jerryc41 Loc: Catskill Mts of NY

A local plumber was bought by Sila, a company owned by Morgan Stanley, a few years ago. Their hourly rate is now $800. Morgan Stanley has bought fourteen HVAC companies in the past year. Competition? What competition? This is the second local plumber bought by Sila. Both were started by individuals right in this locality, and now they're not in competition with each other - not really.

https://www.crunchbase.com/organization/sila-3227

Longshadow Loc: Audubon, PA, United States

$800???

NOT ME!

tradio Loc: Oxford, Ohio

Sounds like if you bought a van and some pipe wrenches, you could make a fortune.

47greyfox Loc: on the edge of the Colorado front range

That explains why a local Denver HVAC company wanted $450 to replace a furnace igniter element and $400 to install a smart thermostat that I supplied. I did both myself in about 45 min total.

StanMac Loc: Tennessee

Capitalism at work. If you don’t want to compete, buy your competitors so you can set pricing anywhere you want it. And deceive your customers by keeping the name of the company you bought.

Stan

sippyjug104 Loc: Missouri

The HVAC trade has been my lifetime career. I retired as one of the partners in a full-mechanical services business with 300 employees in the pipefitting, plumbing, fire sprinkler, sheet metal, building automation, security, and service repair and replacement. We had offices in three locations in the State so I know a bit about the "why and how" pricing works.

The major portion of the prices that the Trade Unions drive the contractor charges. When I retired in 2017, the wage rate for a man-hour was $86 plus. In addition to the wage, we had to pay $0.05 per man-hour to the Union as an "Association Fee". Of course, we had to pay FICA tax equal to that amount withheld from the employee. Now, take that times several hundred men working 40 hours per week and it adds up big quite fast.

Home office expenses, support staff, warehouse and inventory, fleet of trucks with inventory, fuel, maintenance, and insurance, uniforms, tools, equipment, specialized instruments and diagnostic tools, fabrication machinery, safety equipment, specialized training, and on, and on, and on. And these were only the tradesman directly related costs, not the indirect business costs.

Our labor rate in 2017 was $140 per hour at the time and it is pushing closer to $200 today so the $800 figure sounds quite off unless that was a "flat rate price" for a task-specific job. Automotive repair shops use flat-rate pricing quite often which is much like buying a Number One Combo which is a hamburger, fries, and soft drink at a flat price (plus tax of course).

BigDaddy Loc: Pittsburgh, PA

For the first time in my life I hired a plumber to do some work for me. Took him two hours and charged me $450 for labor and a few dollars in parts. I expected the expense but thought that was high, even though my doctor charged $300 for a 15 minute pre-cataract physical to ask me if I had any allergies. At least I got something of value from the plumber. The physical was required even though I just had a full annual wellness physical 2 weeks prior, but need another one less than 30 days from scheduled surgery. Best part was each were in different years, so my deductible I had to pay both times.

47greyfox Loc: on the edge of the Colorado front range

I think you've got it spot on! The big (lots of trucks, lots of techs) HVAC service company I occasionally use uses a "flat rate" schedule as you describe. Similar to a car dealership shop.... When I got quoted $450 to replace a furnace igniter, I figured I was paying for more than the guy standing in front of me and that $30 part. Two years I got a quote to replace a furnace and A/C system from the same people. I think the number was about $12700 or so. In November when I asked out of curiosity, the number was over $17000 for a unit not quite as good as the one originally quoted. I know parts scarcity is a contributor, but cost of doing business has to play a part as well, including labor for a fleet of technicians.

Longshadow Loc: Audubon, PA, United States

$400????????? For replacing a thermostat???????? That YOU supplied???????
Two screws, and 2 to 4 wires (Ours are 2 wire)......

My local HVAC guys are great, as well as their prices.
The igniter I'll let our guys replace.

47greyfox Loc: on the edge of the Colorado front range

Yup, a Ecobee smart thermostat that replaced a Honeywell two wire hookup to an interface box on the furnace. The interface box wiring had to be bypassed to the furnace terminal box. But, all wires were there and it was still relatively easy. Oh, and that included programming.

Longshadow Loc: Audubon, PA, United States

Wow!
My dumb thermostats can only be programmed with temps at times.
Heater(2) and A/C(1) are separate, both two wires- on/off.
I'll stick with my stupid thermostats......
10-15 minutes to replace.

StanMac Loc: Tennessee

Is that labor rate what the technician gets in his paycheck, or is it what the fully loaded labor rate is for cost accounting and estimating (includes overhead allocations, equipment loading, benefits, etc.)?

Stan

LXK0930 Loc: Souh Jersey

I am also in the market for a new HVAC system. I live in southern NJ.
A local contractor told me a similar story about the state of the industry here- smaller contractors being gobbled up by the giants. I am still getting bids from local independent vendors.

jerryc41 Loc: Catskill Mts of NY

It worked for Abe's of Maine - for a while, anyway. I think the name of the company should be changed if there are new owners. It's not the same company, so why use the same name?

HOHIMER

Jerry: Sometimes the name alone is worth the price paid for the whole company. Especially if it is a long-standing reputable local name everyone knows and trusts. Customers think it is LOCAL, not part of an out-of-state conglomerate. The name, Mom and Pop Hardware, appeals more to some people than the name, Mega Big Box Hardware Company, Inc.