What are the top performers in HVAC contracting doing differently? Some answers can be found in a new study from ACCA and Farmington Consulting Group. The two groups teamed up to survey more than 1,000 contractors – ACCA and non-ACCA members – throughout the U.S.

“This study was shaped by contractors, for contractors,” says Barton James, ACCA president and CEO. “We listened to our members, built questions around their biggest challenges, and worked with our partners at FCG to make sure the data would lead to action — not just analysis.”

The majority of the respondents (66%) had the job title of “owner/executive” and 35% ran two-four service vehicles with 21% running five-nine; 15 percent running 10-19 and an equal percentage with 20 or more; and 14% had one truck. In general, 69% of the respondent’s sales were from residential HVAC and 31% were from commercial HVAC.

More options = more sales

Contractors presenting four or more options to customers are closing jobs at 52%. Meanwhile, those offering just one, two, or three options? They’re stuck at 42%.

Plus, these same multiple-option contractors are selling more premium equipment. Their premium mix of products hits 42% compared to just 26% for everyone else. In other words, these top performers aren’t just selling more, they’re selling bigger ticket work. Meanwhile, the research shows that only 10% of contractors are actually offering four or more options to their customers.

Marketing dollars

Most contractors spend about 6% of revenue on marketing and advertising. However, contractors with higher net profits spend double this amount.

Contractors that allocate at least 12% of their annual revenue towards marketing and advertising have a significantly higher net profit (+9%). On the other hand, contractors who allocate less than 12% of their annual revenue towards marketing and advertising (+5%).

What’s more, 57% of these the high-investment shops report growing margins. Among contractors spending less? Only 35% are seeing margins increase. Yet just 15% of contractors meet that 12% threshold. 

There’s also been a major shift in what contractors are promoting. Three out of four are now focusing their marketing on their company brand instead of their equipment brand. As for what’s working to bring in leads, Google Business Profile leads the pack, followed by truck wraps and websites.

Pricing strategies

Flat rate pricing is most common (56%) for service work. But the research underscores the effectiveness of an entirely different pricing mindset. Only 19% of contractors adjust their prices by season. Regardless of the time of year, most shops charge the same rate year-round. The study points to seasonal adjustments, divisor pricing on installs, and flat rate on service as a winning combination.

 Heat pump trends

Not quite half (45%) of contractors say all their heating systems sold for either new or replacement sales are heat pumps. Of course, the regional differences are significant. For example, it’s 87 percent in Florida and 27 percent in the Upper Midwest. Most contractors (81%) are selling air-source heat pumps, and a third have added hybrid systems to the mix with 16% selling ground-source heat pumps.

Meanwhile, brand loyalty isn’t what it used to be. Before 2020, 58% of contractors were single-brand shops for ducted and unitary equipment, buying 90% of their unitary equipment from one manufacturer. Now? That’s flipped with 60% supporting multiple brands. Carrier and Trane still lead in residential ducted equipment, but Mitsubishi has a 31% market share for ductless.

Also, 56% of contractors sell water heaters and 47% sell boilers.

Financing matters

Contractors who offer financing have a close rate of 49%. Contractors who don’t? 38% What’s more, only 37% of contractors offer financing on every single job. 

Among shops that do offer financing, how the terms are presented matters. Lead with the monthly payment instead of the total price, and 42% of sales get financed instead of 21%. Customers also buy better equipment — the base model mix drops 8 points when payments are considered.

Second-look financing (having a backup lender when the first one declines) is another underused tool. Only a third of contractors bother with it, but those who do, finance 35% of sales compared to 23% for single-source shops. Wells Fargo and Synchrony split most of the market at 25% and 24%. Most contractors find their financing partner through manufacturer programs.

Extended warranties

Just over half of contractors (55%) are selling extended labor warranties. Most use a third-party provider rather than self-funding, and JB Warranties has grabbed more than half the market with a 52% share. AIG is second at 21%.

Contractors who include extended warranties in the total cost of the job on average make a 6 percentage point higher margin on their extended labor warranties (30%) than contractors who offer extended warranties as a separate add-on option (24%).

Ten-year terms are the most popular (48% of sales), with five-year agreements coming in second at 20%.

Software choices

Just over half of contractors now use field service management software. Service Titan dominates with 31% market share, followed by Housecall Pro at 16% and FieldEdge at 12%. But adoption varies wildly by company size—83% of large contractors (defined for this study as those with 10 or more service vehicles) use field service management software while only 31% of small shops (those with fewer than five service vehicles) have made the jump. If you’re an ACCA member, you’re probably already onboard (80% adoption). If not, it drops to 47%.

Here’s something to consider if you’re shopping platforms: Those contractors responding to the survey said they were up and running on Housecall Pro in about three months. Service Titan? Plan on eight months. On average, contractors report that the implementation process with software took five months.

What do contractors want from these platforms? Better integration with accounting software tops the list, followed by improved customer service and improved tracking of maintenance agreements. 

On a related tech note, one in three contractors are using AI with most using it for answering phones, summarizing service calls and responding to reviews automatically. Younger contractors (those under 45) are adopting it faster, hitting 43% usage.