In the last 6 months, two well-known Denver heating and air companies have closed their doors. Both of these now defunct outfits had been in business for years, and had dozens of technicians and company trucks on the road. So naturally, you would think they were thriving, successful businesses, right? Actually, despite their outward appearance of success and stability, both of these companies had been hanging by a thread for years. While customers had no idea how much financial trouble these two companies were in, many of the executives at Denver's top heating and air companies knew it was only a matter of time before both companies went under.
How did experienced industry professionals know the end was near for these two seemingly thriving heating and air companies?
Because both of them were attempting to stay afloat by offering significantly cheaper prices for furnace repair than the rest of Denver's well-known, reputable furnace companies. Both companies accelerated their demise when they expanded their low-price business strategy to include cheaper prices for air conditioning repair and replacements, as well as furnace installations. This fateful decision put these formerly respected companies on the fast track to insolvency.
I'll explain the vicious cycle that attempting to offer low prices for heating and air conditioning services inevitably leads to in Part 2 of this post, but right now I'm wondering what's going to happen to all the customers these two 'cheap service' companies have left in their wake.
There will be some percentage of the thousands of furnace repairs these companies have done that will experience a problem that would require the technician to come back a second time. Who are all those customers supposed to turn to when they need service on their systems that should be covered under warranty? Unfortunately, the customers who chose to use either of these companies because of their low prices will have to foot the bill themselves if they have a problem with their furnace or air conditioner.
This situation is a lot more common than most people realize. In Part 2 of this post, I'll explain more about the 'death spiral' that engulfs any heating and air company trying to compete by offering lower prices than their more reputable competitors.