Pricing quotes on a new heating system
In addition to my day job as a pricing/data person I run a small property management business in St Paul.
Procuring services for my rental properties and working with the trades and tenants is a microcosm of the work I do with distributors and manufacturers and it helps me stay aware of how hard a job sales has.
The 30+ year old furnace in my duplex needs to be replaced and I’m hoping to split the system into two separate zones.
I got one company to bid the work and they gave me 5 options, ranging from $26k-$41k dollars – Economy to Premium.
My first instinct was to do a feature price comparison and make a spreadsheet from the PDF files so I could understand the tradeoffs.
My next step was to try to analyze the value proposition of a high efficiency furnace vs a standard one and the potential benefits of pushing the heating bill to the tenants instead of including it in monthly rent.
You can see I stopped short of filling out the matrix though because I saw some items marked up more than I could stomach
I’m not paying someone $4k to remove a scrapped appliance from the basement and $1500 for the installation of a digital thermostat for sale on Amazon for $132.
This HVAC company did a good job of framing prices to make $26k seem almost reasonable, but laying out the individual materials al a carte made me realize they had marked up retail prices (not supplier costs) 7-10x on every line AND had expensive labor too.
Lessons
Buyers – get 3 bids on anything critical to your business or for which you don’t have reference prices in mind
Sellers – customers can easily Google product costs so be aware if you mark up any individual items too much you may lose trust in the entire bid
My daughter – go into the trades, not data analysis
Carragee Consulting 
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