efficiency requirements and the crucial roles they play in the HVAC industry.

• Why IAQ is such an essential part of HVAC.

• Comfort controls, and why they’re so crucial to HVAC systems and installations.

• Why there are so many different HVAC systems choices, and the benefits and drawbacks of each.

Get Started with Effective HVAC Company Training

To cater to your company and your service techs, we offer two separate course options: a live, instructor-led online course and a self-paced version. These courses are developed to change your company and make closing the skills gap easier, and we want to make sure they’re as personalized and flexible as you need.

Ready to learn more about our HVAC company training or any of our other contractor training options? Contact us today!

Contractor Business Training 101: How to Set Your Pricing

Everyone loves getting paid — especially contractors who can quickly run into cash flow issues. If you run your own independent contractor business, though, one thing you’ve likely wondered is how to set your pricing.

How do you know if you’re charging too much or too little?

How do you stay competitive in your market?

And how do you adjust your pricing over time?

This is one of the most important aspects of contractor business training, and we’re here to help you figure it out.

5 Steps to Price Your Work as a Contractor

As a contracting business, you have a lot of competition.

Stay competitive and keep your head above water with these five smart pricing tips.

Step 1: Start by Determining Your Ideal Salary

How much do you want to make each year? $50k? $100k? Once you know how much you want to get paid, you can work from there. While there’s no limit to what salary you can set for yourself, you do want to make sure it’s reasonable and reflective of your experience. If you price yourself too high from the get-go, you’ll make it challenging to participate in the market.

Step 2: Understand Your Overheads

Next, it’s time to understand how much it costs to run your business. You have to calculate your overhead.  In this case, your overhead includes all of your outgoing bills, and how much they add up to annually. Count things like:

• Marketing
• Office rent
• Website costs
• Equipment and tools
• Business insurance costs
• Stationary and office expenses
• Third-party software, services, subscriptions, and reference materials
• And anything else you pay to keep your company going

If you’re just getting started, you might not have a reliable number for many of these expenses, and that’s okay. It’s fine to estimate, but you might want to lean on the high side to ensure you’re not short-selling your final number.

Step 3: Determine Your Profit Margin

This is where many contractors go wrong. They set their prices without considering a profit margin, and they end up not making money as a result. As a general rule, profit is a percentage of the total costs for each job. While there’s no standard profit percentage, most contractors choose to take 10%-20% on top of their salary.

Step 4: Understand Your Schedule

Now, it’s time to think about how you want your daily life to look. How many days will you be working each year? How many hours on each of those days would you like to work? As you plan your schedule, make sure you’re leaving time for unplanned breaks in work, like contracts that end unexpectedly and dry periods during the year.

As a general rule, you’ll want to give yourself about 20-30 days of vacation time each year. That will help you set the rest of your schedule and working hours. For example, if you decide to take 20 days of vacation annually, you’ll work 48 weeks out of the year. This is 240 working days, or 1,920 billable hours.

Step 5: Calculate Your Hourly Rate

Finally, it’s time to set your pricing! As you do this, you’ll pull together all the information you’ve gathered so far in this exercise. Here’s an example:

• You want to make $70K annually, and you have $30K in annual overheads. Add these two numbers to get $100K.
• Multiply this by your profit margin.
• Divide the total by your annual billable hours. This will determine your hourly rate.

And there you are! This is a great place to start when it comes to properly setting your prices.

Set Prices That Reflect Your Value

When it comes to setting prices, most contractors do one of two things. Either they call everybody else in town and find out what they’re charging, or they charge whatever their previous employer was charging.

The problem with both of these approaches is that they’re not personalized, and they don’t reflect what it costs to run your company. This is why you need to understand your pricing. You need to charge what it costs you to cover your cost of operation and generate a reasonable profit.

Make Your Contracting Business More Profitable

While these five tips are a great place to get started, our contractor business training can help you complete the circle and establish a pricing structure that helps your company grow for years to come. We’ve helped thousands of contractors learn how to run a profitable contracting business, and we can help you, too. To get started, contact us today!

Grow Your Contractor Business by Creating a Cash Flow Budget

If you’re going to run a successful contractor business, you need to create a cash flow budget within your company. Unfortunately, the majority of contractors don’t do that.

Here’s what we hear:

“I don’t want to.”

“I don’t know how.”

“It’s going to be too hard.”

“I don’t have enough time.”

When the seasons change, though, or business gets tight, you’re going to wish you’d taken the time to establish a cash flow budget back then.

If you want to protect the future of your business, or grow your business, then you have to create a cash flow budget.

If you’ve ever said any of the excuses above, then you’re in luck. Today, we’re going to teach you how to create a cash flow budget.

Cash Flow: the True Measure of Success

Today, lots of companies look at their profit and loss (P&L) statements to gauge how well their business is doing. If they’re in the green, things are good. Red, meanwhile, means it’s time to drum up some new business.

While profit and loss statements are certainly an essential part of accounting, they don’t tell the whole story. In fact, your P&L can — and will — lie to you and tell you the company is making money, even when you’re not. If you keep going like this, your business is bound to struggle.

So, what’s the answer?

Welcome to the importance of cash flow.

More reliable than those P&L statements, cash flow is the metric that demonstrates how well your company is truly doing, and where your contractor business is (or is not) growing.

What Your P&L Won’t Tell You

The primary issue with P&L statements is what they don’t show you. These things include equipment purchase cost and loan payment numbers.

Equipment purchase cost. Depreciation is an accounting number that relates to how much you pay for a piece of equipment and how much the value of that asset has reduced since you first purchased it. Equipment purchase cost, on the other hand, is a cash flow metric, since your company must spend money to replace said assets. While depreciation doesn’t have a direct impact on your cash flow, equipment purchase cost does.

Loan payment numbers. P&L statements only show you how much interest you’re paying on your business loans — not the principal payment amount. This means you could be under-reporting the expenses associated with running your company.

In addition to giving you a clear picture of your company’s finances, establishing an accurate track record of your flush seasons allows you to predict what next year, and next month, will look like. This is good because it can help you plan ahead.

4 Tips to Develop a Cash Flow Budget

Now that we’ve discussed why creating a cash flow budget is so important, let’s talk about how to make it happen. Here are a few critical steps:

Predict your collections. What do you anticipate bringing in as revenue, and when? Be realistic about this. If a June invoice is September revenue, thanks to your net-60 payment terms, be sure to account for this.

Predict other cash to enter your accounts. Are you anticipating client deposits, proceeds from partnerships, or income from equity-based transactions? Account for these, too.

Detail expenses. The easiest way to do this is to look at your costs from the last year, month, or quarter. Start with standard expenses, like insurance, loan payments, rent, and payroll.

Evaluate accounts payable. Using the same period (month, quarter, or year), evaluate your accounts payable. What are the due dates for each account, and when will you pay those expenses?

We Can Help You Grow Your Contractor Business

Once you’ve got this information gathered, you’re ready to begin compiling a cash flow budget. Don’t go it alone, though. At Grandy & Associates, we know just what it takes to run a profitable contracting business. We provide business training exclusively to the service and trades industry.

Contact us today and find out how we can teach you to grow your contractor business.

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