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Old 09-06-2019, 07:26 AM
 
79 posts, read 111,705 times
Reputation: 39

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A year or so ago I got a couple quotes for central air on my house. The systems proposed were ductwork in the attic space to create a single zone in the upstairs, and then a ductless unit in the ground floor. Quotes came in between $10k-$15k.

This year I started asking for quotes on a heat pump system, figuring that I might as well cover both heating and cooling. The first quote just came in at $25k. What's confusing me is that the system design is identical to the previous A/C systems: ducts in the attic, ductless in the ground floor. I checked some prices and the heat pump being installed outside (Mitsubishi H2i) is about $2k more than the A/C compressor. But otherwise, the proposal I'm looking at might as well be a copy/paste of the A/C proposals I got before.

Any experts out there know what might justify the extra $10-15k in cost?
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Old 09-13-2019, 10:04 AM
 
Location: New Jersey
5 posts, read 929 times
Reputation: 20
I am a technician that has worked for 2 similarly priced companies throughout NJ for the last 4 years. I will try and give you an unbiased opinion on the type of company I think you are referring too.

Before I get into details, companies that are charging more may offer better response time for issues that may arise, longer warranties, more manpower to get the job done faster, better insurance, more qualified technicians, etc.

I have been doing electrical, hvac install and tiling in NJ for 14 years and always worked for other companies until recently. My last 4 years were spent with two major companies in New Jersey that had a much different structure. What I came to understand is that there is a program called Nexstar that offers businesses a full structure on how to operate. Their promise is to grow the business and offer different plans depending on how much assistance you need.

One of the problems I see with this structure is that their prices are through the roof (100% - 400%+ higher than highest average) and it is usually a cut throat environment for the technicians and customers. Profits rise greatly with these Nextar companies, but profit margin doesn't change much. This tells me that a lot of the money is going somewhere and Nexstar is a big corporation that probably has a lot to do with this. One positive is this structure may help raise low pricing and quality concerns throughout the industry. Both of these companies did pride themselves on going the extra mile for the customer and offered lifetime warranties.

The issue I saw is that it is very conflicting for a technician to be told to go the extra mile for a customer and also be drilled all day every day on revenue performance or risk losing credibility and even your job. First of all, to keep your job you need to be bringing in at least 6-10k a week in revenue. Minimum goals are 30-50k a month and they praise the techs through company wide emails that are knowingly taking advantage of customers and bringing in 80-100k+ a month. Some of these techs will say you need a full replacement when there is most definitely other solutions. There is a lot of responsibilities involved in both selling and performing the work. There is a very basic price structure but you are encouraged to up-sell in every aspect of your day. Consistency is an issue if one tech can sell a switch replacement at $200 and the next at $350. I am a very honest person and an extremely hard worker. For me to make an honest living at these companies, I had to work twice as hard and charge less per job just so I could sleep at night knowing I didn't take advantage of customers while keeping at the revenue standards to keep my job.

Technicians hourly rate is lower and less important because this system is based on revenue performance and bonus. There is a significant payout for hitting your weekly or monthly bonus numbers. You can have a great group of technicians, managers and owner, but this Nexstar structure creates a cut throat environment that puts this performance factor way ahead of pricing jobs properly, customer satisfaction, or doing the right thing in any given situation. This is why I recently left these type of companies.

The sweet spot is to find a reputable company that is within New Jersey's average price range that takes pride in their work and are dependable. This is not an easy task and can be found in companies with a single truck or bigger scale operations. There can be a mix of extremely professional and less than professional technicians in any given company. Also it is worth considering that a company should have revenue performance as a high priority in order to stay in business and continue to offer quality services. In my opinion, putting the customer first and doing good work at a reasonable price will sustain business far more than this structure which seems to be focused on lining the pockets of the higher ups. Lifetime warranty doesn't matter as much if you have people doing the work focusing on quality. Say this Nexstar company comes in, does the job in 1 day (until 1 am or later sometimes) and comes back 15 times after the install because they rushed for the revenue and things keep going wrong. Was it worth the extra 10k? It happens more often than it should with these Nexstar based companies. Compare that to a company that took 2 extra days to install and perhaps offered a 10 year warranty and you never needed them back. Another thing that can be confusing is a reputable company can be in business for 30 years and then decided to adopt the Nexstar program for whatever reason. This is what confused me, thinking they are doing something right for being in business so long!

To give one last perspective, these Nexstar companies more often hire salesman over technically inclined tradesman. Comfort Advisors selling hvac installs are paid on commission only and asked to convert 30% of leads given. These advisors make 120k-200k+ annually for doing this job. What company says the goal is to get 3 out of 10 jobs quoted. This means that their pricing is so much higher than the competition that they still win with a 3 out of 10 conversion while paying advisors there high commission. The service departments average around 50-70% but its not often a customer would become a repeat buyer. The only reason I had steady repeat work was because I wasn't pricing to their standard and was working twice as hard to meet revenue numbers.

These are some of my opinions and I hope they help people make educated decisions in hiring a company or who they want to work for. I have learned a lot working for these 2 companies and don't regret anything. This opened my eyes up to another side of the industry and gave me all of the extra experience needed to be running my own company today. Working in a Nexstar program was far from easy, but I have been able to help many people through these companies, while managing to keep a balance between giving into a greedy revenue structure and providing exceptional quality of work. This is probably why similar companies can not maintain good technicians long term. You will get burnt out very quickly.

Best of luck and do your homework!

Last edited by bmeyer7821; 09-13-2019 at 10:43 AM..
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Old 09-13-2019, 01:29 PM
 
3,789 posts, read 3,270,003 times
Reputation: 3710
What is your current heating system? If it's a natural gas hot water system with baseboards, why change it over to hot air heating? That's the best system you can have. Heat pumps don't work well in very cold weather and are expensive to operate.


I've found that plumbers (plumbing, heating, ventilating and AC) are the worse price gougers- even out here in the sticks.


I suggest installing high quality through the wall air conditioners like Friedrich. A carpenter or handyman can do the installation.
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Old 09-13-2019, 03:00 PM
 
2,150 posts, read 2,179,162 times
Reputation: 3661
Bmeyer- do you know if Nextstar is national? I used to live in NJ but moved to FL. Had a similar upsell experience down here. Told us we needed ducts cleaned and a new a/c unit. That was 3 yrs ago and same unit is still running fine. Ducts were spotless. Called another company and they took pictures.
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Old 09-17-2019, 10:04 AM
 
Location: New Jersey
5 posts, read 929 times
Reputation: 20
Macrodome2 - Yes they are nationwide.

I came across a page once that listed all the participating members but can not seem to find it now. Their website says they have over 640 member companies nationwide.

https://nexstarnetwork.com/
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