Heating and air conditioning contractors have many options to choose from when choosing air conditioner manufacturers. Of course, air conditioner prices are a major factor but also AC contractors want a system that is reliable where they won’t have to go back to fix defective parts that are no fault of the contractors. This is where AC contractors will find a conundrum within air conditioner manufacturers. Some AC manufacturers require contractors pay annual fees to sell their systems, some are priced so high it becomes hard to bid AC replacements competitively, some systems are priced super low but the quality of the components can be a gamble.
If air conditioning contractors don’t sell enough volume, the manufacturer can raise the prices of their units without warning. This can be a big problem for smaller AC contractors trying to compete with larger companies. Smaller AC contractors still need to make a profit and having the manufacturer bully them out rewards the bigger companies regardless of the quality of work or level or service. If AC contractors are charged different prices for the same units it favors the bigger AC companies. The only way smaller AC companies can still be competitive is if they start taking out things that affect the performance of the unit but save money upfront and that is good for no one.
Here is a breakdown for HVAC contractors to help find which air conditioners are the best priced at the best quality. Heating & air conditioning contractors have three groups of air conditioning manufacturers to choose from. Some of these brands are made by the same company, like Toyota and Lexus.
1. Inexpensive HVAC brands
These brands include Amana, Frigidaire, Ruud, Payne, and Gibson. The quality of these brands can be hit or miss but the warranties will always cover manufacturer defects. HVAC contractors need to be diligent in checking for manufacturer defects by putting the system under long nitrogen leak check and visually inspecting the compressor and other components. The occasional defect is best found early during or before the installation to keep customers happy but when the defect does slip through the cracks you want to be prepared to keep customers happy. HVAC contractors will find the best prices for these which should be passed down to the consumer. If you can stomach the occasional callback, HVAC contractors should consider these inexpensive air conditioners and heaters. Many smaller companies solely sell these units because of the great prices they offer. The brand distributors will also sell parts, flex, and materials at a better discount than any other distributor. Marketing by the manufacturers to the general public will be almost nothing so HVAC contractors will need to be prepared to educate and sell against other brands.
2. Mid-level HVAC brands
These brands include Day and Night, Bryant, American Standard, Rheem, and Goodman. These mid-level brand prices will still be competitive but slightly higher than the lowest brands. The number of defects is less and we have noticed these brands are more installation friendly. Day and Night, for example, have air handlers and furnaces that come in two pieces for a greater ease of installation with smaller footprints. HVAC contractors will also see more training and product support from the brand distributors. Their parts, flex and materials will also be mid-level priced. HVAC contractors will see multiple office locations which are nice if you work in more than one area of town.
3. High end, well-known HVAC brands
These brands include Trane, Lennox, Carrier, and York. High-end brands carry with it consumer recognition from the marketing they do but unfortunately, the HVAC contractors will find their prices the highest in the industry. Each of these manufacturers will have tiered pricing. Tier One pricing is from $50,000 and below and has the highest prices. Assuming air conditioning contractor’s retail prices with a 2 – 2.5 multiple after equipment, labor, and materials, that would mean an HVAC contractor, would have to gross at least $100,000 a year in air conditioning sales. Tier Two pricing is between $50,000 – $100,000 and discounts Tier One prices about 2.5%. Contractors in this range need to gross $100,000 – $200,000 in sales annually. Tier Three prices offer a 5% discount from Tier One prices and are for contractors selling more than $200,000 a year. Tier Three prices often require contractors to sign exclusivity agreements.
Manufacturers of high-end brands make systems with a good reputation for quality. Although Trane units may be well made, their parts are ridiculously expensive. Go to a Trane parts store and you will find parts marked up 1.5-3 times more than the exact same part at another distributor. Why? Who knows but this could be a sore point for homeowners who bought the Trane name but still want a fair price on the service and maintenance of their unit down the road. This is where Trane loses a lot of customers.
Homeowners will be most familiar and may request the well-known brands but these well-known brands will be the most expensive for mid-level and smaller sized HVAC companies, which will be passed onto the consumer. That’s why you may see many mid-level and even larger HVAC companies sell mid-level brands… they offer much better pricing to HVAC contractors. Most manufacturers will offer co-op dollars for HVAC contractors to advertise their brand with some co-ops are less strict in their guidelines than others. We hope you are able to find the right balance of quality and cost savings when purchasing your AC systems and always do right by the customer.
Our thanks to our guest author Mr. David Byrnes, LEED AP
Home Performance Specialist
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