Ottos HVAC Blog What Percentage Should You Mark Up Your Material for Doing HVAC Work

What Percentage Should You Mark Up Your Material for Doing HVAC Work

HVAC companies that service residential and commercial heating and air systems have an important job — no one likes to be hot in the summer and cold in the winter. Even though people need your services, they don’t want to pay an exorbitant amount to get their HVAC systems repaired or replaced. At the same time, you need to make enough money to pay your staff and your bills.

Break-Even Point

  1. Before you decide on how much to mark up your materials, know how much you need to make on the job to break even. Add up all your bills and divide that by the number of jobs your staff typically complete in a month. Calculate the number of hours the job should take, how much your staff person makes per hour — including costs such as health insurance and workers’ compensation — how much your charge per hour and the cost of the materials. If you need $50 per hour to cover all your staff costs and you charge $100 per hour for labor, that’s $50 toward your break-even point. If you need a profit of $100 per job to keep yourself in business, mark up the materials accordingly so they make up the other $50.

Markup vs. Margin

  1. Markup and your profit margin are calculated differently. The amount you mark up your materials doesn’t equal your profit margin percentage. Understand the difference so you can more accurately set your markups to make the profit you’re expecting. For a part that you paid $100, marking it up to $150 gives you a 50 percent markup: multiply 100 by 0.50 to get a $50 markup. To get your margin, divide the markup — in this case $50 — by your cost, $100. You get 0.33, or 33 percent. In this example, a 50-percent markup equals a 33 percent profit margin.

Parts Markup

  1. A standard markup in a non-retail business is 100 percent, meaning you charge the customer twice what you spent on the part or material. This requires accurate bookkeeping and estimating skills because prices change constantly. Know what you spent on each part before you can mark it up correctly. Your overall cost for the job also includes a labor markup, charging more per hour for your technician’s time than you pay him. These two markups can work together to make your business profitable. When you mark up your materials by 100 percent, you typically mark up your labor less, such as 25 percent.

Overall Markup

  1. Instead of setting a percentage to mark up your materials, provide overall job estimates. Decide how much you need to make on each job and provide an estimate that increases the total by a percentage instead of breaking labor and materials into different pieces that need to be marked up. For example, if your actual labor cost, including insurance and commissions, is $400 and your materials are $300, your total cost to do the job is $700. Mark that up so you get a net profit of 30 percent by dividing $700 by 0.70, and you get an increase of $300, for a total customer cost of $1,000. Set your overall markup percentage based on your break-even point to ensure that the job makes enough to pay your bills and, hopefully, makes a profit for the company.

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Otto Nemenz MovesOtto Nemenz Moves

Otto Nemenz International (ONI) has moved to a huge new facility at 5700 Buckingham Parkway, Culver City, CA 90230.

We usually list specifications for cameras and lenses. Here are a few specs about the new place. These details tell a lot of the story:

  • 38,000 square feet
  • 41 employees
  • 21 prep bays
  • 2 large feature prep rooms
  • 128 parking spaces
  • 345 maximum occupancy (173 in current social distancing times)
  • 1500 sq. ft storage area for camera assistant carts
  • 1250 sq. ft. machine shop
  • 1085 sq ft projection and lens test room with Chrosziel Large Format Projectors
  • New Trioptic Lens Tester
  • 45 truckloads of equipment brought from the former place on Vine St.

This is Otto’s third location. I remember the first storefront at 7531 Sunset Boulevard. Then they move to 870 Vine Street around 1983 with 8 employees.

Otto Nemenz at ONI on Vine Street around 1984.

And now this magnificent facility in Culver City:

Lounge Area and Kitchen at ONI in Culver City.

Otto said, “We certainly didn’t plan it this way, but the place is enormous and we’re lucky to have the latest HVAC system with advanced air filtration. The place is so large that social distancing comes naturally. The prep bays have  23-foot high ceilings. Crews can check out for jobs and remain safe.”

Fritz Heinzle added, “Union and safety committees visited and approved of what they saw. The halls are 12-feet wide. Equipment is returned to the loading dock where it is checked in and sanitized. The vault is fireproof. Prep technicians work with customers in the big, open plan area. Customers sign in, have their temperature checked, receive masks and gloves. We are open for business and are already prepping jobs.”

 

Prep Floor with 23′ high ceiling

Prep Area in Feature Room with 12′ ceiling.

 

Instead of fixed camera pedestals and moving lens charts on rails that hang from the ceiling, Otto Nemenz and crew embedded tracks into the floor on which the camera can move. They installed  P.A.T. (Pret à Tourner) Focus Charts from MYT Works in New York. The charts have magnetic backings that attach and move on the perfectly perpendicular walls.

“Having the camera move on tracks frees up a lot of space,” Otto explained.

Trioptic ImageMaster Cine Flex and Chrosziel Projector in the Lens Room

The massive Trioptic ImageMaster Cine Flex is similar to the ones installed at ARRI, Signature Prime manufacturing and QC, ARRI Rental, and elsewhere. Essentially, it’s three motorized telescopes that pivot on the center and off-axis along with a “wheel of fortune” to test, align and check lenses, including MTF values. The data is stored in its computer. So, if you change air gaps or mess with elements, the Trioptic tester will let a technician return the lens back to the default factory settings. It also checks for loose elements and anything else conspiring inside, both before and after a job.

The Chrosziel TP7 is the latest Large Format, LED illuminated, 60mm Image Circle  Projectors.

The lens test room is 50 feet long, so you can check out far distances as well.

Otto summed it up, “This move has been in the works for a long time. We were running out of space in the Vine Street place. We would love to have you come to visit us. Thanks to all the cinematographers, assistants, crews, directors, and producers for all their years of support. We look forward to working together for many years to come.

Top 5 Tips for Maintaining Your HVAC SystemTop 5 Tips for Maintaining Your HVAC System

Mowing the lawn and painting your home are easy ways to maintain your home and increase its value. In the same way, there are easy things you can do to take care of your air conditioning and heating equipment to keep it running when you need it most. And, as an additional benefit, it can reduce unexpected emergency calls and can lengthen the life of your HVAC equipment. A little preventive maintenance in the spring and fall goes a long way. Here are our top five tips to add to your home maintenance routine:

Change Your Filters

When was the last time you replaced the filters on your unit? Disposable filters keep your system clean and take out the large particles from your indoor air. Aim to change them every 1-3 months. If is allergy season or you have pets in your home, you may consider replacing your filters more often. We recommend picking a filter rated MERV 7-11. Anything more will reduce the airflow on your system which can put an unnecessary strain on your system and will negatively affect its efficiency, too. If you have an air purification system, follow the manufacturer’s instructions for servicing those filters, too. Often ductless systems require that filters be cleaned (See a helpful DIY.)

Clean Your Condensing Unit

Most air conditioners have an outdoor condensing unit/heat pump sitting outside with a fan on top to disperse heat in the summer. The metal fins on the condensing unit frequently get clogged up with dirt, pollen, and grime. Once each season, spray the outside of the unit with a water hose to clean it. Warning: Do not use a pressure washer because it will permanently damage your unit.

Visually Inspect and Create Clearance Around Your Outdoor Unit

Remove the build-up of leaves and overgrown vegetation so they do not interfere with the air flow of your outdoor unit. You can trim any bushes or trees also so your unit has plenty of clearance, about 2 feet, on all sides. Keep a close eye if you have bushes or trees that give off excessive pollen, such as Cottonwood trees in particular. They are notorious for clogging up condensing units.

Check Your Evaporator Coil’s Drainpipe and Drain pan

If you are unsure where your drain pipe is, have your service technician show you where to find it. Check your HVAC system’s drainpipe and clear any blockages of the algae/mold that sometimes builds up there. A wet-dry vacuum can suction out any plugged up areas, and bleach can help clean it too. A clogged drain line is one of the most common breakdowns we fix in Houston, Texas during the spring and summer. Often customers learn of it when water comes pouring through their ceiling unless a protective float switch or “ceiling saver” is installed which switches off the air conditioning to prevent damaging leaks.

Call in a Professional for Regular Maintenance

We recommend having a licensed professional come in and perform preventative maintenance twice a year, including flushing the coils, checking the drain pan and drainage system, vacuuming the blower compartments, looking at the voltage, checking refrigerant levels in the air conditioning unit, evaluating furnace operation, checking voltage on motors and loose wires. Spring is a good time to service air conditioning equipment and in the fall, we service heating equipment. With luck, we will catch any problems before they become a major inconvenience.

Need an HVAC Partner?

Contact the experts at Ottos Hvac to take care of your repair and maintenance needs for any make or model of air conditioning or heating system in residential and light commercial settings.

WHAT IS HVAC AND HOW IS IT DIFFERENT FROM AIR CONDITIONING?WHAT IS HVAC AND HOW IS IT DIFFERENT FROM AIR CONDITIONING?

There was a time when “HVAC” really was a term thrown about only by industry professionals and those wealthy enough to pay for it. Now, however, the entire industry has opened up. Google is littered with “what is HVAC” searches.

It’s become an almost generic term for air conditioning, used synonymously by people in all environments. But what does HVAC mean, exactly? How does it factor into your home or business, will it be heating or cooling? And what, if anything, is the difference between it and air conditioning?

These are the important questions, as we move into a world of better and better air control systems for spaces of all shapes and sizes. Because, ultimately, even with dozens of options to choose from, the only way to make a truly informed decision is to be, well, truly informed.

So join us, as we define HVAC, define air conditioning, and break down the differences between these two concepts.

 

WHAT IS HVAC?

Let’s start right off with an important question: “What does HVAC stand for?”. Short for heating, ventilation, and air conditioning, HVAC is responsible for heating and cooling a building. It’s also a source of proper ventilation, allowing for moisture to escape.

HVAC units can take on many shapes and sizes, all offering different benefits depending on their design and the spaces they’re being used in. Units may include any combination of the following:

  • Boilers
  • Air conditioning units
  • Ducts and moisture vents

Not all HVAC units are air conditioning units, even though AC units are included under the HVAC umbrella. As outlined above, what’s important to understand is that it’s actually a larger term. Think of it as an umbrella term that applies to all sorts of interrelated air control systems.

 

A CLOSER LOOK: HOW DOES YOUR HVAC WORK?

There are instances where the HVAC components may operate independently of each other. What’s more common, however, is for each component to work alongside the others. These so-called “combined systems” include both central heating and AC systems.

But make no mistake: your HVAC system is more than just a convenient way to warm up or cooling the space you live or work in. It’s a way to fully transform your indoor air quality and create a comfortable environment for everyone inside.

HVAC systems are available in several different variations. However, even with that said, at their core, they’re all based on the same essential build concepts. And it starts outside, not inside.

Fresh air is sourced and brought in from the outside environment by way of a process called “ventilation”. This can be carried out in one of two ways.

 

NATURAL VENTILATION

Ventilating your space naturally is done without specialized equipment, construction, or add-ons. We see this present in most homes, actually, in the form of any entry and exit points into the building. When the natural air outside moves through your windows, doors, and vents of its own accord, that’s natural ventilation.

Where is this most useful? Natural air exchanges like this are important in replenishing your oxygen levels, for starters. It’s also useful in removing odours and excess moisture from your home, as well as filtering out carbon dioxide.

 

MECHANICAL VENTILATION

Next, we have mechanical ventilation. This is a system that uses mechanical systems to transport air both into and out of the building. Old-fashioned architecture made it so most buildings had ready access to natural ventilation. Most homes, businesses, and official buildings made use of doors and windows to bring natural air from the outdoors, indoors.

Modern architecture is different, however. Contemporary builders opt for creating much more tightly-sealed homes, in general. This is a design philosophy that makes mechanical ventilation all the more important in households with HVAC systems.

Air enters the building using a specially designed air inlet unit, where it is immediately put to work. Air enters via the filter and is routed to different areas where it will be most needed. Specifically, it will be used in removing dust and dirt, allergens, and various other particles. This same air is used both in heating and cooling processes, and also works against excess humidity in the air.

Finally, once the air has been filtered and brought up or down to the appropriate temperature, it is headed home. In the case of a central system, this movement takes place via a network of ducts, allowing the air to travel wherever it is needed.

 

WHAT IS AIR CONDITIONING?

An air conditioner or AC system is specifically designed to cool or heat the air. In some circles, a contractor may call any unit that controls the air, whether hot or cold, an air conditioner.

For our purposes, however, and to keep the process as uncomplicated as possible, we won’t be using this convention. We’ll break it down like this: a system designed to condition the air is an air conditioner. Any system that works to cool or heat up the air while pushing out moisture via air vents would be referred to, specifically, as an HVAC unit.

We need to be careful here, most if not all AC units heat as well as cool these days, they refer to this as a “heat pump” which in essence is reversing the refrigeration cycle to provide heat, more and more these days buildings are dispensing with traditional “wet” systems as air conditioning systems have become more reliable and more importantly very efficient against fossil fuels.

 

A CLOSER LOOK

There are different kinds of air conditioning and HVAC systems. Let’s take a closer look at some of the options available;

Window Unit

A window air conditioner or heater is a small unit that is installed in and sits on the inside of a window sill. These AC units are usually smaller but actually offer a pretty powerful output. In spite of this, however, they are best used in small spaces for maximum efficacy. Studio apartments and small rooms work best, in this regard.

One big benefit of window units is their price. For the budget-conscious, this is one of the cheapest cooling options out there, especially for the quality of the product. Expect to pay only a few hundred pounds at a time, both for the unit itself and for installation.

Central Air (Air Handling Unit, AHU)

Central air conditioners are commonplace for cooling and heating. They’re especially useful in large spaces, where the interconnecting air ducts guide and release air to the rooms where it is needed.

The system itself will include both outdoor and indoor parts. Because of the size of the installation, these tend to be lifelong investments, put into buildings that owners own for many years.

They also involve big investment, initially. The system itself, however, is one of the most effective and has been known to last up to 20 years or more under the right circumstances.

The Mini Split System

The mini-split system is quite similar in design to central air. The big difference is the fact that the ductwork is largely removed and in its place refrigeration pipework is installed.

One of the biggest draws when it comes to ductless systems such as these is in the reduced cost of operation.

The system is more aesthetically pleasing than some other options, since there is no need to install complicated ducts.

And Now You Know…

When we try to define HVAC, air conditioning, and the differences between them, we immediately run into a problem. The idea of “what is HVAC” and “which one is air conditioning” has a simple answer: there is no real difference. Air conditioning is a subsection of HVAC, with units focusing more on moving air through a space.