Tips On Selling Hydronic Equipment

October 7, 2004
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The terms "value added" and "value engineering" often pop up during sales presentations and design planning. The terms are basically self-explanatory, and usually refer to adding something, such as a more efficient or more effective piece of equipment to a system. The concept of adding value can be important when it comes to selling a hydronic heating system, as some customers need to be shown that the benefits of a hydronic system - such as added comfort or increased efficiency - can help overcome higher initial costs. The News asked some hydronic equipment manufacturers about value engineering and how contractors can use key features of hydronic equipment to sell a whole system.

Explaining The Benefits

"As with any high-priced, high-quality, high-feature/benefit product, you must emphasize to the customer that you get what you pay for," said Madonna Courtney, director of corporate marketing for Roberts-Gordon, Buffalo, N.Y. "While the statement is rather cliche-ish, with radiant heat it is true.

"Once a customer is exposed to radiant heat, its comfort level, and the fuel savings associated with it, to value engineer it out of a building is actually misleading the consumer. There is absolutely no way that warm air heat can match the comfort level of radiant heat. If you want that comfort, the customer has to pay a little bit more for it."

According to Neil Pilaar, director of U.S. sales and marketing at AERCO, Northvale, N.J., contractors should carefully consider each product's total costs and advantages before making a decision to substitute equipment. In other words, look carefully at the actual installation costs instead of just the capital equipment (boiler) price.

"The term value engineering is commonly used to describe situations where the mechanical contractor is encouraged to substitute equipment that is not specifically specified by the consulting engineer or owner," Pilaar said. "The reasons for the substitute recommendation vary, but are often driven by a lower equipment price to the contractor.

"Coupled with the lower purchase price, however, typically is a reduction in product performance (energy usage, temperature control, reliability, warranty, etc.) as well as hidden project and installation costs. While the proposed substitute may be positioned to be ‘nearly as good' as the specified equipment, this may be far from the truth from both the customer and the contractor's point of view."

According to Pilaar, boiler water piping, pumps, and the associated controls required are automatically incorporated into most projects to ensure that the boilers see constant water flow and return water temperatures to prevent damage to the boiler. While some boilers may cost less, they must be installed using a more complex heating loop.

"Before making a decision that one boiler is less expensive than another, we highly recommend that the installing contractor review the installation material and labor savings of the reduced piping, pumping, and electrical requirements, as well as flue and combustion air flexibilities," he stated.

"Coupled with the opportunity to promote longer product warranties, higher energy savings, and a simpler heating system, the higher-priced, high-efficiency boiler becomes a ‘value add' to the contractor and customer alike."

Ken Womack of Triad Boiler Systems Inc., West Chicago, Ill., said that his company sells equipment that is "a bit more expensive," but notes that only adds value to the systems.

"Our vessels are definitely value added because of the tremendous longevity for only a moderately higher price," he said.

"Our vessels can easily last more than 30 years, which is unusual for a small footprint vertical boiler. Replacement cost should be kept in mind when buying equipment. Value engineering can end up costing more if you replace it once or even twice, while a more rugged vessel would still be operating."

System Design

Manufacturers spend a great deal of time and resources to ensure that customers know the functionality of each component and how each component fits into a system. "We have an in-house customer service department where each person has 10-plus years in design experience," said Courtney.

"Radiant heat is a bit more demanding from a design standpoint, and if you don't design or install it correctly, you will miss out on having a customer for life. Once exposed to properly designed and installed radiant heat, a customer will virtually never go back to warm air.

"However, if not applied properly, radiant heat can be very disappointing, especially considering the money spent by the customer. Misapplied and misunderstood product has been a problem in our industry since its beginnings."

According to Pilaar, AERCO routinely hosts meetings with interested consulting engineers, contractors, and building-owners to discuss the design-build ad-vantages of high-efficiency boilers. The sessions are free. Interested contractors can contact their local AERCO rep to coordinate a meeting.

"In addition, AERCO engineers are responsible for providing appropriate venting information for projects utilizing our high efficiency equipment, which can help ensure that contractors fully leverage the hidden savings associated with our high-efficiency equipment," Pilaar said.

Womack insisted that system design should include the costs of maintaining it. These costs are not only reflected in the availability/interchangeability of parts, but in the people who service the equipment. "The cost of ongoing maintenance is very important and an often-ignored aspect of equipment cost," he noted.

"An untrained worker can easily damage many complicated systems, and that is definitely a cost to consider. Simpler systems like ours are easy to understand, and the burners are so well known that all industry technicians can work on them."

Selling The System

In order to sell a system, engineers must understand how the system works. That's why each of the manufacturers contacted for this story offers ongoing training on its equipment.

"We have discovered that training is the No. 1 factor in making sure our product is applied and installed properly," stated Courtney. "The intimidation factor with radiant is rather high. It isn't just installing some threaded rod and hanging a unit heater. However, it isn't that difficult, and it is important to show them the ease at which it can be done when you partner with the right manufacturer.

"Another aspect of our training is showing the features the customer receives and the profits the contractor can make. In the HVAC world of single-digit margins, radiant heat allows the contractor to make solid margins while providing the customer an unmatched heating system. We show them how to differentiate from their competition."

Energy efficiency and long-term costs are concepts that must be explained to the end user, said Womack. He noted that the modular boilers that his company sells might appear to be more expensive in a given application, but the cost difference can be more than made up by the savings resulting from increased energy efficiency.

He noted that purchasing several modular boilers can be more expensive than buying one or two larger boilers.

"However, the system of modulars will be more efficient be-cause only one boiler might end up handling the load most of the time, thus saving on fuel. People tend to focus too much on single boiler efficiency and ignore the efficiency of the entire system."

Publication date: 10/11/2004

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