Originally Posted By: JHZR2
Originally Posted By: dishdude
Originally Posted By: Pop_Rivit
Originally Posted By: ARCOgraphite
Need to replace the split system in my moms 2100 sqft condo in Ft Myers; we've been band-aiding it for years and its time to go.
It's a 3.5 or 4 ton system (~40ooo btuh) and im getting quotes of over 6 grand to do this. I see the wholesale cost of the unit(s)** is around 2700- shipped and I added 700 for labour and 500 misc and 25% markup to the company and I don't get to 6grand. What am I missing?
Looking at a bottom of the line 13 seer Rheem/RUUD split system 4 tons (from AC wholesalers).
Thanks for any insight.
** air handler evaporator with 10kw heat and condenser + cheapie prog controller
Ken
There is a tremendous amount of overhead for a business like that-your 25% markup figure is laughable. HVAC tech wages are high, equipment is expensive, insurance/taxes are expensive, and overhead is expensive. You have a couple of choices. Either find yourself very small, independent contractor who will work on the cheap and hope that he's not a fly by night operation, learn to do the work yourself, or understand that most contractors are in business to make a profit and will charge what the market will bear.
You also need to understand that in many businesses, cost of goods is around 1/3 of the total price you'll be charged. If I sell a bottle of wine for $12, that bottle of wine cost about $4 in raw materials to produce. 1/2 of the remaining 2/3 (or $4 in my bottle of wine example) goes to overhead such as electricity, wages, taxes and insurance. The remaining $4 goes back to the business as profit. When I sell a bottle of wine at a discount my raw materials costs and overhead don't change, the only thing I do is reduce the amount of profit that I make.
If you come in and want to purchase one bottle of wine I'm not going to discount it at all. If you purchase 50 cases then I'll take a somewhat smaller profit and make it up in volume. Same with an HVAC contractor-small, one off jobs always have higher profit margins than bidding new construction where the HVAC crew can knock out 3 new houses in a row every day. It costs the company more to do your one off job than it does to do production work in a new construction development, even if they use identical equipment. Therefore you get charged more.
I don't see where the overhead for an HVAC business is that high. They have no storefront, little inventory and the tools to do the job are pretty basic. No accounts receivable for residential customers...I had a guy come out yesterday to clean my windows and do some pressure washing. I can't his overhead being much different than an HVAC business.
I agree. There's just not that much extra overhead or training that makes HVAC worth 2-4x more per hour than other trades. I'd argue in fact that if anything, HVAC should be about the same burdened man hour rate as auto repair, since a good auto shop needs lots of training, specialized tools, hazmat fees, refrigeration equipment and epa requirements. If the HVAC compang had given me a price close to what I pay per hour for their install, I might have hired them to do mine. Instead I bought all the tools and made out way ahead.
It's clear that neither of you have ever owned your own business and are clueless to the costs involved. JHZR2, HVAC companies also have specialized tools, lots of training, hazmat fees and EPA requirements. You also didn't need to pay for your labor, medical insurance, 401K benefits, federal taxes, state and local taxes, FICA, Medicare, and social security taxes. You also didn't have to keep a vehicle on the road and stocked with parts, and your time spent ordering and receiving parts and equipment was free. You didn't have to pay an office staff, don't have building overhead to pay for, don't have property taxes to adjust for.
So by doing it yourself you did indeed save some money. However it's clear that the original poster isn't able/willing to do the job himself, and like you is ignorant about how much it takes to run a business.
