Signature HVAC Installation Contract Made Easy

Signature hvac installation contract

hey guys I wanted to break down an installation job for you um see give you a chance to kind of look and see where your pricing is at this isn't necessarily our pricing it's just an example but give me an idea how we go about it so basically we want to figure out the actual cost what it's going to cost us to do the job not marked up cost just what it what does it cost so you give you an example I just kind of broke down all these different things so we got I got a torch vacuum nitrogen 35 bucks permit 60 bucks metal 20 bucks fuses wet pad disconnect 75 bucks maybe a little dirt to level the pad $5.00 miscellaneous gas pipe flu material flush or line set whatever you want just just take your actual cost so copper fittings starbooster filter rack stat wire and I just figured 12 hours labor for two guys at $25 per hour so you want to make sure to do a little more on your on your labor than what you're paying and I don't know what that number is for you maybe it's $50 per guy it's whatever whatever you're currently charging maybe add five or ten bucks to it and figure it that way so all that added up came up to eleven hundred seventy dollars so now we have our labor materials so now we figure up our equipment so I just figured a 95% variable speed furnace 1685 a 16 seer condenser 1403 a coil 450 and the thermostat may be a nice digital touchscreen thermostat 260 and I take that total which is thirty seven ninety eight so add those two together your equipment your material and labor and that comes to 49 68 now that price now in order to determine your actual price of what you're going to sell it for you know that that's what it's going to take to do the job that's what it's going to cost you your company so based on a 35% overhead in the installation department which i think is probably fairly standard somewhere anywhere between it can be as high as 40 but probably isn't but if you're somewhere between 0 to $500,000 in revenue with your company I would imagine you're going to be somewhere around 35 mark so 35 s pretty safe bets what I'm saying so then you figure how much profit you want to make so on this particular example I'm figuring 12% profit that's what I'd like to make at the end of the day so I add those two together my overhead my profit that gives me 47 now in order to determine my divisor I just take 100 minus 47 which is 53 53 percent is going to be my divisor that's how I'm going to determine what I'm going to charge to do this job so all you do is take the 49 68 which is your actual cost divided by 53 percent which comes up to a selling price of 93 73 so that's what I would need to sell that job for and have everything go like I planned it in order to come out with 12 percent profits so you can break that down the other way too so once you're finished with the job let's say that I hit it on the money it took exactly 12 hours we used exactly what I had on the listed we paid what I figured and that's what the job cost us was the 49 68 so if I take the sale price 93 73 and I - what it cost us which is the 49 68 I come up with 4405 that is our gross profit as what we made from the job but it's not that's that numbers not that important way more important number is going to be your gross profit margin which is you take that number the 4405 and turn around and divide it by what you sold it for the 93 73 when you do that you get 47% so there's our 47% that we came up with earlier so if you take that 47% you minus the overhead out of it you're left with 12 that's what you get to actually keep from the job so you can see there's a big difference which if you figure that up that's your net profit and your net profit if you just figure that that percentage 12% of 93 73 is somewhere around eleven hundred and twenty-five dollars so you can see there's a major huge difference between just your gross profit and your actual net profit what you get a keep after all your expenses are paid your gas your insurance bill your printer paper your ink your phone bills all this stuff that that's all included in your overhead your reoccurring cost you know maybe your rent or your mortgage utilities at the place of business all that stuff so once that's all all considered and removed from the equation you actually get to keep eleven hundred twenty-five dollars which is a really good day I mean that's that's good money if you could make that every day we'd be doing pretty well so um and that's why I say you need to shoot over a little bit like when you're pricing your labor figure 12 hours instead of eight the hardest thing about it's just going to be to sell it at the price that you need to get so you got to develop a sales process so you can um that's the only way you're going to make any real money so basically that's pretty much it you just add everything you got material labor equipment add all that together and then determine your divisor now if you wanted to make 15% or 20% you just change that maybe maybe your overheads only 25% so then you you might be able to you know when times get a little tougher you tend to watch these numbers a little closer I hope it's been a really hot summer here in the Midwest and I hope everybody's been super busy and having read you're breaking months I think we're about have one so we're growing about 28% so far which we were shooting for 35 but we know realistically if we hit 25 we're going to be totally cool with that so basically that's that's kind of how our pricing structures is made we've got a formula where it breaks down just the furnaces and then breaks down the air conditioners and coils and when you put those two together it's got the 12 hours labor which is why I use the 12 hours so it most jobs don't take us 12 hours especially just on replacement equipment but that way we were patted a little bit because what about the jobs that don't go great you know there's lots of those and there's lots of service calls that you wind up giving away for free you got to cover that stuff somehow so I'm not saying gouge by any means but it's got to be padded just a little bit to cover your butt so you may even want to add like a warranty we actually have one I just forgot to put it on here I'm just a warranty bucket so we have like a $50 that we add into every installation so that's strictly for a warranty bucket that might help cover one more go back after we finish the job so it's important to think about those things and include them in your price so I hope this helped you guys and hope you're having an awesome summer and hope you're making lots of money go make money