What to Charge for Parts Under Warranty

An HVAC Contractor in Idaho asked:

“I want to know what to charge for parts under warranty?”

EGIA faculty member Gary Elekes explained that there are two scenarios that contractors need to be prepared for: either the parts are under warranty with your own company, or a part is under warranty for another company.

“Obviously, if its under our warranty we’ve already reserved and organized around that,” said Elekes. However, Elekes explained that you still charge for labor of installing the part, and that that also tells customers how much you charge for labor — which is something companies may not want to do.

“If you’re $75 an hour, you’re probably not going to be having customers upset with you because it doesn’t sound unreasonable,” said Elekes. “If you’re $350 an hour, like we are, there’s gonna be some people that are gonna be pretty unhappy about that number staring at them.”

Elekes explained that to protect his company from this situation, he creates a special ‘in-warranty’ labor rate. “We charge a reduced rate basically so that we don’t expose a client to the overal, full labor rate,” said Elekes.

Gary Elekes is serial entrepreneur with a passion for helping others become more successful by sharing what he has learned over the past 3 decades working closely with all facets of the contracting industry. During his career, Gary has held senior management positions at Lennox and Service Experts.

Our faculty members have also answered questions on other topics related to system sales, including Competing with Internet Prices for HVAC Products and Handling Customers’ Questions About Pricing.

Hear more from our “Ask The Experts” faculty members on “Cracking The Code,” our weekly web series.

Contractor University members can click here to log in to their member dashboard and submit a question through the Ask the Expert portal.