Can we make the above post a sticky?

Posted By geome on 19 May 2010 08:37 PM

Can we make the above post a sticky?

Wish I thought of that. 

Posted By tscat007 on 25 May 2010 12:45 AM
This is the best forum I have found online yet. The general public just dosent know that insurance rates fluctuate by state. The length of pipe per ton vary by whats underground & drilling cost vary by region. If you are a home owner do not go on a website to get a Geothermal quote! Most importantly do not go on a lead service website and charge a contractor $60 just so you can ask "how much?"

Recently I quoted a 2 stage, 3 ton system with wells, zoning, duct, kitchen hood, bath vents and thermostats for $25K in Atlanta GA and the home owner treated me like I was wearing a mask and holding a gun after recieving my bid (5th out of 5 bids, I was highest). I would have made $3500 in profit on the project which really isnt much considering all the overhead and advertising cost involved with this business. I guess some of my competitors bid the job less than my/the cost to install it. That is a frustrating thing about being a contractor. You can do a good job estimating and even installing but the other turkeys out there can really make your life difficult by underbidding (leaving something out of their estimate, not proposal) and doing shotty work or providing shotty management while doing the project to minimize their losses.

Too many home owners are on this and other sites like this complaining about "crooked" contractors that did bad work but 99% of the time they picked the low bidder. YOU GET WHAT YOU PAY FOR. People in the construction & Geothermal industry dont magically produce something for 50% less than everybody else out there inorder to do the job for less.
The high bidder has either
1.included everything you asked for and is willing to go the extra mile.
2. maybe too busy at the moment to really need the work.
3. made an estimating error to the high end. Remember the high bidder wants the work too. He will not intentionally bid to be the high bidder, that is wasting his time. Every project/estimate is a prototype.

Your low bidder could be
1. unfamiliar with what he is doing.
2. desperate for the work
3. planning on cutting corners to "make it happen".
4. made a mistake and forgot to include something he needed to. (Have you ever typed 55
instead of $550????? 5. or they may be a smaller company just looking to get their foot in the market which may be a legitimate reason to be low but certianly not the lowest!

Just think about these things from a Geothermal Contractors perspective who has a modest home and family as well. We arent ripping you off. The cable company, Burger Joint, Gas Stations, Soda Companies, Health Insuance Companies, Lawyers, your boss & pretty much everything else you purchase without blinking an eye are.

Posted By tinoue on 05 Jul 2010 03:56 PM
No HVAC system is cash flow positive unless you compare it to something more expensive.

Posted By arkieoscar on 06 Jul 2010 11:24 PM
would you buy an automobile with this kind of warranty?

Hydro electric??

Tidal power electric??

Wind turbines???

Eric

Posted By toddm on 25 Sep 2010 05:02 PM
Alas, that would only be combustion free, odorless, quiet and eco-friendly on the customer side of the electric grid.

Posted By toddm on 26 Sep 2010 08:53 AM
300 minutes/mo, unlimited internet and texting, no contract. $25/mo. (Virgin Mobile.)

Posted By toddm on 25 Sep 2010 09:45 AM
"Cash flow positive" is itself a red herring. Heat pumps require service and wear out, so you must account for annual upkeep and expected lifespan in your analysis. The latter is critical if a fast-talking geo salesman is telling you to roll the cost into a 30-year mortgage and enjoy net savings from Day One. If they cart a dead heat pump out of your house in year 20, you will be paying for its replacement plus roughly half of the initial geo install. Some deal.

A life cycle cost analysis is the only appropriate evaluation for geo: You weigh energy savings against initial cost plus annual upkeep plus interest plus depreciation (what you must set aside each year for its eventual replacement).

Since a car analogy is required apparently on this thread, a life cycle analysis gives a very different look at that '89 beater. It's life is certain to be short and the annual upkeep figure cannot be ignored. Well, in 2031, a geo system installed this year will be the functional equivalent of that '89 beater.

Posted By toddm on 26 Sep 2010 03:08 PM
Some precision in language, please.

But mine is new construction, and so small and tight that geo wouldn't make sense.

Posted By toddm on 26 Sep 2010 03:08 PM
Some precision in language, please. If it doesn't earn income or appreciate in value, it is not an investment. You can look it up. And it's annual savings rather than ROI, there being no "I" involved. You may not want to call it what it is -- an expense -- but when you don't you'll hear from the sales spiel police.

That said, your numbers are in fact a lifecycle cost analysis. Almost. You forgot to amortize the cost of the equipment over 20 years. Paying the extra $6,600 for geo would reduce annual savings from $1070 to $740. This assumes that you match the term of the loan to the life of the equipment. Otherwise the interest clock keeps running in a 30-year mortgage -- even after the HVAC equipment stops -- on a balance of about $9,000 for geo vs $4000 for furnace and AC. (One suspects that very few homeowners apply their IRS refunds to the mortgage.)

Even so, $740 a year is argument enough for me. If I lived in a 1910 farm house I am sure I'd choose geo over propane after I sealed and insulated it as well as I could.

But mine is new construction, and so small and tight that geo wouldn't make sense. Dunno how this makes me disgruntled and disillusioned.

Posted By ICFHybrid on 06 Jan 2011 11:40 AM

1) Truth is that you can order a 4 ton GEO system for $7500, Pay a ducting sub $2,500

2) call in 100 hrs of HVAC install at $50/hr for a total of $15,000 to get to the same place the OP showed nearly $24,000.  HVAC guys don't get $45/hr, payroll taxes are NOT 30%

3) the installer does NOT pay sales tax on materials and most businesses
 

Posted By joe.ami on 08 Jan 2011 01:51 AM

Posted By ICFHybrid on 06 Jan 2011 11:40 AM

1) Truth is that you can order a 4 ton GEO system for $7500, Pay a ducting sub $2,500

2) call in 100 hrs of HVAC install at $50/hr for a total of $15,000 to get to the same place the OP showed nearly $24,000.  HVAC guys don't get $45/hr, payroll taxes are NOT 30%

3) the installer does NOT pay sales tax on materials and most businesses
 

Lots of bones of contention I have with your assertions, but I'll keep it to a few.
1) Geo also requires significant electric work (a seperate service in my AO right down to a second meter). Then there is a plumber, process pipe and buffer tank (for the DSH everyone wants). Few will install 4 tons of duct for $2,500 with material included.

2) Perhaps the 100 hours you cite included duct labor? We do not bill out at $50/hour. We charge $80 as a $25/hour tech with vacation time, 7% social security, comp insurance, health insurance, truck, gas auto insurance.........costs me at least $50/hour.

3) Correct, sales tax is a pass along- passed along in the cost of a geo system.

In my area, a 4 ton geo depending on features selected will be around $20,000 turn key. On the east coast more. In Indiana from what I understand, less. Nowhere I know of will it cost $15,000 turnkey without significant DIY contribution.
In your example, If I add my electricians rate of $2,000 to $2,500 and the DSH piping and buffer tank + tax you would be ~$19,400.
BTW if we were talking DX (as was OP) my cost is higher as would be buyer's.
J

Posted By ICFHybrid on 06 Jan 2011 11:40 AM
Every time I pass this sticky I wonder about the first post. I don't know what state that's in, but is it dated or what's up?

Truth is that you can order a 4 ton GEO system for $7500, Pay a ducting sub $2,500 and call in 100 hrs of HVAC install at $50/hr for a total of $15,000 to get to the same place the OP showed nearly $24,000.

HVAC guys don't get $45/hr, payroll taxes are NOT 30%, the installer does NOT pay sales tax on materials and most businesses don't get to heap costs on top of mileage on top of overhead on top of management on top of profit (or whatever). :-)

With cost being an obvious disincentive to the acceptance of new "greener" technology, it would appear that the service portion of the industry has a large part to play in getting things moved forward.

We charge $80 as a $25/hour tech with vacation time, 7% social security, comp insurance, health insurance, truck, gas auto insurance.........costs me at least $50/hour.

What is that company's price for the whole job? Why not use them for the whole job instead of subbing everything out?

Posted By ICFHybrid on 08 Jan 2011 10:51 AM
Labor Rate: $25.00
vacation, sick leave: $2.00
health insurance: $2.75
Base Rate: $29.75

Employer FICA: $1.84
Employer Medicare: $0.43
FUTA: $0.30
SUTA: $0.60
Comp: $3.00

$35.92/hr

Trucks are usually Overhead, but you can take it out of the $14.00 an hour that is still on the table.

If you want to buy a 5 ton geoexchange system in Indiana for $16,865 from government pricing, have at it. God knows government bids never have over runs.

There are a lot of unseen charges.

both of our geothermal suppliers raised prices in 20111 3 to 5% across the board due to the commodities market.

Posted By ICFHybrid on 11 Jan 2011 12:22 AM
It's a big place.  The trucks get stocked.  The materials for an install collect back at the ranch until it is time to go out to do the install and they arrive with the service guys.  I'm sure that if they need something, they try to get it before the service call so time isn't wasted.  After all, as we can see, time is money. 

You say you don't get extra money, but aren't you trying to bump the rate to account for the the 2 hours a day of work that the guys and the truck (aren't?) doing?  In any case, if they are using their time to pickup and deliver parts, presumably there is a markup that will account for that, isn't there?

One strategy in the service business has always been to have a low hourly rate and then take a lot of time to do the work versus someone who operates more efficiently.  In this case, the businessman knows his rate, operates efficiently and knows what he can discount to and still stay in business.

[quote]many of which someone can avoid by being the primary contractor or doing the whole thing themselves[/quote]Well, you have to have some knowledge of what you are doing.  I'm sure the corollary to this is that consumers who don't have a clue about HVAC are the ones who end up paying the most.

You probably already know that in 2008, The Indiana Office of Energy and Defense Development analyzed (for a rebate program) the average, fully installed cost of 5 ton Geothermal systems at $16,865.

Posted By joe.ami on 11 Jan 2011 10:34 AM
You won't get anywhere arguing with someone on the internet about what you think a fair price is.

You suggest "it's a big place" so- what- it doesn't cost money to purchase, pick-up or inventory materials?

heat pumps, furnaces etc. go up ~1-5%/yr aside from sales I've never seen one come down.

Posted By ICFHybrid on 11 Jan 2011 11:07 AM 
At some point, you, as a member of the industry need to realize that competitive bidding is going to be employed to bring the technology into greater usage.

I know you keep saying its about the OP but you keep saying things like this. When you said "you" in this comment is that about the OP?

Posted By ICFHybrid on 11 Jan 2011 12:05 PM

I know you keep saying its about the OP but you keep saying things like this. When you said "you" in this comment is that about the OP?

1) You are hammering on me for points outside of what I commented on.
2) My comment was more a reaction to why that was happening; it was a collective "you" so I'm glad to hear you, at least, are accustomed to competitive bidding.
3) If I had to analyze how this all worked, I would say that one of the reasons someone is able to field a big crew is that they have been somewhat successful in limiting their competition. I don't know how many overpriced ($44,000 in this case) installs a guy has to do to stay in business, but I bet it isn't that many.

That geo system in Indiana might be like the old HydroHeat systems which were and still are a nightmare

With geothermal you get what you pay for.

that variable is experience...How much is that worth to you?

Why is he slow when there is a 30% tax credit?

Posted By toddm on 12 Jan 2011 02:42 PM
BTW, if you are turning away customers, why would you care what they think of your prices, except to weigh the possibility that you aren't charging enough?

Honestly

Have I or the other guys ever suggested that folks not get multiple bids?

Haven't we always said prices vary regionally so it's dificult for us to know what is fair outside of our AO's?

Posted By Cgallaway on 18 Jan 2011 10:10 PM
I haven't really seen anything useful since the 2nd page.

The original point of this sticky, to give people a basic understanding of the costs involved with geothermal, has been polluted.

Posted By ICFHybrid on 19 Jan 2011 11:18 AM

The original point of this sticky, to give people a basic understanding of the costs involved with geothermal, has been polluted.

In that case, maybe one of you wants to replace the sticky with some information that is a bit more "clear"?

When you give advise to others on this forum, perhaps you can henceforth be "clear" as to your geothermal ownership, training and experience as others, including myself, have done.

Posted By ICFHybrid on 19 Jan 2011 01:01 PM

When you give advise to others on this forum, perhaps you can henceforth be "clear" as to your geothermal ownership, training and experience as others, including myself, have done.

How much more clear? I think I was very clear in specifying exactly what I was saying and what the source was here. If you want to explain to us how bumping the price of a geo system by claiming an installer has to pay sales tax on it, or where payroll taxes are "30%", then have at.

I'd welcome a knowledgeable and comprehensive treatment of the subject from any of you experienced installers. If you have difficulty with estimating your labor costs, then it might be sufficient to just specify how many hours of labor generally go into what and let people apply what they think is reasonable for their own area.

Others should take note, and take your opinions and advise with skepticism.

Posted By ICFHybrid on 19 Jan 2011 08:05 PM
You can continue to represent those who sell geothermal if that's what you want to do, and I'll represent a little portion of homeowners and those skeptics thinking about buying.

Posted By Cgallaway on 18 Jan 2011 10:10 PM 

I haven't really seen anything useful since the 2nd page.

I've brought up that in tighter houses, the cost of the geo system will never pay itself back. 

to the builders: a lot of consumers get screwed.



And now a question of my own...Someone mentioned having to need a second meter just for the geothermal unit? This doesn't sound right to me.

Posted By ICFHybrid on 20 Jan 2011 01:33 PM
I haven't accused you of anything and have no intention or desire to do so.

Posted By ICFHybrid on 19 Jan 2011 08:05 PM
You can continue to represent those who sell geothermal...

Posted By ICFHybrid on 20 Jan 2011 01:33 PM
To date, this is what I've said;

Posted By ICFHybrid on 19 Jan 2011 01:01 PM
...let people apply what they think is reasonable for their own area.

Posted By ICFHybrid on 16 Jan 2011 02:52 PM
...I would like to hear why all you service professionals allowed this clearly misrepresentational example to exist for months without calling it into question. I think one of you even requested that it be "stickied". It justified charging hundreds if not thousands of dollars extra for bogus things like "sales tax paid", "30% payroll taxes" and questionable labor costs, in addition to a truly convoluted accounting of how much overhead and profit there "should" be.

Posted By ICFHybrid on 11 Jan 2011 12:05 PM
I don't know how many overpriced ($44,000 in this case) installs a guy has to do to stay in business, but I bet it isn't that many.

Sounds like an accusation to me.

Do you even bother to try remembering your own posts?

Hmm, interesting site, 2 suggestions to dump a whole thread after my 2nd post ever

NO DIYs allowed here?, did not see that in any site rules. Guess I better go back and re-read site rules.

Posted By geome on 20 May 2010 08:21 AM
Thanks Dewayne. We should really give the credit to thehtrguy. He did the hard part by writing up an explanation that is easy to understand. Should have been made a sticky when he originally posted this, but it's not too late. Just as relevant today as it was back then. 

Posted By ICFHybrid on 13 Mar 2011 11:36 PM
Some people might say a Prius actually has some interesting engineering.

Maybe it's more like the comparison between building a jalopy with '68 Falcon parts and pulling a new Chrysler K-car out of storage and putting a digital stereo in it?

How could I have thought there was no value in this discussion?
j

Posted By tinoue on 14 Mar 2011 07:43 AM

On the other hand, I think homeowners are perfectly justified in asking why installed system costs have gone from $20k to $40k at the same time the government started offering large incentives.

Posted By geodean on 14 Mar 2011 08:29 AM

Posted By tinoue on 14 Mar 2011 07:43 AM

On the other hand, I think homeowners are perfectly justified in asking why installed system costs have gone from $20k to $40k at the same time the government started offering large incentives.

On the third hand,  this has not happened in my area and I doubt that it is the case in all but a few isolated cases.

Can anyone produce a 4 year old estimate for a project that is 1/2 the price of a current one?
Let's have some proof that prices have gone up significantly since the tax credit.

Posted By ICFHybrid on 14 Mar 2011 11:00 AM

Can anyone produce a 4 year old estimate for a project that is 1/2 the price of a current one?
Let's have some proof that prices have gone up significantly since the tax credit.

Have you forgotten about the Indiana Office of Energy and Defense Development Rebate Program study from June, 2008 in which the average installed system cost was $14,278?

Posted By ICFHybrid on 14 Mar 2011 12:29 PM
The 30% tax credit (with no cap) wasn't added to IRS code until the last
quarter of 2008. That's why I noted the study was from June of 2008.

Posted By ICFHybrid on 14 Mar 2011 12:29 PM
1)The 30% tax credit (with no cap) wasn't added to IRS code until the last quarter of 2008. That's why I noted the study was from June of 2008. The systems covered in the study were installed before the tax credits were in effect.

2)I don't really have an interest in finding a single self-contained document which fully illustrates the rise in cost coincident with tax credits, just so you can agree. I think the evidence, for me and for others is more than sufficient. $28,500 would represent the low end of a number of quotes that posters have come here asking about recently.

3)I would note, again, the clumsy attempt to "jack up" a price point justification that led off this thread. If I recall, the author claimed false expenses, taxes and questionable labor costs among other things to get up to $26,000. I have personally found similar attempts at justification among a number of installers.

4)I do think it is a credit to your business leadership and fair competition in your area that you haven't come across it yourself.

Posted By Looby on 14 Mar 2011 12:55 PM

Posted By ICFHybrid on 14 Mar 2011 12:29 PM
The 30% tax credit (with no cap) wasn't added to IRS code until the last
quarter of 2008. That's why I noted the study was from June of 2008.

That $14k "average price" in June 2008 must have been for some kinda time-warp
found only in Indiana (prolly related to the state's famous time-zone time-warps).
Either that, or prices more than doubled between June and August 2008, when I
signed the contract for my 3-ton WF Envision. The well alone was almost $9k.

Anyone here have first-hand experience with a $14k retrofit contracted in 2008?

1) right. prior to that no one in the "geo conspiracy" jacked up the price because the cap was 2k.? really?

first time you cited this Indiana example you conceded it was flawed and btw, did you check to see if they updated? if not then again 0 value.

2) you don't really have an "intrest" in finding anything that doesn't support your point of view (or can't find anything that does)......what evidence?

28,500 does not represent the number I cited in the comments you are responding to (it is 40% high).

3)again, you offer "clumsy" support for your contrary opinion.

You think the root of this thread is flawed, fine.

If you have information that sheds light on your assertion, let's see it.

Where's the data????

Posted By tinoue on 15 Mar 2011 12:57 PM
The burden of proof is on you pros to prove that prices have NOT gone up substantially in the last few years. Since you're all so confident that no price jiggering has gone on, publish your data.

I can't speak to the cost of doing business elsewhere.

Why do you continue to use phrases such as "well-documented" and "textbook example"?

(i.e. citing a low average purchase price in a tax credit year as proof that tax credits raised geo prices).

Posted By robinnc on 02 Apr 2011 11:57 PM
1) I can see it costing more up there than in the SE but still those prices seem insane.
2) Are the trades up there all unionized?
3) The material prices are the same, the equipt to dig a trench or drill a well costs the same so that basically says labor is thru the roof. Is this correct?
4) Traffic can be bad anywhere. When I lived in Atlanta I was only 11 miles from work but I was lucky if it took me 45 mins to get there.

Posted By engineer on 03 Apr 2011 09:16 AM
I'd gobble my Glock before attempting to do biz in a northeastern city.

Posted By toddm on 04 Apr 2011 01:52 PM
1) Upstart: a person of humble origin who attains sudden wealth, power or influence. Sorry for the mischaracterization, Joe.
 
2) But since you brought up your history: Aircraft Mechanical Inc was incorporated in 1996. AMI Comfort Systems appears in an assumed name filing in 1998. (AMI doing business as AMI Comfort Systems.) AMI Contracting dates to an assumed name filing in 2007. In a quick sampling, the other names appear not to be linked to AMI, although it seems to me that Aletha and Johnson, as examples, should say they were acquired -- or are defunct in the case of asset liquidations -- or AMI should say it is doing business under those two names. Michigan carries them as active corporations but behind in their filings (not since 2008.). Again, I am not disparaging Joe. Just raising questions that might occur to a prospective customer. Like, if Aircraft Mechanical Inc. was GSHP in 1996, how do the airplanes fit in?
 
3) At a minimum, you start crossing off names. As in choosing a heart surgeon, you don't want the guy who does one or two a year.
If you can wait, do so, particularly if GSHPs are rare in your area. Likely, it will be easier and cheaper in 2014.

Posted By robinnc on 05 Apr 2011 12:11 AM 
Joe said the parts and machines do not cost the same in NY.....WTH......why wouldn't it be not counting the state tax difference ? Again everyone, the 'parts'.....(not LABOR) of the HVAC, the machines used to build it(trench or drill) are the same with minor diff. Why is it such a hugggge diff from place to place....it seems to boil down to mainly NO competition??

Monopolies are not free markets.