How Inflation May Impact Home Services — And What Contractors Can Do Next
Updated: Aug 30, 2022
Home services contractors, take note — economic conditions are deteriorating quickly.
Inflation has spiked to record highs, sending the costs of just about everything soaring. The Fed is raising rates at a more accelerated rate than many expected. Companies are announcing layoffs as they try to curb spending. A recession is looming — and all of the above will impact the cost, competition, and availability of home service contractors.
As lending sources tighten their credit standards, home contractors need to start future-proofing their businesses now. Here’s how a recession may impact your home services business and what you can do to navigate the storm without losing your shirt.
Inflation’s Impact on Home Services
Inflation happens when there’s an imbalance between supply and demand. As demand goes up and supply goes down, the cost of goods increases. That’s not because they’re suddenly worth more. It’s because people are more willing to pay for things if it means getting what they need or want, given the short supply.
Home services aren’t immune to this effect. Whether you’re installing an HVAC system or water heaters, for example, the price you charge the customer is going to increase. The reason for this is twofold: first, your materials are going to cost you more. A price increase in one area often costs a price increase in another area (e.g., increased fuel costs lead to increased costs of goods, and wages).
And second, if you’re not raising your own prices, you’re losing money. Your revenue isn’t worth as much as it once was, even if you’re charging customers the same as always.
How Home Contractors Can Prosper During Inflation
There’s no way to avoid inflation. The big question: what are you going to do to prosper in this environment?
Our advice — think like a customer.
The need for home comfort doesn’t disappear during financial uncertainty. Like you, your customers are going to be struggling financially during times of inflation. One way to earn their business is to offer a worry-free service while helping them save money. That’s where a home services lease comes in.
A lease for home services works a lot like a lease for a car. Instead of buying it outright, a homeowner can lease the system and have all their installation, maintenance, and repairs covered worry-free!
Service 1st Financial facilitates leases on HVAC systems, water heaters, and other home needs through strategic HVAC partners (like you!) that conduct the sale and install.
We help contractors provide their customers more options to get what they want from their comfort systems, which is worry-free comfort in their home, and not just what they can afford, all without taking on a significant investment upfront. When you can make life happen for the people you serve, they’ll thank you for it.
We’re trusted by some of the biggest names in home comfort, including Halo, Nexstar, Dynamic, Fujitsu, Hero, Dilling, Precision, and more. Reach out to learn more about how we’re transforming home comfort in the U.S. while delivering a better experience to cash-strapped consumers.