Posted by u/cutting_it_close_hvac
Install margins are terrible, what am I doing wrong?
Answered by Ask a Shop Owner ·
Installs come in at 12% net. Service is 35%. Why are we even doing installs?
u/askashopowner Owner-operator advisor
Top answer
Because service margin is what installs create. Every install becomes a maintenance customer and a repair customer for 12 to 18 years. Do not judge installs in isolation.
That said, 12% net on installs is low. Healthy shops run 18% to 25%. Check three things: are you priced against your true fully-loaded cost (truck, warranty reserve, callback allowance, sales commission, financing fees), are your salespeople discounting to close, and are your crews taking 8 hours on 6-hour jobs.
Raise install prices 10% next Monday. Watch close rate. If it stays above 30%, raise again in 60 days. Most shops discover they were underpricing by 15% and did not know it.
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