HVAC Companies Use Two Basic Service Agreements

by: admin - Filed under: Service Agreements

In our HVAC Books we discuss two basic types of service agreements for HVAC Companies.  Preventive maintenance (PM) and full coverage agreements.  There are hundreds of variations on these two basic themes.

 Some common practices have been developed over the years.

  • One service agreement is written per location.
  • Service agreements are written and tracked by address.  Owners change, but the address is permanent.
  • For ease of accounting it is a good idea for service agreement pricing to be devisable by 12.  This will eliminate the cents is monthly calculations.
  • Service agreements terms should be written to expire on at the beginning of the summer season.  Customers are most likely to renew at this time of year.

Residential Preventive Maintenance Agreements

A preventive maintenance (PM) Agreement provides the customer (2) precision tune-ups annually, priority service and a 10% to 15% discount on all parts and labor. Emergency service will be billed at the normal rates or a flat rate, less the discount on parts and labor.

 Replacement units do not qualify for the discount.

 This agreement can be 1, 2, or 3 years and the full amount is prepaid by the customer. All emergency calls performed under this agreement will be paid by cash, check, or bank card. On the month prior to expiration, the renewal agreement is mailed. Include the agreement in duplicate, plus a cover letter and a self-addressed stamped return envelope for the return of the signed agreement and payment. Any renewals not received within 30 days of the mailing should be forwarded to the Sales Department and a Salesperson will renew the agreement.

 Residential Full Service Agreement

The Full service is a PM agreement plus insurance for repairs.  The agreement includes two precision tune-ups for all heating and air conditioning equipment. The agreement also includes priority service, repair for any emergency breakdowns, parts and labor. An annual fixed amount is prepaid by the customer. An option for monthly payments made by automatic credit card charge is an option.  The HVAC Companies will handle all inspections and repairs just like an insurance policy. The agreement can be terminated by either party at any time, as long as full payment has been made.

Items covered by the Full Service Plan are:

  • Furnace and Flue Dampers
  • Circuit Breakers
  • Air Conditioner
  • Air Handler/Furnace
  • Electronic Air Cleaner
  • Heat Recovery Unit
  • Thermostat
  • Electrical Low Voltage Wiring
  • Condensate Piping – Condensate Pump
  • Refrigerant Piping
  • Humidifiers

 The plan covers only the equipment specifically listed on the agreement.

 Items not covered by the Full Service Plan are:

  • Ductwork
  • Grilles and Registers
  • Secondary Drain Pans
  • High Voltage Wiring
  • Water Piping
  • Casings, Cabinets and Base Pans
  • Water, Oil Gas & Flue Piping
  • Vent and Chimney Caps

 These items will be maintained but not replaced under this agreement. Repairs required as a result of abuse, fire, water, lightning, accidents, damage as a result of non-operation or malfunction of the equipment are not covered.

 A Full Service Customer should be invoiced 45 days prior to the July 1st renewal date (May 15). If the invoice has not been paid by July15, the Sales Department should be notified so the appropriate salesperson can attempt to renew the agreement. If the amount due is not collected by August 15 at the latest, the Agreement should be cancelled. Any costs incurred for services rendered between July 1 and August 15 on a cancelled agreement should be invoiced at normal rates.

Sample Service Agreements can be found in the HVAC Books apendix.

How to Build the HVAC Money Machine from HVACbooks

by: docCool - Filed under: Marketing, Service Agreements

Building Your HVAC Companies Business through Tune-Up’s and Service Agreements …. from HVACbooks.

We are aware of no business model superior to establishing a lucrative HVAC service and replacement business using the “Maintenance Department Model”.

This is not a get rich quick model, it has been effectively replicated by hundreds of organizations, in most areas of the country and it will work.

How does the Air Conditioning Maintenance Department Business Model Work?

You set up a maintenance department, independent of the service department. The air conditioning maintenance department continuously recruits new customers and generates HVAC business and HVAC sales leads  This maintenance department keeps generating leads even when you are distracted by other AC business demands. You continue to run your business as you have in the past while growing your maintenance tune-up department. Business for the air conditioning maintenance department is not seasonal. Tune-ups are scheduled weeks and months in advance. Tune-ups are performed year round. Overtime is not necessary.

Marketing for the entire HVAC business is directed exclusively toward obtaining tune-ups from new customers. These customers are converted to service agreement customers with one, two or three year service agreements. A service agreement customer is worth as much as $800.00 per year, per customer, in accessory and replacement HVAC sales. We also know our sales closing rate goes from 30% to 70%+ when the customer is a service agreement or service contract customer. Replacement sale profit margins are higher for service agreement customers.

 Following is a brief outline of how to get started.

•Perform tune-ups with your service techs until you get the maintenance department up and running.

•Develop a budget and plan that makes sense for your business. This might be a one (1) person maintenance department or much larger department, depending on your business, market area and capitalization.

•Develop a budget and break the budget down into measurable daily goals for each employee in the department.

•Hire your first air conditioning maintenance department employee, a Precision Tune-up Specialist (PTS). This person is hired first for people skills and then trained to perform AC tune-ups. If tune-ups are not available, this person puts on their marketing hat and get’s some.

•Train your demand service techs to sell tune-ups and service agreements.

•Train your dispatcher and customer service reps to sell tune-ups and service agreements.

•Track your results. If monthly budgets and objectives are not achieved, introduce countermeasures to get back on track.

HVACbooks for HVAC Companies.  Get our Free EPA Certification Study Guide at our HVAC Training site