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September 18, 2023

3 Ways HVAC Service Contracts Can Benefit Your Business

HVAC maintenance agreements can increase your cash flow and profit margins, as well as provide opportunities to build customer relationships and train techs.

3 Ways HVAC Service Contracts Can Benefit Your Business

HVAC service contracts, or maintenance agreements, are a simple idea and a standard offering for many HVAC companies. With these contracts, you perform routine maintenance and tune-ups for your customer’s HVAC system. Your customer pays you based on the terms outlined in the contract. You may even offer some incentive for customers with service contracts, such as discounts or priority for emergency repair.

However, just like you would with any new business offering, you’ll need to consider the value HVAC service contracts can add to your business before rolling them out. Sure, plenty of other HVAC companies offer them, but why should you offer them? HVAC service contracts can bring in over 50% of your profits, but that’s not the only benefit. Let’s dive into a few other ways they can level up your business.

Building and Strengthening Customer Relationships

Customer relationships are essential to any business, but building them as an HVAC contractor can be difficult. Unlike barbers or hairstylists, you’re likely not seeing your customers every other month, which can make it difficult to build long-term relationships that lead to repeat business.

With service contracts, you get more face time with your customers. Instead of seeing them maybe once a year, you see them at least quarterly. That increased face time allows you to get to know their HVAC system and provides more opportunities to build trust with your customer. And if 60% of Americans would follow a trusted HVAC technician to a new company, that says a lot the value of customer trust.

Plus, when customers trust you, they’re more likely to accept your suggestions and less likely to see your them as a cash grab. You know their system better than anyone else, after all.

Training Opportunities for New Techs

Finding time to train employees during the busy season can be challenging. But shoulder season can be hard for training, too. You don’t have as many jobs coming in, so you can’t necessarily afford to have both a trainer and a trainee on the clock.

HVAC service contracts are a great solution, especially for training seasonal HVAC employees. These services are planned in advance, not in an emergency. So, you only need to schedule trainees when you know there will be enough jobs and the right kind of jobs for them to shadow and train on. By the time busy season comes around, they’ll be ready to take over these jobs while veterans take on the bigger jobs.

Keep Business Coming in Year-Round

The HVAC industry can be profitable, but it is a seasonal business. Cash will flow in more during the summer and winter than during the spring and fall. And even if you budget for it, you can still run into cash flow problems. Things happen that you can’t control.

But business and cash keep coming in year-round when you offer service contracts. Regardless of whether you collect a monthly payment or payment at the time of service, you’re guaranteed cash flow during shoulder season. Budgeting for the entire year is still important, but you don’t have the pressure of making just a few months of income last the entire year.

HVAC service contracts are a great way to increase your cash flow and profit margins, but they’re not the only way. If you want to learn more, check out this blog.

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