Hourly Wage or Commission? Trade School or Sales Training?
It used to be that tradesmen went to trade school before entering this profession. Once hired, they made a decent hourly wage and left the sales to the sales department. Those days are over. Most so-called tradesmen in residential HVAC have never been to a real trade school. Some have never had any formal training at all, unless you count sales training. Many repairmen now make a low base pay plus commission.
Obviously you’re better off hiring a company with trade-school-trained technicians who make nothing but an hourly wage. Finding such a company can be difficult since, as you might have guessed, most contractors are unwilling to share that information over the phone. If they won’t tell you over the phone, the repairman might tell you in person. Treat him well and you may be surprised by how much he opens up.
As for me, I have the training. However, as a one-man operation, I can’t put myself on a strict hourly wage. That’s one of the reasons why I do two things. First, I publish my time and materials formula for all to see. Second, I ask homeowners to hang out and watch as I work (at least through the diagnosis). With transparent pricing and an understandable diagnosis, my customers know they have nothing to worry about.
Learn the Contractor’s True Cost
Assessing how much an HVAC contractor charges based on their trip fee is virtually impossible. That’s because most contractors price their trip fees artificially low. If you really want to know how much they charge, ask them for their hourly rate and parts markup. All contractors have an internal hourly rate and parts markup, even flat rate contractors who say otherwise.
Flat rate pricing is designed to hide the hourly rate because, as I explain here, that hourly rate is often $300 per hour or more. Now if you find a contractor with a good hourly rate, don’t get too excited until you know how they mark parts up. A good hourly rate means little if they’re marking the part up by 1,000%. (There are stories behind that comment, dontcha know?)
If they won’t tell you their hourly rate, find out ‡ what the part costs wholesale. Multiply that cost times two and subtract it from the total bill. Divide what remains by the number of hours spent at your home plus an extra half hour for travel. That number may be a reasonable approximation of their hourly rate. My labor rate and parts markup can be found here.
As of 4/8/17 contractors can purchase Freon / R-22 locally for about $25 per pound before tax. (Puron / R-410A can be purchased for about $5 per pound.) Last summer, when it cost just $17 per pound, many highly rated flat rate contractors were charging $200 per pound for Freon. I can only imagine what they’re going to charge this summer.
I charge less than half that much. Why the disparity? Freon is being phased out. By 2020 production of new Freon will cease. As for Puron, regulators have set their sights on that too. Those facts are being used as reason to raise prices and, in some cases, as excuse to gouge homeowners. Learn more about Freon and Puron here.
‡ If you want to know what contractors pay for parts, look it up online. Quite often the best price you find online for common parts is roughly what contractors pay locally. That’s definitely not the case with certain specialty parts, new equipment or restricted materials like refrigerant. Contractors can often purchase those items for less than the public.
The average air conditioner lasts 20 to 25 years. The average natural gas furnace lasts 25 to 30 years. That’s what I’ve experienced locally. We have relatively mild weather in the SF Bay, so our equipment lasts longer than in other parts of the country. Other parts of the country may get less than 20 years out of their equipment.
Naturally the equipment fails more often towards the end if its life. If you’re at a point where you’re reasonably certain that you’re going to replace the HVAC equipment once but not twice *, then it may make sense to do so now rather than pour repair money into equipment that you’re going to replace anyway. This audio commentary explains in detail.
* You can be reasonably certain if: 1) Your current equipment is old enough, and you’re going to own the home long enough, that replacing the equipment is inevitable during your tenure as that home’s owner. 2) You’re going to own the home for less than 20 years, which means you’re probably not going to have to replace the equipment again before selling.
Stay, Watch and Ask Questions
Pointing the repairman to the equipment and walking away is the biggest mistake many homeowners make. Not only do I ask homeowners to stick around, I actively engage them during the repair. You should do the same with any repairman (at least through the diagnosis). That’s the best way to find out what kind of person he is and if he truly knows his stuff.
Some homeowners resist by saying they don’t want to annoy the repairman or make him nervous. That’s considerate of them, but consider this: When you go for an exam, is the doctor made nervous by you watching? Is s/he annoyed by your presence? Does s/he get irritated with your questions? If so, should you not get a new doctor?
The answers to those questions should be true of any skilled profession. If your presence makes the repairman nervous, then he may not know what he’s doing. If he’s irritated by your company, then you may be unwittingly thwarting his unscrupulous plans. Or maybe he’s just a jerk. Either which way, it’s time to find a new repairman.