Texas HVAC Business Can Be More Profitable in 2023

The most common HVAC house calls are requests for new installations, maintenance, repairs, replacements, and emergency services. Some HVAC services focus on cleaning, while others focus on installation, and others focus on doing everything. Some HVAC businesses are just one contractor or technician on their own, while others are an entire team. But no matter where your HVAC business falls in the spectrum, there are ways to increase your profit margin. Here are 8 ways to make your HVAC business more profitable in 2023.

1. Diversify and Upsell

Next time you’re in any kind of store, take a look at the items by the register. These are traditionally called impulse purchase items because they’re items that are compelling to buy right at checkout…things like candy and chewing gum. Impulse purchases can add a significant amount of profit, with the average person spending over $300 per month on impulse buys.

Of course, that’s not all bags of candy, but there is a very detailed science to maximizing profit margins with a stream of small purchases. You may be wondering what this all has to do with HVAC systems. Of course, there are local businesses that have successfully used promotional merchandise to increase their revenue…but we’re not talking about tees and sweatshirts here (although that could be cool too).

Instead of focusing exclusively on HVAC repair and HVAC installation, your business can also sell HVAC equipment like thermostats and HVAC filters, along with related appliances like humidifiers and dehumidifiers. You might be raising an eyebrow, but the proof is in the pudding once you incorporate HVAC supplies into an upselling process.

For instance, customers who request an HVAC duct cleaning should receive a complimentary assessment of related equipment like thermostats and AC units. If anything is not up to par, there should be an immediate recommendation to replace it with some inventory from the truck.

In another example, you could upsell a pack of 10 air filters for a reduced price as part of the cleaning. You can also explore the idea of leveraging your company’s reputation to sell equipment on your website or via email marketing campaigns.

Person holding a smartphone showing social media apps on the screen

2. Invest in Social Media

Texans are the audience that tends to engage the most according to a study that analyzed data from Facebook, IG, and Tiktok.

Social media is an excellent free marketing tool that every business should be using, HVAC contractors included. Around 54% of consumers use social media for product research, and 71% of them are likely to recommend a business they like to their friends and connections. This is your chance to build a community around your HVAC service company. All it takes is a few minutes each day to post a picture or video, write a caption and throw a few hashtags under the post to draw in search traffic.

You may not think that your average social media user is interested in home maintenance topics, but you’d be surprised: DIY and related forms of content are some of the most popular on social media, with as many as 44% of users turning to platforms like Instagram for inspiration and know-how.

Social media is also an excellent place to do some good old-fashioned paid advertising because you can get extremely pinpointed with the demographics that see your ads. For instance, you could target a specific zip code where you know there are lots of older homes in need of HVAC maintenance. Or you can target users in a certain age range that are more likely to be homeowners, or accounts that frequently view home improvement content. And if you feel that navigating all this video-making and posting is more complicated than understanding duct systems, there’s a good chance that one of your contractors or someone in the office is handy with social media that can become your official marketing point person.

3. Accept Mobile Payments

Another way to make your HVAC business more profitable is to improve the customer experience with mobile payments. There are a few different forms of mobile payments. One involves using a phone with a mobile wallet enabled with NFC (near-field communication). The customer simply taps or waves their phone near a POS terminal—for instance, a small one that’s kept on board your truck or van. This type of mobile payment is called proximity payment.

Another type of mobile payment involves directing the customer to a website or app on their phone, perhaps by having them open their camera over a QR code, where they can directly make payments using an app.

One reason mobile payments are especially beneficial in the area of home improvement is that customers (ironically enough) may not have personal items like their wallet nearby when they’re at home (and if you’ve ever hunted for your car keys, you know that’s the truth). They will, however, most likely have their phone…because let’s face it—we’re on our phones all the time.

A payment experience where you can simply direct the customer to an app or have them wave their phone over a payment terminal is going to create a smoother customer transition than asking them to hunt for a credit card, and it’s also going to make sure you get paid right away, without having to make any phone calls later to collect payment.

Businessman counting cash

4. Leverage Business Loans

Most business owners will tell you that in order to make money, you need money. And that’s definitely true in home improvement businesses where expensive equipment is needed. With the influx of business expenses (payroll, equipment, gas, vehicle maintenance), it can be hard to set aside enough money to expand your business with a new truck, larger office, or expanded list of services (such as AC installation).

A business loan can provide the funds you need in order to take your HVAC business to the next level. Unfortunately, getting a traditional loan from a bank can be very difficult, as they have tight lending requirements—and seeking out a more flexible or willing lender can be a time-consuming process. Many times an online business lender, like ECS, can be a faster route toward getting the flexible funding you need. And more often than not, they will offer better repayment terms and lower monthly payments.

Two reasons for this increased flexibility and favorable loan terms are that online lenders don’t have a brick-and-mortar presence to keep up and they also have more flexibility to shop around for underwriters. This means they can get you better loan terms and close the loan more quickly.

5. Make a Solid Tax Strategy

This is the part that nobody wants to deal with, but it’s one of the most indispensable in terms of making more money. That’s because, in terms of business profit, it’s not always about how much money you make, but how much money you keep. And if you have a good tax strategy in place, you can keep more.

Many business owners are unaware of all the tax breaks, tax credits, and tax-deductible expenses they can claim against their gross income. For instance, you probably knew that you use depreciation on business assets like vehicles and equipment (but not inventory) as a tax write off…but did you know you can do a cost segregation analysis to separate these assets, some of which depreciate faster and offer more accelerated immediate tax breaks? Did you know there are tax credits for hiring veterans, or for using alternative energy sources (like electric vehicles) in your work fleet?

There are also significant ways to generate tax savings in terms of how your business is structured on paper, even if you’re just one person. According to SBA estimates, the average small business is paying around 19.6% in taxes annually. Whatever that would mean as applied to your gross recipes, speaking to an accountant about this can actually lower this percentage, legally. Moreover, by taking care of the accounting for you, they can alleviate a significant amount of headache, which leaves you with more time and energy for more house calls, and more profit.

Hand holding emotion face blocks

6. Create a Customer Review Process

If you’re like most business owners, you probably don’t pay much attention to customer aftercare. After all, you can frequently rely on a steady stream of customers to call you, because most homeowners don’t have something like an HVAC vacuum pump, or the know-how to install ductwork. But what if there’s a lull in business? Or what if you want to expand your business by hiring other contractors to work under you?

This is where word of mouth comes into play. As many as 84% of consumers stated that customer reviews played an important part in the purchasing process, and 63% of consumers stated that no reviews on a company is a dealbreaker. This can be especially true in the realm of home improvement because consumers are weary of having a bad contractor experience. Reviews can bridge the consumer trust gap and create a solid reputation for your HVAC business.

A streamlined review process looks like this: politely reminding customers to leave a review on your target review site, and sending them a follow-up email and/or text a few days later as a reminder, perhaps using an automated solution like MailChimp or Avochato. 

You should focus on building reviews on one venue at a time, making sure to build a presence on Google, Facebook, and sites like Angie’s List. Believe it or not, if you get enough positive reviews, when potential customers search “HVAC installation near me” on these sites, your company will come up, because search engines also view these as a strong indicator of credibility.

7. Create an Invoicing Process

An HVAC technician has a lot to juggle in terms of understanding ventilation systems. If you’re also managing a team of contractors, there’s even more to juggle. And if you add to that all the accounting and business management ends of running a business, well…that’s a lot of balls (or chainsaws) to juggle at once. Anything that can make life easier and more streamlined, especially on the backend, should be embraced, so you can focus on your HVAC services.

Software that assists with invoicing and reconciling chargebacks is indispensable…unless of course, you love working with lots of spreadsheets. According to some estimates, the average person can process about five invoices per hour, which comes out to roughly twelve minutes per invoice. If you’re one HVAC repair contractor visiting a few job sites per day, you still probably don’t want to spend an hour dealing with paperwork in the evening. But if you’ve got a whole team of contractors, that reconciliation of invoices just becomes an impossibility.

A software solution that can automate the invoicing and (select portions of the) accounting can become an indispensable tool saving you time and therefore money. Software that can integrate and deal with issues like refunds and chargebacks is even more dispensable.

Son explaining to his mom different subscription plans and prices

8. Create an ACH Payments Subscription Model

Your HVAC company doesn’t have to just focus on HVAC installation or HVAC replacement. It could also focus on recurring subscription services like an annual cleaning or quarterly checkup. This is a great way to build a dependable income stream that can pretty much be left on autopilot year after year.

The subscription industry is projected to grow to $1.5 trillion by 2025, for a whopping 453% over the past decade. And subscription services in today’s economy are not just about streaming videos or satellite radio. Startup company Super recently raised $50 million to build a subscription service for home contracting.

The lifeblood of a subscription service is, of course, the recurring payments your business collects. And the most convenient and secure way to collect recurring payments is through the ACH network. This is because the network facilitates transfers directly from the customer’s checking account to yours, using bank account and routing numbers. Since these numbers won’t change unless a customer closes their account, they are far more dependable than credit cards or debit cards that can get lost, canceled, or replaced with new numbers.

Setting up the ACH payments is a simple matter that only requires the customer to provide a few pieces of information, and then that particular tributary or income stream is locked in place. The right payment processor, like ECS, can offer an ACH form that integrates into your website or mobile app for smooth customer transactions in terms of collecting payment information.

Bottom Line

Whether you focus on residential or commercial HVAC solutions or both, whether you’re a one-man band or an entire crew, there are ways to increase your revenue stream this year. Some of them involve backend changes like invoicing software. And some of them involve how your business interfaces with the customer journey…starting with that Google search (HVAC replacement near me) that pulls up your reviews, and ends with new customers writing their own reviews. And some of the ways you can increase profit are as simple as changing the ways in which you collect payments.

To contact sales, click HERE. And to learn more about ECS Payment Processing visit Credit & Debit.

Charles Hanna

Charles Hanna

Financial Writer
Magna Cum Lade BA, Communication, California State University Channel Islands.

Omega Alpha, National Communication Honors Society, Lambda Pi Eta

I spend the majority of my free time as a professional portrait photographer, traveling when I can, and focusing on physical fitness, weight lifting, and nutrition.

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