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Typical pricing for 4 ton unit

Last Post 30 May 2010 09:41 PM by engineer. 64 Replies.

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geo fan

Basic Member

Posts:408

29 Dec 2008 09:11 PM
The auto industry will go flat rate inside 10 years , you wont see 110 an hour , just this much for this job , its the trend of all the trades, When you walk into a clothing store do you want to know what the markup is , how much the denim costs and what the clerk gets paid no , hmmm could it be because you know what your getting and how much it will cost YOU and with that info you can buy or walk to another store and look at there stuff Same with restaurants , real estate , financials ( heck they dont even tell you what they charge you ) retail , phone, cable , the list goes on and on essentially the only things that where done time and material traditionally was blue collar work The problem with that is skilled trade work in general went from being a middle class career , to a , to be honest tough one to raise kids on The reason quotes are given usually flat rate is because its easier to market the value of a product , then to try to convince customers that we do really earn our rate and no $$$ and hour is fair and so on .

project_x

New Member

Posts:62

29 Dec 2008 09:39 PM
Flat rate isn't the issue, it is hiding the parts cost in the package price. I want to see what the markup is on the wire, on the furnace, on the pipe,..... If people are charging a fair rate, why hide it ? Most people can not design or install their own geothermal systems, so why not arm them with the proper information to compare quotes. If contractors started generating detail quotes, instead of trying to explain "payback" to me I would be a much more satisfied consumer. Every contractor tried to convince me that I should include the price of a new forced air gas furnace in the "payback", even though my current furnace was a HF 92% Forced air gas unit that was less than 7 years old and working flawlessly, that is not "payback", so they clearly do not understand that simple concept, let alone,.....

geo fan

Basic Member

Posts:408

29 Dec 2008 10:09 PM
In my last post on this topic , Ill attempt to explain the logic from the point of view of an employee In a flat rate/ package price there is 0 markup on material , on labor , on overhead ( including office staff and management salary ) when a cost break down is down its accurate as possible at that point a profit is added to the formula , then that price is presented to the customer , there is no reason to markup since we are not selling you material we are selling the finished product Now if someone shows up and tells you this much for parts and this much for every day or hour we work , there will be a mark up on the material because they want to make the labor cost look low and material high ( more presumed value ) the problem for customers here is you dont know what you owe till the job is done , you pay more for less experienced workers

project_x

New Member

Posts:62

29 Dec 2008 10:59 PM
I think we just have a different perspective on this. Like I said, I don't need to know how much per hour, a flat "installation" is fine, I just want to know what you are charging me for the parts. I disagree with your conjecture that you sell a finished product, Waterfurnace, ClimateMaster,.... sell finished products, you design and implement systems that use such products. It is easy to compare WF and CM specs, because they publish them for everyone to see, prices of these units are much harder to come by. I would like to know what the price difference between CM TT27 5-ton and WF Envision 5-ton unit to help with the purchase decision. The most important part of getting a geothermal system is in the design and implementation of the system, I really don't know why the unit pricing is so secretive. I wish WF, CM, Florida HP,....would all post MSRPs on their site, so it was completely transparent to the consumer. Then a consumer could do fair comparisons, from brand to brand and from contractor to contractor.

thaas53

New Member

Posts:11

30 Dec 2008 09:42 AM
I can't understand why you are so hung up on the individual cost of each item. You aren't going to purchase the HP from one contractor and pay a different one to do the install, therefore the only price that matters is the cost of the entire job. I would say an HVAC contractor does sell a finished product. All pieces of the system must work together and be designed such that you get an economical, comfortable and reliable (I would include important as well) part of your house.

project_x

New Member

Posts:62

30 Dec 2008 10:43 AM
I don't think I'm hung up on it, I just don't know why it is a secret. The contractors are system designers and integrators, they design a system and install piece parts to build that system. It is like most engineering contracts in the world, the overall cost is a combination of design costs, materials, installation and maintenance. If every contractor produced a "finished" product, we wouldn't have a new thread of people with problems on here. That isn't to say that there aren't great HVAC contractors out there, many of which post on here, I just think that we must have different definitions of "finished product". If I have a problem with my installation, and am unsatisfied with my installer, who do I complain to, the manufacturer of the unit, who does make a finished product?

engineer

Veteran Member

Posts:2749

30 Dec 2008 12:12 PM
Does Walmart disclose the wholesale cost of a Microwave oven or any other of its 100,000+ items in inventory? Do you resent them for that?

Curt Kinder <br><br> The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is - Winston Churchill <br><br><a href="http://www.greenersolutionsair.com">www.greenersolutionsair.com</a>

project_x

New Member

Posts:62

30 Dec 2008 12:41 PM
Posted By engineer on 12/30/2008 12:12 PM Does Walmart disclose the wholesale cost of a Microwave oven or any other of its 100,000+ items in inventory? Do you resent them for that? They do however disclose the price, otherwise it would be hard to buy. And if I pay someone to install it on a shelf, they give me a price for that as well. Would you buy a microwave installed in your house for one all inlcusive price, without knowing the price of the microwave? I'm not asking anyone to disclose wholesale pricing, msrp would be acceptable.

Dave-iin-MD User is Offline

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Posts:3

30 Dec 2008 01:48 PM
I think this has been a very civil and helpful discussion. When one buys something from Walmart (I stopped buying there, since I believe they don't pay fair wages - so, not all of us are motivated by getting the lowest price), you either rely on an impression that the price is reasonable, or you check their competitors to see what others sell the same item for. At that point, the item is a commodity. Geothermal systems, and home improvements in general, can not be so easily compared and customers wish to understand (and should understand) what they are getting for their money. Think again about this Madoff scandal. I have read many stories of people that "lost everything" because they only knew that the historical return was high. They invested without knowing any details. Those that asked details were not provided any and many of those people didn't invest with him. The lack of available detail was clearly a sign of his fraud. So, now jump to a geothermal project - several vendors provide a price without providing any details - how is the homeowner supposed to evaluate that? Flip a coin? I don't spend $20-30k without asking questions. Do you? I have yet to find an industry that went to "package pricing" that was not trying to increase margins in a way the obscured the true cost of the goods and services to avoid price evaluation. Educated consumers will resist such moves. I know builders took this idea and ran with it in the last building boom, but many of those guys are going to be out of business - if you wanted to pick a different tile for the bathroom, you had to upgrade the "bathroom package" for much more than the cost of the different tile. My car dealer wants $800 for a "30k mile service package", that is nothing more than an oil change and changing the fuel filter, air filter and pcv valve. Incrementally, each of those things would cost $25 to $75, but one has to ask a lot of questions to discover that the package price is unreasonable. I think that such package pricing is not in the interest of skilled engineers and tradesmen. It turns our expertise into a commodity - which then leaves the industry wide open to vendors like Home Depot to repackage and market unskilled workers (and crappy hardware) for a cheaper "package price". If you are not demonstrating your expertise to your customers, why would they value it and pay for it? I view a well written bid/estimate as a way to demonstrate the knowledge and expertise of the contractor. I don't intend to ask contractor "A" for the equipment and contractor "B" to do the install, but if the numbers don't match, I do ask why. Finally, lets think about this in pure economic terms. In a free market, each customer should be able to compare goods and services and choose the most suitable one for the best price. Colluding or obscuring costs artificially inflates the total cost and decreases demand. Unskilled or uncompetitive producers stay in the artificial market when true market forces would have eliminated them. Happy New Years to all.

waterpirate User is Offline

Basic Member

Posts:467

05 Jan 2009 06:54 PM
Well this has been an interesting read to say the least. The discussion should be "what is the differance between wholesale and retail?" When the contractor buys wholesale he assumes all the risk associated with that product that he delivers to the end consumer. The very definition of markup includes, cost,profit, and warrauntee, whether actual or percieved. If you go to the car dealership and request from GM what did it cost you to manufacture that unit so you can determine what you think is a fair margin to pay the retailer, I want to live in that world! lol Like many things supply houses do not want to deal with the public because they are trouble. The addage " you just don't know, what you don't know" is all to real. We as contractors assume the publics headache and for that we also charge. As a driller I am often accused of making a geo project out of reach due to my pricing. I call fish out of water everytime. Go buy a rig, assume the overhead, pay the help, fix the rig, fuel the rig, fight with DOT everytime you move the rig, and devote the last 20 years of your life to get good at it. I used my trade as the model, but feel free to insert yours and the statement is still true. Eric

Eric Sackett<br>www.weberwelldrilling.com<br >Visit our Geothermal Resource Center!

Palace Geothermal User is Offline

Veteran Member

Posts:1609

05 Jan 2009 09:30 PM
Posted By waterpirate on 01/05/2009 6:54 PM The addage " you just don't know, what you don't know" is all to real. Eric I like it.....I am going to use it!!

Dewayne Dean <br>www.PalaceGeothermal.com<br>Why settle for 90% when you can have 400%<br>We heat and cool with dirt!<br>visit- http://welserver.com/WEL0114/- to see my system

Farmboy

Basic Member

Posts:356

06 Jan 2009 10:47 PM
Dwayne, now how would you be using that and with who? Perhaps the following would be more useful in producing trusting, harmonious relations between contractors and "potential' customers: "Seek first to understand, then to be understood", from Franklin Covey. I know I don't know all about HVAC or geothermal, but I sure would like to get at least some basic answers. I don't begrudge a contractor profit, heck, somebody needs to make a profit in these economic times. I agree with Dave in Maryland that trust and details should gp hand in hand. How do you build trust? Through honest communication in both directions. I appreciate when a "salesperson" asks me questions to seek to understand what I'm looking for. And if I'm not sure because it's a new technology or something I'm not familiar with, I really appreciate them enlightening me by answering my questions. That helps me see they are trying to give me what I need and as much as possible what I want. That builds confidence. And if they're wiling to discuss the costs so I can make an informed decisioin, that builds trust.

Palace Geothermal User is Offline

Veteran Member

Posts:1609

06 Jan 2009 11:08 PM
I would never use this on a customer. I would use this when harassing a colleague or coworker.

Dewayne Dean <br>www.PalaceGeothermal.com<br>Why settle for 90% when you can have 400%<br>We heat and cool with dirt!<br>visit- http://welserver.com/WEL0114/- to see my system

geo fan

Basic Member

Posts:408

06 Jan 2009 11:10 PM
Agree 100% Farmboy Questions should be answered and answers should be questioned but when it comes to the topic of overhead the parallel that I see . A "sales person" shows up to deliver the quote and during the conversation he asks " how much do you make? " when you ask why he would like to know his response is along the lines of "Well in order for me to make an informed estimate I need to know what you can afford " how would you feel ? Is that any of his business ? Trust in my opinion is built though honesty , professionalism , expertise? Now any cust that has a price in mind can tell the installer about that and multiple options should be presented with benefits and draw backs clearly explained . Just my opinion

waterpirate User is Offline

Basic Member

Posts:467

07 Jan 2009 09:20 AM
My addage was rolled out in a response to a homeowner wanting to get wholesale info. We use that term in technical diving all the time to discourage internet divers from becoming technical divers without first getting the neccessary training from an accredited facility. The same is true of homeowners. we are glad to help in any way we can, but if it goes to far they really need to get the proper training. Because "you don't know what you don't know" Eric

Eric Sackett<br>www.weberwelldrilling.com<br >Visit our Geothermal Resource Center!

rykertest

Basic Member

Posts:202

07 Jan 2009 04:02 PM
Posted By thehtrguy on 07/07/2008 1:13 PM Hi. I'm new to the forums. I've installed some EarthLinked DX systems. I can't talk for water source systems, other than they cost more. The conversation here is out of line. You're basically calling me (an HVAC contractor) a lying cheat. I'm going to list my approximate costs and what I charge on a bid for a 4 ton system--just for forced air heating and cooling. Cost of materials on a typical 4 ton system includes: 4 ton heat pump: $3,690 4 ton vertical ground loop: $2,255 125' of line set, approx. $1,100-$1,300 R-22 refrigerant, $200 Nitrogen, $45 heat pump thermostat, $200 duct, including the grilles, registers, duct seal, (always varies greatly), let's say it's a new home, 2000 s.f. per level, basement and main (NOT A RETROFIT COST): $2,400 condensate drain: $50-$100, depending if a pump is needed acetylene and brazing rod: $50 freight: $450 This totals about $11,300. Next, I'll have to pay sales tax on all of this. That's an additional $710. Now my total material cost is $12,010. Next, I have labor to install the above. It'll cost me about $45 per hour to pay my guys. This includes worker's comp, non-productive time, etc. I'll have to pay about $4,800 in labor. I'll also have to pay about 30% labor taxes on that. That adds another $1,440. So my total labor costs hopefully don't exceed $6,240. This is not my profit, this is my labor COST. In other areas, I've heard of the hourly cost being upwards of $85 per hour. (because of labor unions and dues, I'm told) Overhead is next. I know this one, along with labor, varies greatly across the US. For my small company, and small amount of sales, I have to cover at least $1,800 of overhead for this job. This could easily need to be $3,500+ or so. Now there's mileage. It costs me (just a pure cost) about $1.00 per mile of travel with a service/install truck. This is gas, tires, service and insurance. Let's say the mileage is only $100. So, my costs (still haven't added drilling or excavation) total about $20,150. Now, how much money do I need to survive? Are you okay with me getting $50,000 per year? It'll take about 1 week for us to get this system installed. Let's say (I wish) that I can sell 1 system per week. That would be phenomenal, but improbable. So, for 50 weeks/year, at $50,000 per year, that's $1,000 per system. Let me tell you, if I'm only making $1,000 per system, I'm going to go bankrupt. Why? because eventually--inevitably--I'll have to return to a system to fix it on warranty. Whether it's my fault or the manufacturer's, it costs me time, fuel, and materials to go back. Of course, we all want the system to never have problems, but... Typically, I need to make at least $3,500 per system. So now, without drilling and excavation, the total is $23,650. When I can get a driller, they're typically $10 per foot in my area. So, for a 4 ton, that's $4,000 drilling. Now the price is up to $27,650. I'll need a backhoe for a day, another $350. So, I'm an even $28,000. This isn't always the case, but it's a good fair guess as to how much I'd charge. If an installer needs to make $5,000 per system, good for them. It's not a rip-off. You're getting exactly what supply/demand dictates. A fair price for a fair product. Remember, this is for a NEW home. NOT a retrofit. For a house without duct, that needs it retrofitted, it'll cost me double the labor and overhead. It'll cost about 50% more on duct materials, and my liability is higher, too. It also takes longer, so I can't do as many systems. Before anyone rags on me for wanting to make a profit, let me say this. I'm installing the most comfortable, reliable, efficient, safe, green heating and cooling system available. Do you get a Mercedes car for the price of a Yugo? Is a Yugo just as comfortable and safe as a Mercedes? No. You pay extra for a better product. I'm installing a system in your house that will actually pay for itself in savings. How about your kitchen cabinets? The carpet? the tile? window and door trims? No. Geothermal is the best bang for the buck. Do I wish my costs were lower? Absolutely. When they become lower, I can lower my price. But until then, I have to maintain the price as it is, or I'll go bankrupt. Why do you all want us HVAC guys to go bankrupt? If more contractors were straight forward about their pricing and what "skin" they have in this like you did above, they wouldnt have the rap of being "cheats". I've dealt with numerous contractors and I've found that roofers and hvac are the two that never want to give you a price. You almost have to beat it out of them which makes no sense. Here I am, wanting to buy your product and some act like I'm being unreasonable wanting a price for a home I'm building. What kind of business are they in if they have a product, and they want to sell it but not give anyone a price??? To be honest, if I came to you and you stated to me something like what you wrote above, you would get a hard second look by me as opposed to just being "another hvac guy". Why? Because you are transparent. I sense you are defensive of being called a cheat and I don't blame you. I don't think however that people think YOU are a cheat, they are suspicious of the majortiy in your industry and you are colateral damage.

engineer

Veteran Member

Posts:2749

07 Jan 2009 09:48 PM
Some prospects are better off being customers of your competitors.

Curt Kinder <br><br> The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is - Winston Churchill <br><br><a href="http://www.greenersolutionsair.com">www.greenersolutionsair.com</a>

robkindovernh User is Offline

New Member

Posts:23

08 Jan 2009 02:46 PM
I must admit, I see no value in such a detailed breakdown form the perspective of being a home owner. I don't really care how the contractor/professional is getting to his price. If he wants to mark up the materials, but sell the labor cheap and keep a smaller profit on the total job or give me the parts at wholesale, charge more for labor, and have a higher overhead/profit built in to get to the same price makes no difference from me. The only reason I would need to know that detailed information is if I was going to buy parts myself, higher someone to do design and installation, and so on. The things I do need to know as a homeowner is: what is the total cost and what does that include. I need to know what equipment is going to be installed, the quality of the ductwork, the quality of the design, does this include trenching, or do I have to hire that out seperately, etc. So long as I am getting a good description of the job and the components being used, and a total price, that should let me make an informed decsion between contractors. I would assume a good contractor would also then help me decide on what can be done to help meet a certain price point, or what options I might want to consider, and make these alternate prices clear as well. But I just don't see why knowing the price of the parts matters. At one point the OP said: Posted By BradJ on 07/16/2008 10:10 AM Thanks everyone for your input I really appreciated the cost breakdown from THEHTRGUY. I met with the contractor and I believe everything is clearer now. I will be getting a Synergy 3 unit new model apparently with dual stage and the price for the unit will be approximately 13K what is not clear yet is what that is including, install, thermostats, wiring. This is the stuff that seems important. What are you getting for your money. Not how will they be breaking down the costs.

engineer

Veteran Member

Posts:2749

08 Jan 2009 09:34 PM
And Robkin is the prospect I'd want to become my customer - the more questions one asks, the more one can differentiate between pros and hacks and then make sound choices of equipment and options. Posts here and at geoexchange are chock full of grief at the hands of hacks.

Curt Kinder <br><br> The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is - Winston Churchill <br><br><a href="http://www.greenersolutionsair.com">www.greenersolutionsair.com</a>

megan

New Member

Posts:1

17 Jan 2009 05:09 PM
I am having a miserable time trying to get GEOTHERMAL. I had one guy in for a site visit. My 5000 sq. ft., 100 year old house is currently gutted. I need new everything. So, since I obviously don't have it insulated yet, and don't have new windows yet, and I have a relatively small yard and can only fit 4 vertical wells, the guy told methat with insulation (he does) and new windows (we do) it will be between $50,000 and $100,000. So what planet am I living on?????????