Performance contracting is using test instruments to solve problems rather than just using a pencil.

Lately the big news in residential equipment sales is that times are tough and homeowners are not spending money. If they do spend money, they are only looking to spend the least they can.

At the same time, prices from other contractors and/or retailers are driving the average sales price down. With the economy in bad shape, the bottom line is that new prospects are harder to find, existing customers are tightening budgets, and economic conditions have definitely changed as to how a contractor needs to survive the upcoming months.

So, what can an HVAC company learn from these times? In my estimation, the most glaring is the realization that during good times, many contractors grew complacent when it came to sales. Over the last few years, enhancing the professionalism of one’s company was not necessarily important. After all, when a company sold the number of jobs wanted; why need to change?

In these tightening economic times, this is a great opportunity to look inward at your own company and see what you need to do to survive. For many, where we are may look bleak. However, good, progressive contractors will see that they can move into a whole new market. They now have something a contractor can offer homeowners that no other contractor will be able to do.

And, it’s called performance contracting.


Let’s take a look at our residential sales call. When it comes to replacing equipment in a home, it can be the largest repair a home- owner will ever have. When a contractor leaves, there is a cost to run the equipment and that cost can outweigh the cost to install the equipment. In addition, many homeowners are not comfortable, have dust and allergy issues, are humid in summer, and are dry in winter. And the only tool most contractors take in a home to figure out what they can do to solve these problems is a pencil.


Nobody has ever bought a drill because they wanted the tool. They bought a drill so they could end up with a hole. The same is true in the HVACR business. Homeowners do not buy furnaces, air conditioners, heat pumps or boilers because they want the equipment. They buy these to be comfortable in the home.

If you want to truly solve these issues, you must do more. This is where performance contracting comes into the equation.


Performance contracting on sales calls will separate a contractor from his competition. It will find pre-existing problems in the home that can affect the proper operation of the equipment and make the equipment not as efficient as promised. Performance contracting slows down a buying process, allowing a homeowner to make the right decision that they will be happy with for the life of the equipment.

Performance contracting will add profits to your company; by being able to add the repairs of pre-existing problems to the job and not having to make warranty calls trying to figure why the system is not working properly. Best of all, contractors today are even learning they can charge for this type of design process. And, yes, even when the homeowner has called for a free estimate.

In order to charge a homeowner, a contractor must run a different sales call than just showing up, taking a look at the equipment, running through a few brochures, and quoting a price. Performance contracting starts with an interview of the occupants of the home. The contractor needs to find out the occupants’ needs, wants, and desires.

A contractor must explain that there are a couple of ways of replacing equipment: 1) the same procedure that has gone on for years, namely, just replacing equipment; or 2) doing a computerized load calculation, infiltration test. A contractor needs to look at the leakage of the duct system, perform an airflow analysis, and follow ACCA’s Quality Installation specification. The goal should be to make sure that the equipment the home- owner is buying works the way it was designed to operate.

There is a lot of third-party information that is telling homeowners that the best contractor is one who will meet their needs and put in what will make them have a safe, healthy, comfortable, and energy-efficient home. That said, a contractor today needs to be different - one that will be able to truly help customers. Performance contracting is the answer.

After all, a contractor’s success is not held back on what a contractor doesn’t know, but rather on what a contractor does know but won’t let go of.

For more information, contact Summers at

Publication Date:03/09/2009