Finance

Mar 15 2018

HVAC Service Contract Pricing Guide

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If you’re in the market for an HVAC service contract, you have probably encountered a wide range of prices. And since you’re probably not an HVAC expert, it can be a challenge to compare options and figure out what’s included, if it’s worth the money, and ultimately which one is right for you.

Here’s a primer to help you understand the different types of HVAC service contracts and the variables that factor into the pricing. Armed with this information, you can figure out which options are important to you and be better equipped to choose the contract with the right price for the coverage you want.

HVAC service contract types

HVAC service contracts generally fall into the following categories:

A PREVENTIVE MAINTENANCE agreement is a baseline contract that covers a number of regularly scheduled maintenance visits each year. During these visits, a technician will thoroughly inspect your equipment, clean and test the components for proper operation. When needed, worn parts such as belts and air filters are replaced. The number of maintenance visits you need and the list of included maintenance tasks may depend on the age and type of your equipment, as well as the operating conditions and usage requirements. A preventive maintenance agreement is the least expensive type of HVAC service contract.

A FULL LABOR contract covers all the labor needed for repairs or replacements as well as for maintenance, but you’re responsible for the parts. An HVAC service contract that includes full labor costs more than a contract that covers only preventive maintenance.

A FULL COVERAGE contract is the ultimate insurance policy, covering all parts and labor, emergency service and preventive maintenance. This is the most expensive type of coverage, yet it can save you a great deal of money if you need expensive repairs. A full coverage contract also allows you to budget for your HVAC repair expenses, and gives you peace of mind since you don’t have to worry about surprises.

Factors that affect HVAC service contract pricing for PREVENTIVE MAINTENANCE:

1. Number of equipment items. If you have only a single rooftop unit, your contract will cost less than if you have numerous units for a large space or several floors of a building.

2. The size or tonnage of your HVAC system. A larger system has more components that need to be inspected and maintained. For example, a simple 2-ton residential or light commercial split system may have only one filter, a singe compressor and no belts to change. Yet a 50-ton system may have 20 filters, several belts, several compressors and numerous electrical connections to check. More components take more time and cost more to maintain.

3. Type of equipment. A rooftop unit may cost less to cover, since all the components are self-contained. Some of the newer, high-end HVAC technology such as VRF systems may cost somewhat more to maintain due to the additional time and expertise needed to service them.

4. Accessibility of the equipment. This is a big factor in New York City, where space is at a premium and HVAC equipment is often jammed up into any available crawl space. The amount of time it takes to get at the equipment factors into the price to service it. So if you have an easily accessible equipment room, you’ll pay less. On the other hand, if panels and millwork need to be removed every time the equipment needs service, your contract cost will be higher. Additionally, a self-contained unit is easier to service than a system that has components located throughout the building.

5. Distance. If the vendor is located near you, or has a large number of service trucks in your area, it will keep your contract price down since the vendor doesn’t need to factor in much travel time. On the other hand, if you’re asking a vendor to travel a great distance away or outside their service area, the price will increase.

6. Included tasks. There can be some variation in what vendors consider “preventive” tasks. Some might just change your filters and belts and call it done. Quality HVAC service vendors will also check refrigerant levels, inspect electrical connections and condition of parts, clean the coils and checking drain lines and pans. If the included maintenance tasks are not listed in the contract, ask for that list so you can compare apples to apples.

7. Number of maintenance visits. In many cases, two service appointments per year are sufficient to keep your HVAC system in good working order. However, you may need more visits if your system is running 24 7, if your equipment is exposed to poor air quality conditions (such as industrial or kitchen exhaust), or if you have complex equipment that requires more frequent monitoring.

Additional factors that affect pricing for FULL-LABOR COVERAGE contracts:

8. Age and condition of equipment. Just like a life insurance policy costs more depending on your age and your health, full labor and full coverage contracts costs more if your equipment is older and/or in poor condition, and therefore more likely to fail.

9. Life expectancy. Certain types of equipment are designed to last longer than others. In general, it costs more to cover a unit with a shorter life expectancy than a unit with a longer one (with the age and condition being equal).

Is the price too good to be true? Here’s how to tell.

When it comes down to it, the price of an HVAC service contract for preventive maintenance is derived from the time it takes to do the maintenance tasks, times the company’s hourly labor rate.

If you get a price that seems too good to be true, take out your calculator and do the math to see what you’re really getting.

Start with the price of the contract and divide that by the company’s hourly rate for service. That’s how many hours of service you’ll be getting. Now divide that by the number of visits, and again by the number of equipment items covered. That’s how much time the company plans to spend on each equipment item. You might be surprised to find out that this low bidder is planning on spending 4 minutes and 32 seconds on maintaining a piece of equipment.

It’s not too difficult to see if you’ll really get the service you’re paying for.

CONDITION is key

In item #8 we mentioned that the condition of your equipment affects the price of your HVAC service contract. That’s because well-maintained equipment lasts longer and works more reliably, without breakdowns. So the money you’re spending on preventive maintenance means you’ll spend less to repair it. And the longer life span reduces your total cost of ownership.

By now it should be clear that a good HVAC service contract is not one-size-fits-all. Your contract should be customized to your coverage needs, your equipment and your space. Find out more about how to get what you need with our free guide to HVAC Preventive Maintenance Contracts: How to Find The Right One For Your HVAC Infrastructure.

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