Consumers associate warranties with peace of mind, which they should. In our hectic economic times, peace of mind is at a premium, so more customers than ever are willing to pay for it.
Manufacturers’ warranties typically cover manufacturing defects for a period of 5 to 10 years. Customers, who complete a product registration with the manufacturer, including product serial number, model number, installation date, and other information, may be eligible for an enhanced or longer-term warranty. The terms of manufacturer’s warranties vary; for example, a warranty may cover some parts for shorter periods of time.
Generating additional revenue
Especially of interest is the warranty coverage for the compressor, which is the most expensive component. Manufacturers’ warranties do not cover filters, which must be changed regularly, or electrical components such as capacitors and contactors that are not expected to last for the full life of a system.
Extended warranties that include labor, as well as equipment, provide that total peace of mind
Standard manufacturers’ warranties provide some assurance for homeowners who just invested thousands of dollars into a new HVAC system. But after being hit with such a large investment, homeowners are in a great mindset to consider how they can have total peace of mind and avoid such scary and uncontrolled expenditures for the next 10 to 15 years. Extended warranties that include labor, as well as equipment, provide that total peace of mind, and for HVAC installer companies, extended warranties generate additional revenue and cement a long-term relationship with a customer.
Requiring regular maintenance
Proper installation is a key component in a system’s longevity and dependability. Installers who are authorized dealers of a specific manufacturer’s products are well-positioned to ensure that installation is completed correctly, thus ensuring that the manufacturer will honor the warranty.
Manufacturers’ warranties also require regular maintenance to be performed once a year, which provides an incentive for homeowners to invest in maintenance agreements. However, manufacturers’ warranties do not cover labor for any repairs, and they don’t cover repairs needed because of usage or wear-and-tear, but only repairs because of manufacturing defects. An installer typically provides a free labor warranty (in addition to the manufacturer’s parts warranty) for a period of time, usually around a year. This ensures that any issues surrounding the installation are addressed. In effect, it amounts to an installer ‘standing behind their work.’
HVAC labor warranties
HVAC labor warranties are provided by HVAC service companies and by third-party insurers
Beyond the first year, installers may provide extended labor warranties, typically tied to a periodic maintenance agreement. Recurring revenue from extended warranties and maintenance agreements can help an HVAC installer build their business beyond depending on the frequency of individual projects, which can ebb and flow.
Providing a labor warranty enables an HVAC installer to build their brand as a company that emphasizes dependability and a long-term relationship to their customers. It builds credibility in the marketplace and helps installers stand out. HVAC labor warranties are provided by HVAC service companies and by third-party insurers they are associated with.
Products from outside insurers shield an installer company from the uncontrolled costs of providing the warranty on a self-insured basis. An installer can make extra revenue by marking up the price of the third-party warranty.
Offering extended warranty
Labor costs can be up to 90% of the repair cost in the case of a small component
It is helpful to include the cost of an extended warranty and maintenance in the initial quote an installer provides to the customer, being careful to explain that the price includes ongoing maintenance and repairs. Offering an extended warranty as an ‘add-on’ after quoting the initial purchase price may be seen by some customers as the installer seeking to increase profits with an additional sale.
Labor costs can be up to 90% of the repair cost in the case of a small component, or around 50% for a large component. A 10-year labor warranty contract with an installer matches the typical warranty term of the manufacturer and ensures a decade of peace of mind for customers.
A homeowner’s insurance policy may cover a repair if an HVAC system is damaged by an unforeseeable event such as a storm, lightning, fire, a fallen tree of other ‘acts of god.’ A home warranty policy may also cover the HVAC system in addition to appliances, plumbing, and other home systems.