How to Reduce Costs as an HVAC Business
Getting a handle on your costs for your HVAC business is a core pillar of profitability, and while it seems simple, it may quickly escalate without strict monitoring.
In this article, we’ll share ways in which you can reduce your costs. We’ll cover:
- How to reduce field costs without impacting performance and outcomes.
- How to increase technician efficiency.
- How to reduce back office costs.
- How to optimize software costs.
Cost Tip #1: Find the Right Vendor
Are you overpaying for materials? Finding the best deal can sometimes be difficult. To help, build relationships with different vendors to ensure you’re getting the most favorable terms.
…but how do you find the right vendor?
Ask your network. Ask if they’re dependable. Ask if they:
Are open after hours? Yes/No
Are open on the weekend? Yes/No
Go the extra mile to find the right part. Yes/No
Restock parts quickly? Yes/No
Offer competitive prices? Yes/No
After you develop the right list of vendors based on these criteria, segment them by geography. That will help you strategically source the right material based on location.
Cost Tip #2: Don’t waste back office time finding parts
Historically if a tech doesn’t have a part and needs it ASAP, they’ll call the office and wait on hold until they get an answer. This ties up the office staff while the tech continues to work. In this situation, you’re not able to bill for the back office’s time. Essentially, you’re using two people’s time to bill for one.
Instead, the best practice is to source the material/part on the customer’s dime.
Don’t have a back office person do the research. Instead, provide your techs with the right tools and technology so that they can research and find the right part themselves. This allows you to bill the customer for the time used to find the right part.
Cost Tip #3: Level Up Your Technicians to Reduce your Costs
This tip will cost more up-front but pays dividends in the future.
As opposed to buying middle-of-the-line tools for your tech. Help them get the job done more efficiently by upgrading to higher-end equipment. This will optimize their output and reduce the need to replace tools along the way.
A few examples:
- Use smart probes (digital gages and smart probes). They’re less abrasive on equipment.
- Use high-quality electronic leak detectors and a refrigerant scale. If you’re not using a scale, you’re not weighing refrigerant properly and billing the correct amount of refrigerant. A pro tip: buy heavy-duty evacuation equipment. This allows you to evacuate the refrigerant from a system in 10 minutes instead of 2 hours – improving your efficiency.
You’re probably asking, “but that’s only the equipment, how do I actually level up my technicians?”
Here are a few thoughts.
- Give your techs the ability to look at the equipment service history
From the field, knowing who worked on the packaged rooftop unit last week and how many pounds of refrigerant they put in the system is a huge leg up. Plus, being able to do this from their mobile device without the need to call the office will free up the administrative staff to work on more important tasks.
- Provide a wiki/knowledge base for efficient knowledge sharing
Provide techs with a wiki/knowledge base so that they can easily find the wiring diagram or user manual supporting the system they are working on. In fact, with Operix, you can store all wiring diagrams/schematic/user manuals in the system to better empower your techs in the field.
- Have the proper leadership structure in place
When someone needs tech assistance in the field make sure you have a clear escalation process from the tech > supervisor > technical resource. There should be clear lines of communication.
Cost Tip #4: Deploy a field service solution
Back office costs can often be overlooked. Without proper oversight, they can quickly escalate.
Think through some of the manual daily tasks that your back office team does:
- They review and approve payroll.
- They re-enter parts, materials, labor, and time into whatever system you use – including paper.
- They prepare invoices for customers
All very important tasks when running an HVAC business. However, automating these processes can ensure that your back office is spending its time on more impactful things like chasing down customers who haven’t paid you yet.
Using a field service solution that integrates with your accounting system can save time, reduce double-data entry, and even cut payroll processing times from 2 days to 2 hours.
Systems like Operix can help make your payroll review and approval process that much easier.
We do this by automatically sync the parts, materials, and labor that the techs enter in the field with your accounting system. This lets you use the labor time for both payroll and to bill the customer. Saving costs and time.
The cost levers associated with running a best-in-class HVAC business are within reach. To recap, those levers are:
- Find the right vendor
- Don’t waste back office time finding parts
- Level up your technicians by investing in better tools
- Leverage automation