HVAC business

The HVAC industry is an honorable line of work. Having pleasant and comfy air temperatures in the home is a necessity everyone needs but that most take for granted.

By using your skills and knowledge to provide this assistance to people, you are delivering a highly valued service.

This article is part of a KPI (Key Performance Indicator) series designed to help HVAC business owners such as yourself flourish in this line of work.

It’s important to understand this information as it will help address key elements in your HVAC business plan such as business KPI’s, field KPI’s, revenue generators, etc.

With that being said, here are 4 KPI’s that will help you grow and thrive in this field.

5. Advertising Expenses

How much money are you pouring into a professional website or ad campaigns or even pay-per-click marketing? A specific amount of revenue needs to be allotted to these areas.

Your HVAC businesses strategy should include a line-item budget of no more than 5% in marketing costs for your company.

For instance, if you make $1,000,000/year, then designate $50,000 toward your advertising expenses.

6. Service Technician Labor Rate

Generally speaking–at the end of each month–the service labor rate should be at or below 22% of the overall billing for that particular service. This ensures that this KPI continues to perform as intended to expand your business.

So for example, if you have $10,000 allocated for the technician labor rate expense, you would spend no more than $2200 a month.

7. Inside Support to Field Revenue Generators

Every company requires some amount of inside assistance to operate smoothly, especially in the beginning stages. But this changes once the business begins to grow and expand.

Initially, a few people can do many tasks. But as the business experiences growth, this KPI begins to become more important.

This is because when the company generates more revenue, it is able to afford better software that makes certain obligations of the business unnecessary.

Therefore, it is able to do more with fewer people.

8. AOR Equipment as a Percentage of Sale – 25%

With AOR (Add On/Replacement) equipment, you want to be aiming at a number smaller than the percentage cost of the equipment. Never surpass 35% of the overall value of equipment and its parts.

For example, if the total selling cost of a piece of equipment is $50,000, and the parts make up 25% and the units make up 10%; then the final cost should be no higher than $17,500.

Due to inflation raising the prices of goods and services, this is becoming an increasingly difficult KPI to meet. However, it is still a good benchmark to strive for as it will secure a larger gross profit in the replacement division.

Are You Ready to Grow Your HVAC Business?

Having your KPI’s firing off on all cylinders will ensure that you are hitting your targets. And this will cause your HVAC business to grow and thrive.

These are the small nuances that will make the big differences in your daily operations. Your HVAC business success is predicated on these all-important details, so it’s crucial that you stay on top of them.

If you’re interested in learning more, be sure to check us out to see how we can best serve you.