How to Sell Upgrades with the Incremental Profit Story 

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Industry statistics show that most residential HVAC equipment sales, whether add-on replacement or new construction, still include basic efficiency products. We have made some progress, but we can do much more to reach our full potential.

There are a couple of things going for us. New Federal and State rebates on specific replacement HVAC systems will help create new upgrade opportunities, and many homeowners are now showing an increasing willingness to invest in a “green” choice. One problem with rebates and incentives is that everybody will be able to offer them too. Let us show you how the Incremental Profit Story can help you almost double your bottom line, even in challenging economic times. All you have to do is offer it!

Defined: Incremental profit is the additional net profit generated by any upgrade or add-on product added to the sale when little or no overhead costs or labor costs are added.

See the Math

Example #1:

80% Basic Furnace and 14 SEER Air Conditioner

Job Selling Price = $13,500

Gross Profit Margin = 45%

Gross Profit Dollars = $6,075

Net Profit Margin = 10%

Net Profit Dollars = $1,350

Example #2:

Upgrade to a Hybrid Heat Pump System Installed in the Same Amount of Time

Hybrid Heating System Selling Price = $16,500

Gross Profit Margin = 45%

Gross Profit Dollars = $7,425

Net Profit Margin = 15% (will explain that in a moment)

Net Profit Dollars = $2,475

Why this makes sense for the Homeowner

• Homeowners are increasingly concerned about rising energy costs.
• Many homeowners are inclined toward a “Green” system if it doesn’t cost too much more.
• The customer gets a “green” system that minimizes the use of natural gas for the same out-of-pocket cost.
• The Federal Tax Credit for a qualifying hybrid system is now $2,000.
• There are Utility Rebates for $600 and sometimes more.
• For the Homeowner, this is essentially a FREE Upgrade.

Why this makes sense for the Contractor

• When you deduct the Federal Tax Credit of $2,000 and a Utility Rebate of $600 from the $3,000 price difference between Basic and Hybrid, the difference is only $400. This will get your customers' attention and differentiate your proposal from all others.
• The Incremental Gross Profit increases by $1,350 ($7,425 - $6,075) on the upgraded Hybrid System…with no additional labor cost and no additional overhead because it is installed in the same amount of time.
• The Incremental NET Profit increases by $1,125 ($2,475 - $1,350) because, again, there is no incremental labor cost and no additional overhead since it is installed in the same amount of time.
• The Comfort Advisor makes an additional $300 Commission.
• Homeowners don't like "free money" left on the table. You can raise your profit margin to 15% and still be competitive.

Last consideration…

What is the consequence of not offering this to your customers, and your competitors do?

Give this a try.

Good Selling!



Mark and Tom

P.S. – be sure to check out our NEW Training Platform where you can access many exciting Training Resources that will help your team:

• Recruit for Proven Sales Skills

• Educate on HVAC Fundamentals including effective tools to assist in Selling Upgrades

• Develop PROVEN In-home Sales Skills unique to the HVAC challenge