Looking Back – circa 1964 How to sell hydronics to Canadian builders
By Al BuschelHydronics
An expert brings out some points you may have overlooked.
In this industry most of us sit around saying we can’t sell the builder on hydronics because the price is too high. Well, the fact is that you don’t sell builders on anything—they buy it! And there is a big difference between selling something and getting someone to buy something. The fact is we haven’t convinced Mr. Builder to buy our heating system. Yet he’s buying fancy glass and chrome wall ovens. And he’s paying more than he should for a stove.
Now, all of these items cost more, and none of them are as important as heating. Why then does the builder buy them? Obviously, something’s wrong with us if we can’t get him to buy the heating system that even he admits is the best, and in most cases uses in his own home.
In my opinion the thing that’s wrong with this is that we simply don’t try. We trip over our own mental blocks. We create Frankenstein monsters such as price and then run scared before we even face them.
Now, many contractors are going to say that they’ve tried to sell hydronics to builders. Well, talking to a builder about hydronics in a weak, namby-pamby manner can hardly be called selling. All they’ve done is converse with the builder. How many contractors have even done this much with consistency?
How many have approached the builder with a plan, or a program, or even an understanding of the builder’s problem? Yet they’re content to sit around calling the builder names because he refuses to pay the difference in cost between an air system and a hydronic system. Well, why should he pay more for hydronics? Because Charley the plumber is a nice guy? Or because Charley talks about hot water heating being better?
Yet if Charley talked about hydronics helping the builder sell more homes, and selling them faster, and if Charley gave good sound, tangible reasons for the benefits of hydronics instead of beating his guns about the vague “quality” of hydronics, Mr. Builder would have better reasons to buy.
Idle, valueless quality means nothing to a builder. But functional quality—the kind that works for a builder means a whole lot. All ovens are going to bake a cake. But the glass and chrome jobs look better while they’re baking. And almost all heating systems will pump a volume of heat into the house. But hydronics does it better in many, many ways. Maybe if the builder knew how hydronics could help him sell more profitably he would be willing to buy it.
At any rate, the contractor who sits around lamenting his high price and calling the builder cheap will get no place.
For those of you who are interested in getting into profitable hydronics by learning how to make the builder buy there are a number of approaches that work. I think, though, that it’s important to restate what was said before about the contractor improving his technical knowledge. Also his ability to install more rapidly through the use of the advanced techniques that have been developed. Such basic strengths help reduce the price of the hydronic job to a more attractive level making the approach to the builder easier. Notice that I said “more attractive level.” I did not say that the hydronic price has to be equal to warm air. It can’t be except for some rare architectural designs. Face the fact that a hydronic price is going to be higher than warm air although the actual difference can be narrowed down by updating installation and design practices.
The basic appeal to the builder is simple: he will make more money by using hydronics. He will do this in two ways:
1) By selling his houses faster. This means real money to a builder and you don’t have to explain it to him. It’s enough to say that if a builder sells homes fast; his profit is increased by the amount of unused overhead, which he allowed for each house. This, plus his ability to move into another job more rapidly are important factors to him.
2) By selling an upgraded product. Suppose a builder of a 15 home project upgraded his homes with a hydronic installation that costs him $250 more than the warm air job he had intended using. (Sharp contractors in many areas are installing hydronics for only $100-$150 above warm air prices.) But he sells the house for $500 more than he planned ($250 for the hydronics and $250 for his own profit pocket). On a project of 15 homes with an increased profit of $250 per home Mr. Builder pockets an additional $3,750 profit. On a 25 home job he picks up $6,250. On 50 homes $12,500. And if he’s small and builds only 3 homes per year $750 bucks isn’t bad either. Bear this in mind; his only investment is $250 for the hydronic system in the model house. For this investment the 15-house builder picks up $3,750 or a return on his investment of 1400%! If a builder wasn’t interested in hydronics before I think he would be after hearing that kind of profit story. And what better way to take the price tag off the hydronic job than to convince him of his huge profit potential with hydronics? The difference in cost between your system and the air job becomes peanuts.
Now, someone is going to say that builders won’t raise the price of their homes by $500 to cover the profit and hydronic system. Well, why not? After all, any builder knows that the homeowner buys price ranges rather than flat price. In other words, a $21,000 house is still a $21,000 house even if it’s priced at $21,500 or $21,750 or even $21,990. Why then shouldn’t he shoot for the high-ticket sale? It’s extra bucks in his pocket.
Beyond that, suppose the homebuyer did want to spend less. The builder could reduce the price of this one home and give the buyer a warm air system. This same formula has worked wonders for the automobile business in building the profit picture. Automatic transmission is the standard at a higher price. If a buyer wants a manual shift he can get it. But the auto dealers are upgrading first and only coming down when absolutely necessary. It doesn’t make sense to do it any other way. I might add here that this is another reason why I am dead set against offering hydronics as an optional feature in the home. Sell hydronics as the standard system.
Does this program work? Yes it does—it works beautifully. There’s a progressive contractor by the name of Ed Pepling up in Northern New Jersey who used this plan to build an extremely successful business. Ed does both warm air and hydronic heating so he really is in an excellent position to judge profitability. He also does plumbing. A couple of years back he took this concept and advanced it even further by offering to guarantee the builder the cost for hydronics on his model house. He approached builders offering to put hydronics in the model home at the cost of warm air. If hydronic heat didn’t catch on with the builder’s customers, and if he didn’t sell the model house at the additional price, then Ed lost the difference. If hydronics pulled then Ed got his hydronic price.
Did it work for him? Ed doesn’t offer builders the no risk guarantee any longer. He doesn’t have to because his builders want hydronics as their standard heating system. It’s even affected the custom home market in his area to the point where also every custom home gets a hydronic system.
In 1962 Pepling Plumbing and Heating did over 100 homes with hydronics and he got the plumbing as well. I could go on and on with other case histories to prove that contractors can sell builders on hydronic heating in volume despite the higher cost. But, they can’t do it sitting around shaking their heads.
Mr. Buschel is vice president sales, Slant/Fin Radiator Corp.
Editor’s Note: This article first ran in April 1964 in Automatic Heating/Plumbing/Air Conditioning, later renamed Heating Plumbing Air Conditioning (1965).