Know Your Competitors' Prices in the Industry

Collusion is defined as having a secret agreement between two or more parties for a fraudulent, illegal, or deceitful purpose. Many in the HVAC community often cower at the thought of the Collusion Police coming down heavy on them if they should ever discuss pricing with another competitor. But think about it. Collusion occurs when there is an actual customer, and there arises a conspiracy to defraud that particular customer. Simply making retail prices known among the contracting community is not colluding, it's good business.

Does Home Depot know Lowe's prices? Does Wal-Mart know Kmart's prices? How about Sears and JCPenney? McDonald's and Burger King? Of course they do. All retail pricing is known by the competition. It's what drives the market, and it drives competition. But it doesn't necessarily always keep prices down. Sure, in some cases, competition finds out they are out of touch and needs to adjust down. But for the most part, those competitors feed off of each other's lead, and maximize their profit potential.

Why not HVAC? Why shouldn't retail HVAC prices be known amongst the competition in any given market? What's to fear, except finding out you are ridiculously low, or high, for that matter? In either case, wouldn't it be best for the entire competitive market community to be at least somewhat on the same page?

We are told by manufacturers time and time again, if we are to survive, we must become retailers. Act like, think like, market like, price like a retailer. The critical knowledge for any retailer is to know where competition is regarding market price. Understand, I said know where competition is, not just think you know.

HVAC buyers somehow expect us to operate like a car dealer. Surely, they think, I can haggle him down a little, maybe a lot. HVAC retailers must not fall prey to this tactic. Mr. Homeowner may casually name/price drop another's proposal amount in order to gain a negotiating advantage. Many contractors (not retailers) will cave in at this point. A mild season, a weak economy, or just plain greed takes over. It causes many to adjust their price down based solely on what Mr. Home-owner has just sworn to be the truth.

But, what do you do?

The answer lies in open communication. It means not viewing all competition necessarily as enemies, and instead developing mentoring relationships, which bolster profits for all involved.

I'm not saying you have to reveal everything regarding costs, and other trade secrets, but you can convey pricing strategies and methods.

Proactive communication among competitors is best. If that's not possible, at least remaining open to hear from your competition whenever you get a job is just as important. The next time you get a job, and have started the install, ask your customer, "Do you mind telling me if you talked to anyone else regarding your project? Why did you select us? Why didn't you choose them? Exactly what was their price on this job?"

At best you get to hear all the good reasons your customer chose you, which is reaffirming, and a real ego boost. At worst you might hear something you really need to hear, such as, "Well, you were $1,500 less than anybody else." Unless you're just scared to hear this kind of detail, you will definitely benefit from seeing how others viewed the job, and how much, if any, money was left on the table.

Gary Heath, Sales and Marketing Rep.
Environmental Comfort Systems Inc.
Decatur, Ala.

Increasing the Healthfulness of Indoor Air Quality

I read with interest B. Checket-Hanks' focus piece "Researchers Validate Effectiveness" (March 20). The article mentions that EPA data shows that indoor air is "generally four to five times more polluted than outdoor air." Also, it reports that the AHU [air-handling unit] in the test described did not have an outdoor air intake and further that "Not many residential systems do."

That is true, but it may also be part of the bigger problem. In addition to air filtration, dilution with clean outdoor air has been shown to increase the healthfulness of indoor air and significantly reduce harmful concentrations of vapors, gas, and chemicals such as formaldehyde. There is nothing really new here, outdoor ventilation is required in commercial buildings and energy recovery heat exchange equipment is used to neutralize the efficiency penalty. While there are a few residential outdoor air ventilation systems on the market, the penetration has been low and slow. Perhaps it is time to carefully consider a more complete solution to the residential IAQ problems the article describes?

Richard F. Topping, P.E.
RFTopping Consultants LLC

Send correspondence via e-mail to letters@achrnews.com.

Publication date: 04/03/2006