Pricing your first furnace feels simple… until it isn’t.
Too high, and customers walk.
Too low, and you stay busy but broke.
Savvy truth:
👉 Most HVAC start-ups don’t fail from lack of sales — they fail from bad pricing math.
This guide walks you through how to price your first furnace the smart way, so every install moves you closer to sustainability, not burnout.
80,000 BTU 96% AFUE Upflow/Horizontal Two Stage Goodman Gas Furnace - GR9T960804CN
🧠 Why Pricing Is the Most Dangerous Blind Spot for Start-Ups
Early-stage HVAC businesses often price based on:
-
Competitors
-
Gut feeling
-
“What feels fair”
-
Fear of losing the sale
That’s not strategy — that’s survival mode.
Savvy rule: Your price must protect your future, not just win today’s job.
🔍 Step 1: Understand What You’re Really Selling
You are not selling a furnace.
You are selling:
-
Equipment
-
Labor
-
Expertise
-
Risk transfer
-
Warranty coverage
-
Compliance
-
Peace of mind
If you price only the box, you lose money before you begin.
🧾 Step 2: Break Down Your True Cost (Not the Invoice Price)
Before profit, you need clarity.
🔧 Equipment Cost
Includes:
-
Furnace unit
-
Shipping or freight
-
Handling or restocking risk
-
Supplier fees
Example:
A 96% AFUE furnace may cost you $2,100 landed — not the $1,850 invoice you remember.
🛠️ Labor Cost
Even if you’re the installer, labor still has a cost.
Include:
-
Your hourly rate
-
Helper or subcontractor pay
-
Overtime risk
-
Callbacks (they’re real)
Savvy tip: If you don’t pay yourself, your business isn’t profitable — it’s subsidized.
🚚 Overhead Cost (The Silent Killer)
Overhead sneaks into every job:
-
Insurance
-
Vehicle expenses
-
Tools
-
Licensing
-
Software
-
Marketing
-
Phone lines
According to the U.S. Small Business Administration, many start-ups underprice because they fail to allocate overhead properly.
https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
📊 Step 3: Choose a Pricing Model (And Stick to It)
There are three common pricing approaches in HVAC.
1️⃣ Cost-Plus Pricing
You calculate total cost, then add margin.
Example:
-
Total job cost: $3,500
-
Desired margin: 35%
-
Price: $5,385
✔ Simple
❌ Can cap upside if demand is high
2️⃣ Value-Based Pricing
You price based on customer benefit.
High-efficiency furnaces:
-
Lower monthly bills
-
Better comfort
-
Long-term savings
This allows higher margins when value is clear.
✔ Strong for premium products
❌ Requires confidence and education
3️⃣ Tiered Pricing (Savvy Favorite)
Offer good / better / best options.
Example:
-
Single-stage furnace
-
Two-stage high-efficiency
-
High-efficiency + add-ons
✔ Anchors value
✔ Increases average ticket
✔ Reduces price objections
Savvy rule: Never offer only one option.
🔥 Step 4: Why High-Efficiency Furnaces Are Easier to Price Profitably
High-efficiency furnaces (96% AFUE+) make pricing easier because:
-
Customers expect higher prices
-
Energy savings justify cost
-
Rebates soften sticker shock
-
Comfort improvements are tangible
ENERGY STAR notes that high-efficiency furnaces can significantly reduce annual heating costs for homeowners.
https://www.energystar.gov/products/furnaces
Savvy insight: Efficiency gives you permission to charge correctly.
🧮 Step 5: Build Margin Before You Think About Volume
Start-ups often chase volume:
“If I do enough installs, it’ll work out.”
That’s dangerous.
Savvy math:
-
Low margin × high volume = exhaustion
-
Healthy margin × steady volume = stability
Aim for:
-
30–40% gross margin on installs
-
Clear profit per job
-
Room for mistakes (they happen)
🧰 Step 6: Price for Risk, Not Perfection
Every job carries risk:
-
Delays
-
Permit issues
-
Access problems
-
Weather
-
Equipment damage
Your pricing must absorb:
-
At least one unexpected issue per month
-
At least one callback per quarter
-
Seasonal slowdowns
Savvy rule: If one bad job wipes out your profit, your pricing is broken.
📉 Step 7: Know Your Break-Even Point
Ask yourself:
-
How many furnaces must I sell per month?
-
At what price?
-
With what margin?
Break-even math gives clarity.
The U.S. Department of Energy highlights that HVAC systems are major household investments — pricing must account for long-term business sustainability, not short-term wins.
🔗 https://www.energy.gov/energysaver/furnaces-and-boilers
💳 Step 8: Use Financing as a Pricing Tool (Not a Discount)
Monthly payments change buying behavior.
Instead of lowering price:
-
Offer financing
-
Emphasize monthly savings
-
Bundle maintenance plans
Customers compare:
“$7,200 installed” ❌
vs
“$89/month with lower gas bills” ✅
Savvy move: Shift the comparison frame.
🧾 Step 9: Don’t Let Competitors Set Your Price
Competitor pricing is reference — not law.
Your price should reflect:
-
Your costs
-
Your quality
-
Your service level
-
Your warranty handling
-
Your reliability
If you race to the bottom:
-
You attract bottom-tier customers
-
You lose negotiating power
-
You burn out fast
Savvy truth: The cheapest installer is rarely the most trusted.
🛠️ Step 10: Build Add-Ons Into Your Pricing Strategy
Your furnace price doesn’t have to carry all profit alone.
Common add-ons:
-
Smart thermostats
-
Extended labor warranties
-
Maintenance plans
-
Air quality upgrades
-
Venting improvements
Bundling increases:
-
Ticket size
-
Customer satisfaction
-
Lifetime value
📈 Step 11: Track Every Job Like a Mini P&L
After each install, ask:
-
Did we hit target margin?
-
What went over budget?
-
What went smoother than expected?
-
What should be priced differently next time?
Savvy insight: Your first 10 jobs teach you more than any spreadsheet.
🧠 Step 12: When to Raise Prices (Earlier Than You Think)
Signs it’s time to raise prices:
-
You’re booked solid
-
You’re rushing jobs
-
You’re saying yes to everything
-
You feel underpaid
Price increases don’t kill demand — bad service does.
Savvy rule: Raise prices in small steps, often.
🚀 Scaling Pricing as You Grow
As your business grows:
-
Revisit margins quarterly
-
Adjust for labor changes
-
Re-negotiate supplier costs
-
Introduce premium tiers
Pricing is not “set and forget.”
It’s a living system.
🧠 Final Savvy Take: Profit Is Not Greed — It’s Fuel
Profit allows you to:
-
Pay yourself
-
Invest in tools
-
Hire better techs
-
Offer better service
-
Survive slow seasons
If your pricing doesn’t protect profit, your start-up won’t last long enough to matter.
Price with clarity.
Sell with confidence.
Build a business that lasts.
That’s how Savvy start-ups win.
Buy this on Amazon at: https://amzn.to/4hJt23t
In the next topic we will know more about: Your First Sales Funnel: Turning HVAC Interest into Paying Customers
