Why smart HVAC contractors treat warranties like revenue

Let's be honest: when most HVAC contractors think about warranties, they get the same feeling as when the dentist says "this might sting a little."

It's that necessary evil. That thing you half-heartedly mention at the kitchen table, hoping the homeowner doesn't ask too many questions. And if they do? Well, you're already mentally calculating how much to knock off the price to close the deal.

But here's the thing: you're doing it all wrong.

And it's costing you way more than you think.

What Are HVAC Customers Really Buying? (It's Not What You Think)

When a homeowner drops $12,000-$15,000 on a new HVAC system, what are they actually buying?
If you said "a new HVAC system," you're technically correct. But you're also missing the entire point.

They're buying peace of mind. They're buying protection from the unknown. They're buying the ability to sleep at night knowing that if something goes sideways in July when it's 110 degrees outside, they're not going to be hit with a surprise $2,000 labor bill.

As Kevin Thornton (VP of Dealer Business Services at JB Warranties) put it on our latest podcast: "Besides their house, maybe a roof and a car, this is the next biggest purchase they're gonna make. And oftentimes it's during a time that they weren't expecting it."

What Do Manufacturer Warranties Actually Cover? (And What They Don't)

Here's what most homeowners don't understand (and what too many contractors don't explain clearly enough):

Manufacturer warranties cover the PARTS. Not the labor.

So yeah, if that TXV valve fails, the supply house will swap it out for free. Cool. But the 3-4 hours of labor to rip out the old one and install the new one? That's on the homeowner.

And here's the kicker: refrigerant isn't typically covered either.

This is where extended labor warranties come in. They fill the gap that manufacturer warranties leave wide open.

Where Smart Monitoring Fits In

Extended warranties are most effective when contractors have real visibility into how systems are actually performing. That’s where smart monitoring platforms like SmartAC come in. By providing 24/7 insight into system health—such as airflow, temperature performance, and potential failure indicators—SmartAC helps contractors identify issues early, reduce surprise breakdowns, and protect both the homeowner experience and the warranty program itself.

When monitoring data is paired with extended warranties, contractors are better equipped to deliver proactive service, strengthen long-term customer relationships, and turn protection plans into a true competitive advantage.

How to Sell HVAC Warranties: The Pricing Strategy That Stops Objections

"But Wes," you're thinking, "warranties scare customers off. They see that extra $1,500 on the quote and suddenly they're comparing me to the guy who came in $1,000 cheaper."

Fair point. But you're making a critical mistake. You're treating warranties like a line item instead of like an essential component of the system you're selling. Should You Use Line-Item or Bundled Pricing for Warranties?

The answer is simple: always bundle. Here's how Kevin Thornton explains it:

The Happy Meal Strategy

"Think about it: when was the last time you bought a 'happy meal' and then negotiated to remove the fries to save 50 cents? You don't. Because it's a package. It's bundled. The price is the price."

The same principle applies to HVAC warranties. Don't give customers the option to mentally subtract items from your quote. Bundle the warranty into your good/better/best packages and present it as a complete solution.

What If a Customer Balks at the 10-Year Warranty Price?

Here's the sneaky-smart part: if a customer balks at the 10-year warranty, don't just drop it entirely. Offer them a 2-year renewable warranty instead. Get your foot in the door, build trust with exceptional service, then renew them out to 10 years once they've experienced your white-glove approach.

You're not losing the sale—you're playing the long game.

Why Extended Warranties Increase HVAC Business Value (4 Hidden Benefits)

Sure, warranties are good for homeowners. But the real magic happens for your business. Here's what happens when you add a JB Warranty to every install:

1. You Own That Home for 10 Years

The contractor who installed the system with the warranty is the dealer of record. That means only YOU can do the warranty work. No competition. That home is yours.

2. Mandatory Maintenance = Recurring Revenue

For the warranty to stay valid, the system needs regular maintenance (1-2 tune-ups per year depending on manufacturer). Translation: built-in membership sales and predictable recurring revenue.

3. Your Business Valuation Just Went Up

If you self-insure warranties, that's a liability on your books. If you use a third-party administrator like JB Warranties, those warranty contracts are an asset. When it's time to sell your business, recurring revenue and contractual relationships = serious valuation multipliers..

4. Cross-Sell Opportunities Everywhere

Got a customer with a water heater less than 2 years old? You can put a warranty on that even if you didn't install it. Same with secondary HVAC systems, generators, plumbing... you're creating stickiness with the customer across all their systems.

What Actually Drives HVAC Quote Conversion Rates?

Kevin dropped some serious knowledge about what actually drives close rates:

"The biggest thing that we find is speed to lead is the most important. If you can't get back in touch with them until the next day or two days later, they've moved on."

Responding within 5-30 minutes of a lead coming in is critical. Because there's a trigger event—something broke, something's not working, they're uncomfortable—and if you're not there to respond quickly, you're already losing. But here's where it gets interesting: being able to generate a quote on-site, at the kitchen table, in 10-15 minutes is what separates the pros from everyone else.

Nobody wants to hear "I'll send you a quote tomorrow." By tomorrow, they've already gone with someone else.

How to Price HVAC Warranty Labor Rates for Long-Term Profitability

If you're already selling warranties (congrats!), here's Kevin's #1 tip: Check your labor rate.

Too many contractors sell 10-year warranties with a $100/hour reimbursement rate because they want to keep the price low. But what happens 8 years from now when your actual labor costs are $200/hour?

You're upside down on every warranty call. You're losing money while honoring commitments you made years ago.

Better move: Price your warranties at $150-200/hour and account for inflation. Or use the renewable 2-3-5 year warranties that let you adjust the labor rate when you renew.

Are HVAC Warranties Worth It? The Bottom Line for Contractors

Warranties aren't an upsell. They're not a "nice to have."

Warranties are a foundational part of how you capture homes, build recurring revenue, and create a business that's worth significantly more when you decide to sell.

The top contractors in the country already get this. They're bundling warranties into every quote. They're using them to build moats around their customer relationships. They're turning a "necessary evil" into a profit center.

The question is: are you?

Want to Learn More?

Listen to the full episode with Kevin Thornton for all the tactical details on:

• The difference between manufacturer and labor warranties

• How to position warranties at the kitchen table

• The legal and accounting pitfalls of self-insuring

• How smart monitoring systems (like SmartAC) work alongside warranty programs
• Real KPIs to track for your warranty program

And if you're ready to level up your warranty game, check out JB Warranties at jbwarranties.com to learn how they're helping thousands of contractors across the U.S. and Canada turn warranty programs into competitive advantages.

Beyond the Truck Roll Podcast is brought to you by SmartAC. Each episode, we sit down with industry leaders to unpack the strategies, systems, and mindsets that separate the best HVAC companies from everyone else.

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