Maintenance Pricing: Fear or Fact?

The top profit killer in service departments nationally continues to be underpriced maintenance agreements. Common reasons dealers undervalue their maintenance pricing:

• Used as a loss leader to attract new business
• Lack of understanding of service department operating costs
• Do not understand how to price the agreements
• Trying to compete with those that offer loss leaders
• Ineffective dispatching and scheduling practices

When realizing that prices need to increase, owners and managers often process fears over facts.

Fear: “If I raise my price, we will lose our customers to others in the marketplace.”

Fact: Yes, you will lose some customers based on price, but with a well-planned strategy, it will be less than 10-12%, AND you will start being profitable on the rest.

So, what steps can you take to focus on the facts of maintenance pricing rather than the fears?

Evaluate the value and service delivery of your current program

Customers are more accepting of price increases if you deliver top-notch service. Review your program and the stats behind it. Are you completing the maintenance on time? Do you have a defined list of tasks performed that shows the value of your work? Are all your technicians completing the same level of service? If there is a deficit in any of these areas, fix it.

Increase the price to all new customers, with staged increases to your loyal customer base

Share the costs of performing maintenance with your team so they understand why a change is needed. Consider adding other value-added services and benefits and developing different levels of service to meet your clients’ individual needs and wants. You can also implement an accessory program to help bridge the gap in profits.

Focus on efficiencies

Schedule geographically, ideally 3-5 weeks out. Ensure all technicians follow a task list they have helped develop. ACCA has developed a standard, Quality Maintenance of Residential HVAC Systems, that you can download. This resource will help guide your team on what is required.

Make sure your team is on board

Support from the entire company is crucial to creating a “maintenance is essential” culture.  Your goal should be to see that everyone has bought into the program to ensure no customer “gets through the door” without hearing about your program.  If you are converting less than 20% of your opportunities, your team is not on board or being led toward a goal.

It is important to consistently solicit feedback from your team on obstacles or challenges they face and work together on the solution. Switching from fears to facts regarding your maintenance program requires an ongoing development process for both you and your team.

Want to learn more about how you can help weatherproof your business with a profitable, smoothly functioning maintenance program? Get more details about BDR’s upcoming training events today!

About the Author

With over three decades in HVAC Service Operations Management, Jennifer Shooshanian is one of the most knowledgeable and accomplished service performance experts in America. Since joining BDR, she has been instrumental in the co-development of the Service Training and Coaching programs. Jennifer has a proven track record of helping contractors transform their service department into a highly prized, cash-flow-rich profit center.