Informing & Supporting
Conditioning Air Professionals & the Industry
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Tampa, US
2:40 pm, April 13, 2024
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Remember Warranty Costs in Pricing by Ruth King

“Our warranty costs are eating our lunch!”

“What’s going on?”

“There’s a recall from the manufacturer and we have to install a new part. The manufacturer is supplying the part and telling us we have to supply the labor. It’s really expensive.”

“Did you put any warranty cost in your pricing?”

“No. How much should I put in?”

The answer to this question depends on your yearly warranty costs. This was an extreme case with a product recall and replacement. But the company didn’t have a warranty reserve on their balance sheet to take care of this issue.

Generally the warranty expense added to proposal estimates is 1% to 2% of material/equipment costs. However, it is best to calculate your warranty costs for the previous few years and divide that into the equipment/material costs to get your percentage.

I will show you how to account for warranty costs next week.

Did you check your bank accounts online today? This is the first step in protecting your hard-earned cash.

Get the tools you need to grow profitably, build wealth, and live the life of your dreams.

Ruth King is well known as “The Profitability Master.” She is passionate about helping small business owners become profitable and stay profitable. For over 40 years she has coached, trained, and helped contractors and others achieve the business growth and goals they wanted to achieve.

Contact Ruth by emailing ruthking@hvacchannel.tv.

Visit www.financiallyfit.business to get your business financially fit in less than 10 minutes a month!

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