How to Maximize Your HVAC Company’s Profit Margin
No matter where your profit margin currently is, you could stand to improve it. Sometimes small decisions can take your business from a small 4 percent profit margin up to 10 percent or higher. More likely, though, if you already know and have tried to maximize your profit margin, you may need to make changes that feel big (but are actually fairly easy to implement once you see the opportunity.) So, here are ways to maximize your HVAC company’s profit margin that you may not have considered.
Charge Flat Fees, Sign Contracts
Sometimes you undermine your own success by charging for certain services by the hour. Instead, move over to charging flat fees for services and, if needed, tacking on fees like emergency fees, travel fees, and more. As long as you are upfront about these costs, even routine customers are likely to accept the change.
Also consider signing maintenance contracts, which offer longer-term value and can make you more money without necessarily having to put in time-intensive work. Stopping by for an inspection and some maintenance work can be quick but still valuable for the customer.
Consider Your Purchases
The money that you invest in tools and equipment can be minimized without sacrificing the type of work that you can perform. Purchasing used equipment is almost always better than buying new. Renting out equipment that you only need for certain jobs can also be a valuable way to cut costs. If you’ve purchased equipment that you don’t need, you can also take the opportunity to rent it out to others instead of selling it at a loss or letting it sit idle.
Outsource Certain Labor
While it may not be in your best interests to use independent contractors as your technicians, there are other roles in your business that you don’t need to hire for. You can use an outside accountant instead of having your own, you can use a digital receptionist instead of hiring your own, and you can even use outside marketing firms instead of bringing on your own specialists. This saves you the costs of hiring, training, vacation, sick days, and even of having a physical office.
It’s easier to complete this step if you haven’t already hired someone for the role. But you can also take the opportunity to (legally) pare down your current roster.
Choose Better Work
You do not need to take every job that comes your way. Instead, focus on advertising for and committing to the jobs that offer you a better profit margin. Even when you do not have other work you could take immediately, it is often better to wait out for that work rather than take a job that has a very low profit margin or even one that would put you in the red.
Of course, to do this, you need to know which jobs offer you a stronger profit margin than others. While you are assessing them, it is wise to also see if you should change what you charge for them.