To the Point Home Services Podcast

The Home Services Podcast That Gives Back

Episode 42: Could Leasing Be the Future of the Trades?

November 3, 2020

Episode 42: Could Leasing Be the Future of the Trades?

Published: November 3, 2020

What if there was a way to pay for HVAC, plumbing, and other home comfort systems with one low monthly price? What if you could eliminate the risk of ownership, the upfront cost of installation, and the price of repairs and maintenance for your customers? With Service 1st Financial, you can!

Tom Towe, Vice President of Contractor Development and Ian McKeen, Chief Operating Officer of Service 1st Financial are changing the way the trades thinks about offering service.

The Premier Program

In the US, when an HVAC system breaks, you have a panic moment where you’re trying to figure out how you’re going to pay for it. The fear of the cost of repairs washes over you, and worst-case scenarios flash before your eyes. Cash or credit are your only options, and you struggle to figure out a solution. But it doesn’t have to be this way.

What started out as a successful water heater rental program in the U.S. with Service Experts across 95 locations have evolved. Ian and Tom have brought a new path forward for HVAC contractors to the U.S. market, it’s called the Premier Program, and it’s completely changing the game. It’s a leasing program for HVAC systems, and is all-encompassing. It allows homeowners to pay a low monthly rate that covers the cost installation, ongoing maintenance, and even repairs. It’s not just convenient for the homeowner, either, and allows contractors to lock up a customer for 10 years (and likely beyond).

Cash or credit have long been king in HVAC, and financing has become increasingly incorporated and successful over the last few decades. Ian and Tom see the Premier Program as the next progression to make HVAC more accessible.

Choice vs. Convenience

U.S. consumers are used to having a lot of choice. They can choose their contractor, their make and model of HVAC system, and they are used to having the control and responsibilities that come with ownership of their system. When it comes down to what they actually want from their heating and air conditioning system, though, is comfort. Homeowners want warm air when it’s cold, and cold air when it’s hot.

The current situation for buying an HVAC system is the tech comes out to the customer’s home with a brochure and starts talking about variable-speed, efficiency ratings, etc, and the customer doesn’t really care about all of that. Their main concerns are: Is it going to break? What do I have to do to maintain it? What is it going to cost? They don’t care about the box outside—they want all of the headaches of home ownership to go away. When a homeowner hears about the Premier Program, they understand it immediately because it makes perfect sense!

People will pay for convenience, and we’re seeing that more and more in the U.S. markets. The Premier Program is fully bundled and includes the maintenance, repairs, filter changes, and all of the costs of upkeep. If something breaks, the customer gives their contractor a call, and never has to worry about the cost. When it’s time for maintenance, they aren’t worrying about what the technician is going to find wrong with their system. It’s a single monthly payment, and they never have to worry about the “what-ifs” of home ownership.

New Generation, New Economy

Older generations were all about ownership, but the tides have changed. The newer generation and economy is based on the relationship with the provider of the service, and the convenience of the service. Millennials and Gen Z want a hassle-free experience with no friction, and so many contractors are still stuck in the old school line of thinking.

It’s a huge mistake to assume that your customers won’t be interested in the program, or that it’s just for those with bad credit or no money to afford a new system. It’s for people who just bought their first home. It’s for customers who might be moving in a few years. It’s for people with no debt that want comfort and worry-free comfort. It’s for a wide range of customer types that want the convenience of being able to enjoy quality heating and cooling without worrying if something will go wrong.

Common Questions and Objections

Why not bundle services myself?

If you’re a contractor already offering a long-term, low-interest loan, you might be wondering why you couldn’t do this yourself. You could bundle maintenance and repairs into that loan, and how would it be any different? The short answer is you could, but it’s incredibly difficult. You have to incorporate so many costs into the package that when you’ve covered all your margins, it starts to be way too costly for the customer. It’s a tough balancing act that may not be possible to successfully accomplish in-house.

Differences between extended warranties and service agreements?

With the Premier Program, you have the customer locked in for 10 years. Your techs don’t have to try and sell your customers on renewing their maintenance agreement every year, and you’re reimbursed by the OEM for parts. The contractors are just covering the labor.

Do OEMs love it?

Yes! It also helps with product mix. It makes it even easier to get the top-tier systems in the home with the program. Customers are also more likely to add on UV lights, high end filters, etc.

What about after the 10-year term? Then what?

The customer has a number of choices.

  1. As it is a true lease, they can turn it back in. They probably aren’t going to do that.
  2. They can extend the lease for another 3 years. The price goes down a few percent every year, with the same benefits except the cover of repairs.
  3. They can buy the system out. Now they own it, but all of the benefits go away.
  4. The best option is the contractor goes in, says “you’ve enjoyed this service for the last 10 years, equipment has improved during that time, would you like to upgrade to a new system and start the program again?” This is the most likely and best case scenario for both the homeowner and contractor.

Benefits to the Contractor

Customer convenience

A lot of your customers—probably the vast majority—get paid once or twice a month. That’s what they base their budget on. When you talk about a new system and thow numbers around like 10, 12, and $15,000, it’s tough for them to stomach. When they hear good, better, best options that sound like $140/mo, $165, and $200, they can do that. They’re much more likely to opt for a better system that they’ll love, and add on extras like UV lights as the difference in cost isn’t thousands of dollars, it’s a few dollars a month.

Customers are also more willing to open up their door because they aren’t afraid of being upsold, or thinking you’re just there to sell, or associating you with paying money

The program is even transferable to a new homeowner! They can build the price of the buyout of the lease into the home with the real estate agent. Real estates agents have been super excited about this program, and can use it as a great marketing tool.

Employees love it

To no surprise, most technicians hate having to renew service agreements. With the Premier Program, they don’t have to do this every year anymore. They automatically get hours with this program. Your technicians want to be superheroes; they want to go in and fix problems and be able to say at the end of it, “Mrs Jones, thank you for being a Premier Program customer. I took care of everything today and there’s no charge for you.” There’s no more awkward conversation they have to handle about the price, no more haggling and frustration over costly parts and labor. Even your CSRs will be excited that they no longer have to talk about diagnostic charges or trip charges with customers.


Having more palatable price points makes the job of the salesperson so much easier. Customers will more often opt for the higher tier package, raising your average ticket price. Enhanced features like variable-speed, filtration and UV packages are the difference between $165/mo and $200/mo instead of thousands of dollars.

Customer retention

Because the program is for 10 years, you’ve secured your relationship with that customer for the next decade. You’re the only contractor that can do that work, locking up that customer, driving down margins, and increasing average ticket price while improving the customer experience. You take that market share, and even remove seasonality from the business.

Private equity loves it

Private equity LOVES recurring revenue. They love locked-in customers. So when you go to sell your business, it looks great and can definitely drive up multiples like crazy.

Leasing is the Future

The Premier Program isn’t for every customer, and not for every contractor. You can still offer the “old” method, but this model isn’t going anywhere but up. If you ask Tom and Ian, It’s going to be very common in short time, and just like financing, will soon be a staple for the HVAC industry and likely expand into other home services.

If you’re tired of accepting good enough, if you’re tired of accepting discounting services for angry customers and having those negative sales experiences, and tired of putting that pressure on your team for sales, it’s absolutely worth looking into the Premier Program. We encourage you to watch this video with Premier Program information for contractors. You can also email Tom with any questions you may have.

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