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  1. #1
    Join Date
    May 2009
    Location
    Yardley, PA
    Posts
    11

    Refrigerant Mark up, R-22

    I have a 10.5 year old heat pump (of course only 6 months out of warranty) that developed a leak last fall. Since the back up heat worked all winter I never knew (other than excessive propane use). Now with cooling upon us, I quickly discovered the system wasn't working.

    Original installer came out and discovered a compressor leak, noticing oil laying in the pan. He recharged the system with 15lb of R-22 and said he would come our for a leak test and repair.

    Two questions:
    The price of the R-22 recharge was marked up nearly 4 times from a retail figure. Is that normal or am I being gouged?

    Secondly, with a 10 year old unit, should I consider a replacement or repair.

    I have a Lennox 4ton system installed complete with furnace 10 years ago.

    Thanks in advance for all your advice, mods- I'm trying to determine a reasonable mark up, not looking for price or cost.

  2. #2
    Join Date
    Jun 2005
    Location
    Winston-Salem NC
    Posts
    1,133
    No pricing if I am correct about the site rules.
    As far as replacement, is it drawing excessive amps? Has it been causing any problems? I personally don't recommend changing a system out unless the cost of repairs start getting into the range of 25% or more of a new unit, or if it is having multiple issues.

  3. #3
    Join Date
    May 2009
    Location
    Yardley, PA
    Posts
    11
    You are correct about pricing and I am staying away from any numbers. It just seems ridiculous the mark-up on R-22 in terms of how many times retail it is passed on to a customer.

  4. #4
    Join Date
    Feb 2007
    Posts
    999
    Quote Originally Posted by spudman9 View Post
    You are correct about pricing and I am staying away from any numbers. It just seems ridiculous the mark-up on R-22 in terms of how many times retail it is passed on to a customer.
    How do you know what 'retail' is?


    Amp

  5. #5
    Join Date
    Jul 2006
    Posts
    6,450
    Ile make you a deal. I will charge you the extra gas my vans use to haul it around,the time and expense it took to get the license. Time to and from the supply house and well call it even.
    If we charged what it cost time and materials it would be even worse. Imagine being charged t/m for a 2 hr trip to a supply house plus truck charge.

    There has to be a way to recoup the money it costs us to run a business. If someone charged you cost for r22 i can promise you they are making that back 100 times somewhere else.
    You sure are cocky for a starving pilgrim.

  6. #6
    Join Date
    Dec 2002
    Location
    Houston,Tx.
    Posts
    15,826
    I guess Spudman needs to be sent this letter from his service company, by the way I did not write this and I don't know who did, but whoever did you get the credit.

    Date

    Name
    Address
    CityState, Zip

    Dear Mr.

    I'm responding to your phone call/letter expressing dismay about our prices. Yes, we do charge more than some other companies in the area, though not as much as others. I make no apologies for our pricing. I learned a long time ago that it is far better to offer a more expensive, quality service and explain our prices every once in a while than to skimp and have to live with a reputation for poor quality forever.

    It is precisely because we share this concern and that of our clients request for up front pricing that we have implemented our up front pricing system.

    Up front pricing is relatively new to the plumbing, heating and air-conditioning industry, but it is Old Hat to the appliance repair, automotive industries, Doctors and Dentists, actually most professional service industries use it.

    Based on 25 years experience and over one million completed jobs, we now build the price for each job type by applying the material, average labor, overhead and profit to each of these jobs. With this system, our clients now get what they truly want,The cost before the work is performed. Nor do you pay extra if our technician takes longer than the average amount of time required performing the work.

    By removing the unknown of how much the job is going to cost, we believe you are better able to make the decision of whether or not to have the work done. Up-Front Pricing also gives you peace of mind, because you are not watching the clock and wondering is this man ever going to finish? Or how much is this going to end up costing me, And it allows our people the time to do the job right the first time and to leave your home as clean or cleaner then it was before he arrived

    Why do we charge more that some? It's a fair question. Let me endeavor to answer. First, our prices are not set by happenstance. They aren't set to the level we think the market will bear. Neither are they set to the level our competitors charge (that is price fixing and illegal). Our prices are set so that we can keep one dime out of every dollar after taxes. I think that's fair.

    The fact is that our prices are based on our costs and only our costs. 4 times a year we sit down with our accountant and adjust our prices based on his experience and knowledge over our overhead. Out of every dollar we charge, we must pay for:


    „X Our technician's salary, we only hire the best so we can provide you with the best service.
    „X His worker's compensation,
    „X His social security, his medical benefits,
    „X His uniform,
    „X Ongoing training,
    „X Tools
    „X The truck and proper maintenance
    „X The finance charges on the inventory he carries,
    „X The gas in the truck,
    „X The insurance for the truck,
    „X Our business insurance,
    „X Our state licenses,
    „X Our telephone line charges and telephone system,
    „X Our Service Manager to answer the phones and dispatch the technicians (keeping track of the progress of every job to keep you informed when you can expect the technician) and their overhead,
    „X Our computers and our software,
    „X Office workers to enter information into the computers and their overhead,
    „X Accounting,
    „X Billing,
    „X Tax and legal services,
    „X An after hours answering service,
    „X Yellow pages advertising and other advertising media you may have used to contact us,
    „X Membership in professional and trade organizations,
    „X Reserves to ensure we can honor all of our warranties and guarantees,
    „X People to fill out dozens of forms and reports for various government regulators, taxes,
    „X And on and on it goes.

    It costs a lot of money to run an organization that is prepared to respond promptly (or at least respond the same day) to people like you who call us in a crisis because they do not have their A/C or Heat working. You don't want to wait three days, until we can get around to it. That means we need extra resources standing by. Resultantly, faster service is more expensive.

    Yes, there are some in our community that charges less and more. There are some that hire less qualified personnel, who make lots of mistakes and must go back and correct them. There are some that do not train their workforce to keep them up to speed with current codes and practices. There are some that drive beat up old trucks, which will leak oil all over your driveway or in front of your home. There are some that do not conduct background checks on their employees or perform drug tests to ensure that you won't have to worry about a service technician returning at night to rob you to support a drug habit (please do not scoff; this is a very real problem in our industry). There are some that do not carry the proper level of insurances to protect you in the event of a catastrophe. There are some that cut lots of corners.

    It is each consumers decision what type of company they wish to establish a professional business relationship with. Many with a professional full service company like ours, and some with the bare-bones type of A/C and Heating company. That is what makes the Free Enterprise System work.

    I can understand how you might be upset. If you walked into a nice steak house for dinner, you might also be upset to learn that you could have gotten a dinner at buffet style restaurant for far less. Different businesses charge different prices for what appear to be similar products and services every day. Yet, rarely are the products and services truly the same. There are always differences.

    When you called us, you may not have wanted the quality of service and level of protection we offer. You did want our speed of response, however. The problem is that the quality of service, level of protection, and speed of response we provide come together as a package. We can't break them apart or isolate one aspect of our service from another.



    I think it is fair to say that you understood what the cost was when you agreed to the service, just like you understand what the cost of a dinner is when you order from the menu at a restaurant. When you order a dinner and eat the meal, I doubt you try to walk out on the check even though you might think it's pricey. I would hope you give us the same consideration. We rip nobody off!

    I'm not here to make excuses. I merely wanted to offer an explanation. I hope you have a better understanding than you did when you called. If, for example, your bill was $350, it cost us $315 to provide you with that service, including taxes. We will only keep $35. I think that is fair!
    Thank you for your time and understanding.


    Sincerely,
    __________________________________________________ _______________________
    “Experience is a hard teacher because she gives the test first, the lesson afterwards". - Vernon Law

    "Never let success go to your head, and never let failure go to your heart". - Unknown

  7. #7
    Join Date
    Jul 2006
    Posts
    6,450
    Im keeping that...
    You sure are cocky for a starving pilgrim.

  8. #8
    Join Date
    Jun 2005
    Location
    Winston-Salem NC
    Posts
    1,133
    Lol. I make it a point to charge a fair price. I make no bones about turning a profit, because it should be obvious that I do this for a living. No sane person goes out, crawls under houses, into attics, up on roofs at all hours of the day and night, in all kinds of weather conditions and preforms hard, technical work, just for the fun of it. There has to be some pay off other than the sense of satisfaction that comes from a job done right. And here in America, that usually equates to profit.

  9. #9
    Join Date
    Oct 2003
    Location
    las vegas
    Posts
    1,505
    this allergy season i had a series of kenalog shots @ 125. each.
    im sure the dr. , being the good guy he is was only charging me his cost
    for the product. there are costs associated with the proper charging
    of a system that i guess we are just supposed to absorb because
    you need cool air.

  10. #10
    Join Date
    Mar 2008
    Location
    Long Beach, CA
    Posts
    3,294
    Quote Originally Posted by spudman9 View Post
    I have a 10.5 year old heat pump (of course only 6 months out of warranty) that developed a leak last fall. Since the back up heat worked all winter I never knew (other than excessive propane use). Now with cooling upon us, I quickly discovered the system wasn't working.

    Original installer came out and discovered a compressor leak, noticing oil laying in the pan. He recharged the system with 15lb of R-22 and said he would come our for a leak test and repair.

    Two questions:
    The price of the R-22 recharge was marked up nearly 4 times from a retail figure. Is that normal or am I being gouged?

    Secondly, with a 10 year old unit, should I consider a replacement or repair.

    I have a Lennox 4ton system installed complete with furnace 10 years ago.

    Thanks in advance for all your advice, mods- I'm trying to determine a reasonable mark up, not looking for price or cost.
    Spudman,
    The word “gouging” used on this site is a four letter word. You will be attacked for just using it or inferring that it is ever done in the HVAC industry. That is mainly why pricing is not allowed so a person cannot get a baseline for industry standard pricing.

    A 400% markup on anything is absurd but you will get no acknowledgement of that here. In construction where we very infrequently show material costs our markup is between 25 – 35%. We make our money on labor and do OK at the end of the year in spite of overhead costs.

  11. #11
    Join Date
    Dec 2002
    Location
    Houston,Tx.
    Posts
    15,826
    Quote Originally Posted by Brian GC View Post
    Spudman,
    The word “gouging” used on this site is a four letter word.
    A 400% markup on anything is absurd but you will get no acknowledgment of that here. In construction where we very infrequently show material costs our markup is between 25 – 35%. We make our money on labor and do OK at the end of the year in spite of overhead costs.
    Yea, they do the same in Houston they hire Illegals or cheap labor at $7.50 an hour "maybe" so yes they do ok at the end of the year also with just labor, at a 400% markup on there labor, but I guess thats ok.

    Brian, I am not one to get into a big argument with anyone, but I don't think the statement you made is fair, I will leave it at that, I am sure you will hear lots more here, so I will bow out, have a good day sir.
    __________________________________________________ _______________________
    “Experience is a hard teacher because she gives the test first, the lesson afterwards". - Vernon Law

    "Never let success go to your head, and never let failure go to your heart". - Unknown

  12. #12
    Join Date
    Oct 2003
    Location
    las vegas
    Posts
    1,505
    MOST of the gc's that i have worked with over the years are what i call paper contractors & are always working on someone elses dime,& sub out 99%
    of the work.
    very few have enough stock to build a storage shed but when you put up the front money they will do the job.
    we on the otherhand have a large investment in inventory, some of which may stay on the truck for a few months because we know that part will
    be needed & sometimes the partshouse isnt just around the corner
    personally i carry approx. 15k in parts & pieces & normally can complete
    a repair job on the first trip out. in my opinion that type of service
    commands a reasonable profit. in addition there is approx. 25k in instrumentation & tools. quite an investment for one service vehicle.
    i know the large companys probably dont stock like i do but they have a real heavy investment. for what its worth there are some parts that there is more than 400% markup. nothing comes off that truck without someone buying it.

  13. #13
    Join Date
    Oct 2003
    Location
    las vegas
    Posts
    1,505
    bill
    you know that they just pass that labor thru at cost plus 10%
    because they are always crying about loosing money on every project.
    when was the last time you saw a gc with work clothes on & dirty hands

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