How Can I Avoid Losses on Warranty Calls Without Covered Refrigerant?

A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.

Contractor Question:

“What should we do when rising refrigerant costs aren’t covered under a 10-year warranty, like in the case of a coil leak 8 years in? Should we eat the cost or bill the customer?”

Contractor University Expert Response:

“The concern about losing money on refrigerant over time might be a bit overstated. Breakage is part of the business—you win some, you lose some.

Yes, refrigerant costs will probably continue to rise. But if the agreements are priced correctly, these situations don’t happen that often—and the cost should already be built into the pricing model. We update parts pricing regularly now, even monthly, to stay ahead of rising costs.

Chances are, the warranty was purchaed from the manufacturer but you still needs to maintain a departmental financial statement. That’s how you track gross profit per hour and sees where your margins stand. If these kinds of cost increases are showing up, it’s a sign you need to adjust your service rates.

I can almost guarantee your rates are too low. In my companies, across five markets, we’re charging $525 per labor hour in flat rate. That covers wages, warranty risk, callbacks, inefficiencies—you name it. These costs don’t get absorbed; they get priced in. “

Contractor University members can click here to log in to their member dashboard and submit a question through the Ask the Expert portal.