Posted by Charley Cormany, EFCA Executive Director
We started as an insulation company and then added HVAC. Once we got those services down, we slowly added new measures to our home performance toolkit to help increase job size and smooth out seasonality. Here are some of the ones that worked for us, and some of the ones that we struggled with.
1. Solar PV
Solar is one of the easiest measures to add to your home performance offerings. Unlike home performance, selling and installing solar PV is much more straightforward.
The best way to start out is to find a small, local solar company that you can partner with for installation. You can get a good subcontractor price from the solar company and then charge a premium to your client. Ask the solar company to train you on solar sales and go do some initial site visits together. I found that it only took a few visits and then I could handle solar sales myself. There are some well-established software options to help you put together proposals (check out CPF tools). These can easily be learned in a day and they will allow you to prepare a very nice proposal that looks comparable to what the big solar companies produce.
So what is the profitability of adding solar? In our case, our solar partner’s installation cost was around $3.25 per watt. We would then charge our clients $4.00 per watt. Our average solar installation size was around 4,000 watts (4 kW) which means a $3,000 profit.
Once you start asking your clients about solar you will be surprised to learn how many of them are planning to do solar and you didn’t know about it. All you need to do is ask and they will be happy to get a bid from you. Think about how much money you have spent on marketing and outreach in order to show up at their door and sell home performance? Why not leverage this effort with solar and start increasing your bottom line?
Similar to adding solar, if you have a good local windows installer that you can partner with, offering window upgrades can be a great addition to home performance.
At first, we offered vinyl, fiberglass, and wood windows. But I learned that the sales and pricing of vinyl was by far the easiest.
We were able to price using United Inches (UI). This simple calculation takes the width and height of a window, adds them together, and voila! So a 36-inch by 36-inch window would be 72 UI. You would then multiply that by a set price. A good for us was $8 per UI. So you would charge 72 x $8 = $576 for that window.
Other than window type and the need to replace trim or not, there are not that many variables that have an impact on pricing. Your cost of installing that window may be $150 for labor and $200 in materials. So that’s $226 in profit per window. If they have 10 windows that’s $2260 in additional profit for that job. Which is not too shabby.
3. Vapor Barrier System
Most home performance contractors already install vapor barriers. If you aren’t already offering them you should seriously consider it; it’s easy to be cost competitive and they are simple to install.
In our area, there are companies who exclusively install vapor barriers and they charge a hefty premium for it. I have seen simple crawl spaces quoted at $5.00 per square foot. We typically charged half of that and still made a nice profit.
I also like vapor barriers because we never received callbacks. There’s nothing that can break! So long as you are doing quality work and checking up on your crew this is a slam dunk.
4. Earthquake Auto Shut Off Valves
These little devices are installed right after the gas meter and automatically shut off a house’s gas in the event of an earthquake. I call them “cheap insurance” and clients almost always went for them as an upsell. If you are already doing mechanical work that involves touching the gas line, adding an auto shut-off valve is a snap.
Once you know what you’re doing, they only take about an hour to install. We would charge between $450-$600 for this measure and it cost us $200 for labor and materials. Easy money and definitely a good value for homeowners.
5. Solar Thermal
We added this measure when we hired a construction manager who had previous experience with solar thermal. Solar thermal doesn’t seem that complicated, but I found the installation and servicing to be a very difficult and not profitable for us.
We would use our higher skilled guys to do the installation of solar thermal. They did fine with the plumbing but always struggled with the controls. Unfortunately, we didn’t have great support from the manufacturer (probably because we weren’t installing enough of it). Furthermore, since we only had a few guys who could work on these systems, when an issue came up we had to pull our best guys from other jobs.
Though we had our share of problems, we did have some beautiful installations and happy clients. But even the successful jobs were long and complicated. Despite the fact that we charged a nice premium for the systems, inevitably they took much longer than budgeted. Looking back, if I averaged the net income of all the solar thermal jobs, the easy installations were probably outweighed by the very difficult ones.
Homeowners often requested weatherstripping, chimney balloons, and other weatherization measures. We would provide these measurements because we felt like we needed to be responsive to their requests. That was a mistake. It is perfectly fine not to offer certain measures if they aren’t profitable or effective.
Weatherization is simple to install but has a huge go back rate. Door weatherstripping can easily become a problem during the winter when doors swell and the deadbolts don’t engage. Eventually, we learned to tell people that they should hire a handyman to help them with weatherization measures.
7. Greywater Systems.
After many years of drought in California, I figured it was time to add water conservation to our toolkit. I sent key staff to a laundry-to-landscape greywater training. These systems are simple and they don’t require permits. I thought they would be an easy sell.
We got a lot of interest, but people weren’t willing to pay the price we needed to make it worth our while. Our bids were typically between $1000-$1500. Labor could get quite high unless the laundry was on the exterior wall and a close distance to the yard. This often wasn’t the case. Perhaps if the cost of water goes way up in the future then greywater systems will become an easier sell.
What has Worked for You?
So, these are the extra measures that I have experimented with at Advanced Home Energy. Some with success and some with not. But how about you? What have you tried to add to your toolkit? Have you had a different experience than me? Tried something else? We’d like to start a discussion, share, and learn from each other in the California Home Performance industry.
Image provided by Advanced Home Energy.
About the Author
Hello, everybody, my name is Ori Skloot, the president of Advanced Home Energy and a Board Member at Efficiency First California. I’ve been in the home performance industry for about 10 years. Recently, though, at Advanced Home Energy, we chose to transition away from single-family home performance work. It was a bittersweet decision but it doesn’t mean my time selling and completing those upgrades wasn’t time well spent. I have learned a lot over the years and I want to share some of my knowledge and experience with the EFCA community.
I graduated with an undergraduate degree from UC Berkeley Haas School of Business. But, my passion has always been in social and environmental justice.
Right out of college I cofounded a nonprofit called Rising Sun Energy Center which trained and employed high school and college students to do energy efficiency weatherization in their communities. It started in my small apartment and eventually grew to a staff of hundreds during the summer throughout the Bay Area.
In 2006, I partnered with my cousin Dvir Brakha to start Advanced Home Energy in Berkeley, CA. I was in charge of the business backend and he was in charge of operations and running crews. Originally it was just us, two other guys, and an insulation truck.
Sometime around 2007 we took a California Building Performance Contractors Association (CBPCA), now Efficiency First California, 10-day course with home performance guru Rick Chitwood. It was an eye-opening experience. Because of it, we decided it was time to shift our services. We slowly built up our company offerings beyond insulation to include full-service home performance.
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