The 21st Century HVAC Business Model

The fact that business models and even entire industries change and evolve over time is certainly nothing new. Perhaps the most obvious example of this is what has happened in terms of software development and distribution over the last decade. Gone are the days where applications cost hundreds of dollars and “did it all.” Thanks to the advent of the smartphone, even enterprise-grade software now takes the form of “apps” that do one thing exceedingly well and are priced accordingly. The market dictated its own priorities and an entire industry had to adapt over time to survive.

In many ways, the same is true of the 21st century business model that HVAC contractors are naturally developing as we speak. In an era where energy efficiency is becoming a top priority for so many, progressive HVAC businesses are finding new and innovative ways to “cut out the middle man” and establish meaningful relationships not with other businesses, but with the end users themselves.

The Shape of Things to Come

According to a report recently published by ContractingBusiness.com, many modern day HVAC service companies have elected to go around the “way things used to be” and are instead focusing on providing higher levels of more valuable services directly to clients. HVAC contractors in the modern age no longer JUST sell and install equipment. They now perform inspections. They now conduct testing. They now offer repair options backed by comprehensive annual home performance service agreements.

All of these functions used to be performed by a variety of different groups, making HVAC one of the most important (yet simultaneously one of the most stressful) components in any home. Thanks to this new business model, however, enterprising HVAC contractors have both found a way to separate themselves from the competition stuck in the “good old days” AND provide a more valuable service to their users in one fell swoop.

Disruption Begets Innovation

One of the biggest changes to the 21st century HVAC business model has to do with energy efficiency as it relates to a full audit. For many homeowners, these audits were always seen as a “necessary evil.” Something that nobody wanted to do or pay for, but that would theoretically be worth it in terms of increased energy efficiency and energy savings on a monthly basis.

A new HVAC business model is helping to keep up with the changing marketplace.

Instead of paying hundreds of dollars for a full audit, however, annual home performance service agreements have risen up to take their place. Whereas a full audit was a “take it or leave it” proposition in that you either paid for the audit or you didn’t, service agreements are much more malleable. By combining annual inspections, testing and affordable upgrades under one umbrella with a fixed, predictable payment, both sides win. Homeowners get the results they need in a more budget-friendly way, and HVAC contractors get to better service their customers in a way that actually builds trust.

Even the service agreements themselves can be customized to better meet an individual homeowner’s needs. Does a homeowner want recommendations about upgrades to make that they will then execute themselves? Or do they want ad-hoc services and guaranteed annual updates to system components included at the same time?

HVAC contractors are finally designing a business model that acknowledges that no two customers are created equally. The needs of one homeowner vary wildly from the next, but thanks to changes like long-term service contracts and trust-based relationships, the companies can adapt every bit as much as the customers themselves.

Education as a Service

Another one of the meaningful ways that HVAC companies are contributing to a bold new business model has to do with the increased role that homeowners themselves can play in the proceedings. In years past, because of the heavily technical nature of the systems themselves, homeowners were traditionally kept at arms length. A full system audit wasn’t something a novice could do — it required a professional with years of experience and hundreds of thousands of dollars of equipment at their side.

Instead, forward-thinking HVAC contractors are turning hands-on investigations into a true teachable moment. By allowing homeowners to participate in things like visual testing, they can actually SEE what certain adjustments or equipment upgrades do rather than “taking their word for it.” They can learn how to more carefully identify certain issues on their own, even with an HVAC technician isn’t around.

They become more invested into the health and well-being of their HVAC system and, as a result, are more likely to both know when repairs should be made AND be willing to pay for those repairs in the first place.

Instead of hanging onto the idea of justifying what they do by insisting that “you need years of expertise, a degree and a multi-thousand dollar business loan,” HVAC contractors are essentially moving into the opposite direction. They’re not pushing homeowners away — they’ve elected to bring them in closer than ever before and many businesses are being rewarded handsomely as a result.

These are just a few of the major ways that the HVAC business model has evolved over the last few years. It’s clear that businesses that find the most success understand one core thing: the relationship they build with their customers is the cornerstone of every decision they make. A business model built on the idea that homeowners “must” pay for something like an annual audit is a faulty one, as “fear” as a motivation tactic has only ever yielded short-term results.

HVAC companies DO provide an incredibly valuable service to customers and now, thanks to initiatives and disruptions like these, homeowners can get a very real sense of this in a way that still provides them with the energy efficiency they desire for the very first time.