HVAC Pricing Playbook: Turn Price Objections Into Profit
Your competitor just underbid you by $2,000. Again. But here’s what that contractor probably doesn’t know: 80–90% of pricing mistakes are business owners setting prices too low, not too high. While you’re watching refrigerant costs skyrocket from $150 to $450 per tank and trying to explain why a system replacement costs 40% more than last year, that low-ball competitor is racing toward bankruptcy—and taking customer trust with them.
“For HVAC specifically, inflation doesn’t even begin to cover what’s going on,” says Adam Ross, the executive director of South Florida Academy of Air Conditioning. “There has been so much happening in the past 12 to 18 months that it’s just a new world.”
Competing on price alone no longer works. Instead, implement sophisticated strategies that maintain margins while actually winning more jobs. Here’s how HVAC contractors can navigate today’s pricing challenges.
Understanding changes in the HVAC industry
The current HVAC pricing environment goes beyond general economic trends. A convergence of factors have changed how contractors must approach pricing, customer conversations, and business strategy.
The most significant disruption came from the industry-wide transition to A2L refrigerants. While they’re much better for the environment, these refrigerants are flammable, requiring different handling procedures and equipment.
“HVAC companies have had to buy not only new equipment for their customers, but the equipment that the HVAC companies use and the supplies the HVAC companies use had to change as well,” Ross says.
Investing in new machines and equipment meant nationwide supply shortages—and increased costs for contractors and homeowners.
What contractors once purchased for $150 per tank now costs $450, according to Ross. Combined with the impact of tariffs, which affect everything from sheet metal to electronic controls, this means the cost of HVAC installation has skyrocketed.
Competition has intensified as well. Private equity firms are investing in the HVAC space, which increases the cost of customer acquisition. Lead generation expenses have grown as more companies compete for the same customer pool.
But customers haven’t adjusted expectations to match these new realities. “They’re not prepared for the change, so customers are usually very surprised when they see where prices are right now,” says Ross.
This gap between customer expectations and market reality means thinking carefully about how you approach the pricing convo.
Leading contractors use practical approaches to keep them profitable while taking care of their customers. Here are six strategies that work.
1. Turn price objections into value conversations
When customers challenge your pricing, the natural instinct might be to defend or discount. However, data shows that only 19% of homeowners prioritize low installation cost when purchasing a new HVAC system. This means over 80% of customers care most about factors like comfort, efficiency, and reliability.
“When a customer says that we’re priced high, we talk about a few things,” says Ross. “Number one—is it a like-for-like comparison? Are we really talking about the same things?” This question shifts the conversation from defending price to educating on value.
Highlight the benefits of quality workmanship so customers understand that price differences often reflect real differences in quality and expertise.
Not sure how to pitch this to the homeowner? Try Ross’s airline analogy: “If you’re going with a budget airline, yes, technically you can get from Miami to New York for $70. But if you want to check a bag or cancel your flight or change your flight, that’s an additional fee.” This helps customers understand the difference between being cheap and providing value. “You’re going to get what you pay for,” he says.
Focus on what your bid includes, not what it costs. Ask customers to verify that competing quotes include the same equipment tier, warranty coverage, permit costs, and disposal fees. Often, the “cheaper” quote excludes essentials, which show up as add-ons later.
2. Capture more value with tiered pricing
Single-price quotes limit both contractor profitability and customer choice. Research shows that 54% of HVAC businesses offer tiered options on at least half their quotes—and that offering these options is one of the strongest indicators of a “thriving” business.
What’s tiered pricing? Instead of presenting one take-it-or-leave-it price, you give customers three options:
- A quality baseline system
- A comfort-enhanced package
- A premium solution with all the bells and whistles.
It’s like a restaurant menu—some folks want the burger, others spring for the steak, but everyone finds something that fits their budget and appetite.
“We used to offer just one price but now we strive on every job to offer three options,” Ross says. “Close rates have stayed pretty constant, but because we’re adding a better and best option, we’re selling more things that we otherwise wouldn’t have even discussed.”
Ready to create your own good-better-best pricing? Start by understanding your true costs. Calculate all expenses including equipment, labor, permits, overhead, marketing, and customer acquisition costs. Add your target profit margin to establish your baseline “good” option. This becomes your floor price that maintains profitability.
For “better” and “best” tiers, incorporate higher-margin comfort and efficiency upgrades, like duct repairs, attic insulation, UV lights, and home air purification. “A lot of these things have higher margins, especially because you’re already on-site doing the unit installation,” Ross says.
One unexpected benefit of three-tier quotes is the subsequent change in technician behavior, who are “forced to discuss products and services they might not have mentioned before,” Ross says. Now, every customer knows all of their available options rather than defaulting to the cheapest solution.
3. Make services more affordable with financing
Want a thriving business? Offering financing isn’t optional—it’s essential. The median 34-year-old has $5,400 in their checking account, and air conditioning systems range from $2,000 to $12,000 (or more!) in cost. Financing can turn a “We can’t afford that” into a “When can we schedule?”
More importantly, the average financed HVAC purchase is 25–35% higher than cash transactions, and with Acorn Finance, contractors can get those bigger paychecks within 48 hours.
“It used to be an advantage to offer financing and now it’s table stakes. If you don’t offer financing, you’re way behind,” Ross says. His company currently finances about 35%.
Financing is particularly powerful when combined with tiered pricing. That $2,000 upgrade from a basic to a premium system might only add $30 to the monthly payment, making it an easy decision.
Integrate financing throughout your sales process. Don’t treat it as a last resort. Ross’s team discusses financing “all the time,” he says. “It is now so critical in our sales process that we’re literally putting that front and center in Google Ads.” Advertising financing up front attracts customers who might otherwise assume they can’t afford a new system.
Add a financing application into your sales process. “We walk them through the application right on the spot. We’ll usually get immediate application decisioning,” Ross reports. This immediate approval transforms potential lost sales into closed deals, preventing customers from shopping around while they figure out payment options.
4. Use inventory and pricing to protect margins
With material costs fluctuating dramatically, contractors must build systems that protect their margins… without requiring constant quote revisions.
“The moment that we have a signature and have sold a job, we buy the equipment, even if it’s not on the schedule for a few weeks,” Ross says. This locks in costs at signing and eliminates the risk of a price increase.
You might be tempted to maintain a large inventory to hedge against price increases, but Ross cautions against this approach. “That ties up a lot of working capital and cash,” he says. Plus, you’ll need a decent amount of warehouse space for inventory that might be obsolete before you can install—imagine if you’d stocked up on refrigerant before the switch to A2L.
Build clear validity periods into quotes and proposals that match your suppliers’ terms. For commercial projects or installations scheduled months in advance, consider including escalation clauses that allow for price adjustments if manufacturer costs increase beyond a specified percentage.
The key: transparency. Most customers understand and appreciate honesty about fluctuating costs rather than surprise price increases later.
5. Stop price-matching low-cost competitors
There are two types of low-cost competition: unlicensed operators and licensed competitors with suspiciously low prices. Educating the customer is the best way to compete.
“If you have unlicensed work done, first of all, the person doing the work is committing a crime,” Ross says. Beyond legal concerns, unlicensed work creates problems for homeowners including permit violations, home sale complications, and a lack of recourse if problems arise.
For low-priced, licensed competitors, focus on business stability and warranty support. “You just don’t know if that guy is going to be in business 6 or 12 months from now,” Ross says. HVAC systems come with manufacturer warranties that require certified installation and ongoing contractor support. If the installing company disappears, homeowners lose both labor warranty coverage and access to warranty parts.
Educate customers about quality installation—everything from proper system sizing and correct refrigerant charging, to code-compliant electrical work and adequate ductwork modifications. And don’t forget to highlight the energy savings. High-efficiency HVAC upgrades can cut heating/cooling bills by 20–40%, but only when installed correctly.
6. Build sustainable pricing models
Challenging economic times might make you want to maximize profit on each individual job. This might be a critical mistake: “If you go into someone’s house with the intention of trying to get rich off that one job, in many cases, you’re going to lose the sale,” Ross says. This short-sighted approach damages reputation and referral opportunities.
Develop pricing models based on fair market rates that balance profitability with customer value. Start with accurate cost calculations that include all of your business expenses—not just equipment and direct labor. Factor marketing costs, overhead, insurance, and other operational expenses into your pricing.
And don’t attempt to justify prices by revealing profit margins to customers. “I’ve never had a conversation with a customer where I say we have a 20% margin and they say, ‘That sounds fair,’” Ross says. “They always say, ‘Can we take it down to 15%? Can we take it down to 10%?’” Focus on value, not margins.
When customers request prices below your sustainable floor, the answer should be no. “We have the cheapest option on our menu already,” Ross says. “If it’s not on our menu and they’re asking for something cheaper than we offer, then we have that conversation about value and explain why they should be willing to pay more.”
Moving forward in a challenging market
Ready to revamp your pricing? Here’s how to start.
- Analyze your quoting process. If you’re not offering three options on most quotes, develop templates for good-better-best proposals. Teach your team how to present these quotes by emphasizing value, not just pushing the highest tier.
- Add financing options. Acorn Finance partners with lenders who can approve a wide range of credit profiles and provide quick decisions. Add financing to your marketing materials and train staff to present payment options naturally during sales conversations.
- Review your pricing structure to ensure it covers all costs while staying competitive. Don’t race to the bottom—instead, communicate the value that justifies your pricing.
- Develop clear policies for managing price volatility. Establish quote validity periods, implement immediate equipment purchasing procedures, and train staff how to explain market conditions to customers.
Today’s pricing challenges won’t resolve quickly. Ongoing supply chain disruptions, evolving technology, and intense competition mean contractors must adapt to succeed.
Position your company as the trusted choice that delivers real value. With comprehensive offerings, flexible payments, and superior workmanship, contractors who focus on value over price will thrive—no matter the market.