Service agreements or installation work: choosing an HVAC job mix

Start with what the customer is buying

An agreement sells specified future work on an eligible system. A replacement sells a completed installation with its own procurement, acceptance and quality obligations. Neither is just a larger or smaller repair invoice. Write down the equipment covered, number and timing of visits, access conditions, included consumables, separately priced repairs, cancellation terms and what priority service actually means. Avoid promising an immediate emergency response that the paid roster cannot deliver.

ENERGY STAR recommends scheduling cooling checks before summer and heating checks before winter. Its maintenance guidance covers such tasks as checking controls, connections and drainage, with cooling and heating checks matched to the equipment. This supports reserving time for a defined inspection; it does not validate a contract price or guarantee fewer failures. Maintenance scope

The worksheet assumes $360 per system per year, 2 planned visits and separately billed repair work. It is a new comparison alongside the published two-technician residential case. The case itself contains service calls and replacements, with no subscription revenue. No agreement fees are added to its sales forecast. Assumption boundary

Compare contribution per committed technician-hour

Use collected or collectible revenue minus job-linked materials and processing, then divide by all technician time committed to that job or annual agreement. Include survey work, driving, records and an explicit return-work allowance. A two-person installation consumes two technician-hours for every clock hour together. Keep separately paid dispatch out of the technician denominator unless the owner or technician actually does that work.

The agreement consumes 60 minutes on site, 21 in allocated driving and 9 in closeout per visit. Annual return and account work add 15 and 9 minutes. Its total is 204 minutes, or 3.4 technician-hours per system per year. The repair and replacement prices and materials below come from the unchanged illustrative case; their extra time allowances come from this article.

The installation has the highest yield under these assumptions, but that alone is not a reason to abandon agreements. It must have real demand, compatible skills and a usable date. The annual agreement uses recurring route slots and can fill a different part of the calendar. These figures are contribution before the fixed roster, not hourly wages, net profit or take-home pay. Do not subtract the case payroll again as a variable cost and then keep it unchanged in monthly fixed costs. Taxes, additional permit/disposal charges, acquisition costs and changed vehicle costs need a matched quote or a separate revision.

Stress the ranking with access, returns and territory

The replacement comparison starts with 20.0 on-site technician-hours and allocates travel, sold-job survey/coordination and expected return work, for 25.0 total hours. It does not price a different duct design or an unexpectedly difficult site. ENERGY STAR identifies sizing, airflow, refrigerant charge and duct evaluation as installation-quality considerations. Include the necessary work in the quote and schedule rather than treating commissioning as optional spare time. Installation-quality considerations

At the assumed agreement yield, a replacement reaches the same contribution per committed hour at about 35.3 total technician-hours. That is a scope-review signal for this worksheet, not an industry cutoff. Extra materials would lower the replacement result sooner. Wider routes also consume fuel and vehicle wear; the table isolates time while keeping the original vehicle-cost boundary. A larger territory therefore needs a cash-cost review as well as this time test.

Keep prepaid cash tied to the work still owed

A hypothetical cohort of 150 prepaid agreements collects $54,000 at inception. Processing uses $1,620, leaving $52,380 before performing the visits. The annual supplies and return-parts provision is $6,900, and the cohort commits 510 technician-hours across the year. Its $45,480 contribution remains before employee, owner and dispatch pay and other fixed costs.

The initial bank balance is not evidence that the whole fee has been earned or is available for an owner distribution. Keep a register of paid systems, due visits, completed work, cancellation exposure and cash reserved for fulfillment. Determine accounting and refund treatment for the actual agreement with the appropriate adviser; this cash illustration does not prescribe a revenue-recognition policy.

Replacement cash has a different risk: equipment may be purchased before the final customer balance is collected. List the actual supplier due date and lawful customer payment milestones beside the installation date. The published case uses a simplified 12.0-day collection assumption for its blended sales. It does not model a new prepaid cohort or prove that customer deposits are available. Read the existing cash scenarios before expanding equipment commitments.

Fit each agreement cohort into the seasonal calendar

The cohort creates 300 visits a year. If each round must be completed in an assumed 8-week window, each window needs an average 18.8 completed visits a week. At the stated visit block, that takes 28.1 technician-hours a week before the separately pooled annual return/account allowance. An annual-average hours figure hides this concentration.

Place the cohort on the calendar by territory, equipment and technician skill before making room for replacement work. Keep a route slot for a visit whose customer cannot provide access, and record the reason when a maintenance finding becomes a separate repair. An inspection does not automatically become a replacement sale: this worksheet assumes no conversion revenue, repair upsell or new agreements.

Renewals also need evidence. If only 80.0% of the original cohort renews at the same fee and there are no new sales, next-year collections are $43,200 from 120 systems, a reduction of $10,800. Track renewed eligible systems and their actual dates, rather than treating every agreement ever sold as current recurring revenue.

Choose the next commitment from the actual constraint

Check the qualifications attached to the work. EPA requires certification for technicians doing covered refrigerant activities and describes a closely and continually supervised apprentice exception. A helper cannot be counted as independent refrigerant capacity merely because the calendar is full; state and local licensing still need their own check. EPA certification scope

Use completed cohorts and jobs to revise the decision

For agreements, record fee collected, due/completed visits, actual technician minutes, travel, supplies, returns, cancellations and renewals by eligible system. For replacements, retain the sold scope, bought equipment, survey time, crew hours, commissioning/acceptance records, returns and final collection date. Reconcile repair invoices separately so a discounted or included task is not counted twice.

Compare contribution over the same fulfilled cohort or job, then compare the time in the weeks it occupies. A replacement with a large invoice can lose its advantage through unpaid scope; an agreement can lose its advantage through scattered routes or an unrealistic priority promise. Choose a mix with demonstrated demand, fulfillment room and affordable cash timing. Use the HVAC unit-economics guide to reconnect a proposed change to the complete paid roster, and the financing guide for supplier and collection evidence. A revised mix requires a new checked forecast; this article does not alter the existing case.