As prices rise due to inflation, the cost of owning and maintaining an HVAC system can also increase.
HVAC systems are vital to any home or building, providing comfort and maintaining indoor air quality. However, as prices rise due to inflation, the cost of owning and maintaining an HVAC system can also increase. Protecting your margins and staying on top of HVAC equipment price increases is just as important as ever. We have already seen a significant price increase for HVAC equipment in 2023, and they likely will continue to rise. Let’s explore the risk factors and strategies to mitigate those risks in your HVAC business.
Inflation and the HVAC Industry
As inflation increases, the cost of materials, labor, and energy for producing and installing HVAC systems increases. This can increase installation prices and higher costs for repairs and maintenance.
Metal is one of the primary materials used in HVAC systems, which can become more expensive as inflation increases. For example, the cost of steel has been known to fluctuate based on market conditions and contributes to rising prices for HVAC systems. Additionally, as energy costs increase, operating costs rise, resulting in higher utility bills.
Another contributing factor to HVAC price increases is the cost of labor and fuel. The wages and benefits for HVAC technicians and installers also rise due to inflation. This can lead to higher installation and repair costs as those in the heating and cooling business must pass along their added costs to customers.
Changes in HVAC Regulations
The new regulations set by the Department of Energy require higher seasonal energy efficiency ratio (SEER) ratings and new test procedures for air conditioning systems. To comply with these regulations, HVAC manufacturers must invest in research and development, modify their production processes, and introduce new technologies. These adjustments increased manufacturing costs, ultimately leading to higher prices in the HVAC market in 2023.
These new requirements, combined with the required phasing out of certain refrigerants in residential air conditioning systems, mean many HVAC companies are faced with an increased number of customers who need replacement systems that meet the new standards.
Mitigating the Negative Impact of Inflation
We know you are already working hard to mitigate the impact of price increases. Here are some tips to reduce the impact on your business:
Diversify the Supply Chain
Supplier diversification can be the key to addressing supply chain challenges. By diversifying suppliers, contractors can improve their resilience to disruptions and create contingency plans. Over the past two years, more than half of industrial companies experienced substantial changes in their supplier base. Expanding your supplier network and diversifying your sources can increase resilience in your supply chain.
Communicate with Customers
Open and transparent communication with your clients will strengthen your bond with them. Explaining the long-term benefits of energy-efficient systems and cost savings will ease their concerns about potentially more expensive prices. Emphasizing your expertise, exceptional customer service, and maintenance programs can justify price changes and ensure client loyalty.
Crockett Facilities Can Help!
Crockett Facilities Services, Inc. (CFSI) is committed to helping building owners, property managers, engineers, and facility professionals navigate the post-COVID-19 environment. We can develop a cost-effective, customized program for your building that will mitigate the potential health risks of COVID-19. Click Here to Request a Quote!
To learn more about the importance of reopening your building safely, don’t hesitate to get in touch with us at 202.860.1412 or sales@crockett-facilities.com. Our PM contract customers receive priority treatment with 24/7 emergency service in Maryland, Virginia, and Washington, DC. Follow us on Facebook, Twitter, Linked In, and Pinterest!