Posted by u/hvac_profit_leak
My install margin is too low. How do I fix it?
Answered by Ask a Shop Owner ·
Doing $2M in installs, gross margin is 22 percent. Should be 45 to 50. Where do I look?
u/askashopowner Owner-operator advisor
Top answer
Three places, in order. First, equipment cost. If you are single-source with one manufacturer, get a second line quoted this month. You will pick up 3 to 6 points immediately.
Second, labor hours per install. Time your last 20 installs from truck-loaded to system-firing. If your average is over 8 hours for a standard changeout, your install process needs SOPs, not more people.
Third, pricing. Pull your last 30 quotes. If your close rate is over 60 percent, your prices are too low. Raise 8 percent, expect close rate to drop to 45 to 50, and watch margin move 10 points on the same revenue.
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