It’s like trying to hit a moving target with both eyes closed. In today’s HVAC market, the variables around pricing are in constant flux — whether it’s costs associated with labor, raw materials, transportation, or tariffs, contractors are dealing with more and more consequential disruptors that are putting increased pressure on margins.
But the solution here isn’t to respond to every cost increase with a knee-jerk price change. On the flip side, contractors also can’t ignore increases until their profitability has already taken a hit.
Steve Howard, founder of the ACT Group Inc., said the real issue in a volatile environment is not simply how often contractors revisit pricing. It is whether they have a disciplined pricing strategy in the first place.
“A pricing for profit process allows you to know when and how much to adjust pricing during a rapidly changing economy,” Howard said.
A job-by-job exercise
Mike Luongo is the president of Total Home Supply in Pine Brook, New Jersey. From his perspective, many contractors are no longer relying on set schedules to adjust pricing — instead, they are responding to the project in front of them.
“From what I see, the average contractor is updating prices when he quotes the job,” Luongo said. “Due to the instability of the market, pricing can fluctuate. Although it is not as bad as during COVID, many manufacturers are still raising prices, blaming the rise in the cost of raw materials, transportation costs, inflation, etc. Unless the contractor is stocking products, they seem to be quoting based on the most current cost.”
This job-by-job approach is especially important in the commercial and industrial sectors, where no two projects are the same.
Ken Misiewicz, president and CEO of Pleune Service Company (ACCA bronze member), said the majority of his company’s work is technical and unique to the space, meaning pricing is unique to each job.
“Sizing, features, addressing code changes, energy efficiency, up front versus lifecycle costs, budgetary considerations, etc., all play a role,” Misiewicz said. “In the service department, margins are reviewed at the customer level intermittently throughout the year and then formally addressed during preventive maintenance renewals. At the department level, hourly rates, truck charges, and overhead (burden) are addressed through the annual budgeting process. If no changes are needed throughout the year, we tend to leave them unchanged, however, if inflationary pressure is driving margins down, we’ll address the issues of the day in real time. We are never quick to react — we want our customers to know we’ve done what we can to contain and stabilize costs before making the painful decision to raise rates.”
Price adjustments are more than just math — they’re a customer relationship balancing act. Move too slowly and the bottom line takes a hit, but move too fast and the hard-earned trust is gone.
Discipline beats reactions
With tariff news and other high-impact changes, like the price of fuel, in a seemingly constant flux, contractors need to get disciplined on pricing reviews.
Howard suggests that instead of reacting to every change, set a profit goal and let the numbers determine when it’s time to adjust.
“A pricing-for-profit process allows you to know when and how much to adjust pricing during a rapidly changing economy,” Howard said. “Review the gross margin after every job — If you miss the target GM, determine what cost(s) cause the loss and take action accordingly.”
In other words, pricing conversations shouldn’t wait until manufacturers raise prices again or the cost of fuel spikes. Those events should feed into a larger system that’s already tracking whether a contractor is pricing work profitably.
Small costs can create big problems
Contractors who aren’t keeping up with all the latest changes are the ones who are most likely to suffer damage to their businesses.
“Any contractor who is not paying attention to the latest prices will get hurt,” Luongo said. “I feel it is important to watch the little things, as they add up very quickly. Many of the supplies a contractor keeps on his truck have increased, albeit a small amount, but still, they carry a higher cost. These items must be taken into account, and make sure you price your jobs accordingly.”
That’s an easy area to overlook because it’s not what’s grabbing headlines — a 10% equipment increase announcement from a manufacturer is going to be noticed, but it’s the small material and supply increases that are quietly eroding margins. A few dollars here and there multiplied across multiple trucks and technicians becomes real money.
Luongo said he’s also seeing upward price pressure on labor, and contractors are compensating for that with increases. Product category matters, too. If a job includes products that have seen larger increases, contractors have little choice but to quote higher prices. Some may absorb smaller increases when possible, but that decision is usually job-dependent.
“I think most contractors are assuming prices are rising,” Luongo said. “We see contractors asking for us to match the price we quoted a month or two ago, as they believe the product cost is now higher. This is true in many cases, and we find ourselves trying to absorb some of the increased cost for our better customers.”
How to stay current
The challenge is not just knowing that costs are moving, but building systems and habits that can keep pricing current without it being a mad scramble.
Misiewicz added that while margin targets haven’t changed, they are tightening the review process, and ensuring they’re getting information from sales, accounting, purchasing, and operations helps us achieve fair and consistent pricing.
“The volatility in the market has been particularly difficult. It’s one thing to calculate pricing for your work and make a proposal, but we want to give our customers adequate time to make an informed decision (historically 30 days) with firm pricing,” Misiewicz said. “Extreme swings in material and equipment wholesale costs (e.g., tariff impacts, the 2025 A2L shortage, petroleum costs affecting glycol pricing) with short windows of held pricing puts us in a position where customers feel pressured, and it’s beyond our control.”
Misiewicz said they also import standard duct and piping components into their estimating software regularly to make sure they’re current.
“Service parts and equipment replacements are priced using direct contact with wholesalers or reps, and once approved, we order directly from the vendors that helped,” Misiewicz said. “Our wholesalers also do a very good job of communicating impending pricing changes — they’re living with the same volatility, so it’s not perfect, but they try to be proactive.”
Pricing for value
While raising prices is becoming more and more necessary to keep businesses afloat, there is always the concern that a contractor could lose a competitive advantage in their market. But Howard said a good contractor will charge what they’re worth.
“The price contractors charge is determined by the benefits buyers receive,” Howard said. “To justify the highest price, have the skill to document the greatest benefits.”
COVID was a nightmare, but it did come with a few valuable lessons on staying proactive on the business side of things. The industry is now seeing other large-scale disruptive events, like refrigerant changes or war in the Middle East, and contractors are more vigilant when it comes to setting prices that reflect reality.
Transparency and customer relations
Luongo cautioned about where to raise prices and to be aware of the current sentiment of the consumer.
“I think the smart contractor will simply raise his quoted price rather than adding surcharges for fuel or credit cards,” Luongo said. “Consumers do not like the add-ons. They know things cost more, but most consumers find the add-on surcharges insulting. It is also easier to justify a price than to have to explain the additional fees that used to be part of doing business.”
Misiewicz said they’re very transparent about pricing changes, and their service street and contract rates are clearly communicated and agreed upon up front.
“We made a philosophical decision not to utilize surcharges due to the complexity of calculating how much, for how long, and concerns around customer perception,” Misiewicz added. “We never want to be in a spot where we are seen as taking advantage of a crisis or gouging, so we decided we’d give up some margin when fuel and vehicle expenses increase until we can legitimately adjust our truck charge to reflect the aggregate impact. Maybe we’re overly conservative, but trust built over decades can be easily eroded by anything that is not perceived as fair by the customer.”
That trust is central to how Misiewicz said he’s approaching pricing conversations. The more that’s communicated up-front and in the open, the better.
“Construction proposals are presented as hard numbers to be approved, and change orders follow contractual limitations,” Misiewicz said. “The conversations are never easy or fun, but they never will be. No one wants to pay more, but our customers are well-informed professionals who understand what’s happening in the world.”
This article was originally featured in the Summer 2026 edition of ACCA Now Magazine. ACCA members can read the full magazine at https://hvac-blog.acca.org/magazine/.
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