HVAC Pricing Increases Continue in 2023
At the risk of sounding like a broken record…here we are again, facing increasing prices again as we move towards the new calendar year. Last year pressures were placed upon the consumer due to super high inflation, as well as labor and supply shortages.
The story has not changed much throughout 2022. We continue to see inflation reaching 7-8%, but it feels a lot worse than that for the consumer. Gas prices have put incredible pressure on the market and California’s grace period for moving to Ultra Lo Nox requirements on gas package AC units ran out this past April. In an instant, suppliers saw an average increase of nearly $800 on their cost for providing these units to consumers.
As if this wasn’t bad enough, the news continues to get worse for consumers as we approach 2023. As we wrote about in our recent blog post (New HVAC Testing Requirements) M1 testing procedures are going result in an increased minimum SEER rating starting on January 1st for Californians. Specifically, heat pumps and split system ACs are going to have to meet a 14.5 or 15 rating under the new SEER2 testing requirements. Rather than try to explain it all in writing, watch this short video for a great summary of what is taking place: 2023 HVAC Regulatory Changes.
What does this mean for me?
Manufacturers are scrambling to make sure their equipment meets the new requirement. As a RUUD Pro Partner, I know that new lines of equipment are going to be here in the very new future to be ready for the hard deadline that California has set. No equipment is to be installed after January 1st that does not meet this requirement.
January price increase: 15-20%
In order to keep from increasing the size of the units while meeting these new standards, many manufacturers are investing in new designs to increase the quality and maintain a compact footprint for their units. None of this is free (of course!) and we expect to see a 15-20% increase in costs to suppliers as the January deadline approaches.
What can I do?
If you know you have an aging unit in need of replacement, you may wish to consider upgrading soon before the supply of the existing systems runs out. Because warehouses don’t want to be left with inventory on their hands that can’t be install in January, they are going to run low on supply very soon. To save money, I highly encourage you to reach out to your preferred AC company and schedule a replacement soon.
As a RUUD Pro Partner we are able to offer 0% financing for up to 25 months for units with a 16 seer rating or better. With the high cost of replacing your AC, the 0% financing is a welcome relief from having to pay so much out of pocket at one time.
Additionally, we have made sure to adjust our pricing according to a flat rate and not a percentage. Many contractors will set a factor to their pricing based on the cost of their materials. At On Time Home Services, we realized quickly that if we continue to follow that formula, that we would be passing unrealistic costs to the consumer. While our profit margin % will be reduced by operating this way, we will continue to provide fair pricing at a margin we can afford to offer.