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Preparing for Chill: Impact of Cold Weather on HVAC Shops’ Bottom Line

User IconMarina Miller
Clock IconNovember 4th, 2021
Glasses Icon8 Min Read
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HVAC shops in the Upper Midwest and Ohio valley region more than double their revenue on days when a spell of cold weather strikes. Shops in other regions? Well, it depends.

With this winter predicted to be colder than normal for the Northern U.S. and warmer than normal for the Southern states, ServiceTitan crunched the numbers to get an estimate of the weather’s impact on HVAC shops.

What we found was a tremendous variation from region to region and even from state to state. In Illinois, daily revenue typically shoots up five-fold during cold spells, while shops in Florida and California see very little impact. 

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“As much as we’d like to think that our business doesn’t depend on the weather, if we know what the weather will bring and the impact it’ll have, then we can capitalize on that,” said Chris Hunter, ServiceTitan’s Director of Customer Relations. 

In this analysis, we explain in detail what the cold spells mean for the HVAC shops’ bottom line. 

What is a cold spell?

To help shops better prepare for the coming winter, ServiceTitan studied three years of proprietary data from hundreds of HVAC shops combined with records from the local weather stations. 

We defined a cold spell as a period of two or more consecutive days when temperatures remain unusually cold for a given area and season. For ServiceTitan shops in Chicago, a cold spell means daily temperatures below 22 degrees for at least two days in a row. Given that the typical winter temperature there is around 37 degrees, a cold spell brings substantially more chill. For shops in Raleigh that have a typical winter temperature of about 60, a cold spell occurs when temperatures are below 46 degrees.

The past three winters, HVAC shops powered by ServiceTitan have seen about three cold spells per season (defined as November through February). On average across the U.S., more cold waves tend to strike in January and February (Figure 1). Last year’s February ice storm in Texas is a great example of powerful cold waves hitting late in the season.

Figure 1. Average Number of Cold Spells Per Month

“This is why you should be doing maintenance now,” Hunter said. “Come January and February, there’ll be a lot more demand. These numbers can even be leveraged in marketing to communicate to your customers that they need to be ready when the cold weather hits later in the season.” 

And although historically January and February brought in more cold spells than other months, that does not mean that the shops should be unprepared for a November or an early December chill this year.  AccuWeather meteorologists are predicting an early cold wave in the Northeast, so it may be a good idea to check the weather forecast regularly. In fact, early November already brought some unusually cold temperatures to many parts of the country.

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More jobs booked and higher average tickets drive up the revenue

On average across the nation, a cold spell increases same-day calls by about 20% and the resulting daily revenue by 70%. For an HVAC shop with about $15,000 in average daily revenue, that increase means an extra $10,500 per day from the cold spells. 

But where exactly does this revenue surge come from? ServiceTitan analysis shows that it’s both the spikes in the daily job volume and in the average ticket that matter. 

Relative to a typical winter day, a day with a cold spell means 30% more jobs booked and a 30% higher average ticket for those jobs. 

What about the types of jobs booked (i.e. service vs install)? Those do vary some, but not as much as the job volume and the average ticket (Figure 2).

As one would expect, maintenance jobs go down during cold spells. That reduction is offset by an increase in service jobs. Overall, it is the service jobs that dominate the HVAC calendar during both the cold waves and the typical winter days, accounting for more than half of all jobs booked. 

Figure 2. Types of Jobs Booked During Cold Spells vs. Typical Winter Weather

One of the reasons the install jobs are not higher during cold spells is likely because this analysis focused on jobs booked directly on the cold spell days. Many of the customers calling during severe weather are looking for immediate service because, for example, their furnaces are not working. They may not yet know that the problem is so severe that they would need to have their entire system replaced. Those install jobs are likely lagging behind and boosting revenue further in the weeks after the cold spell. 

So what’s the catch? Regional and state-level variation

A cold spell in Washington is not the same as a cold spell in Illinois. Diving deeper, ServiceTitan analysis uncovered an enormous amount of regional and state-level variation in how the weather impacts the demand for HVAC services.

Figure 3. Regional Differences in the Impact of Cold Spells on Daily Revenue

Shops in the Upper Midwest and Ohio Valley generally see the biggest increases in their key metrics during the cold waves. Over the past 3 years, shops in those two regions, respectively, saw 185% and 160% higher daily revenue during the cold spells compared to a typical winter day (Figure 3).

In contrast, shops in the West and Northwest stand out as the regions least affected by the cold spells. With their mild winters, California and Nevada generally don’t see much of an impact when temperatures get unusually cold for a few days because “unusually cold” for those states would be considered “unusually warm” for the Upper Midwest. For example, a cold spell in Los Angeles, California, means maximum daily temperatures below 57 degrees for two or more days in a row, which is well above the 37 degree average winter temperatures in Chicago.

Within a region there is large variation in the impact of cold waves from state to state. Historically, shops in Illinois have seen the biggest increases in revenue during cold spells: well over 350% on average. Shops in Ohio, on the other hand, have seen average revenue increase of only about 65%. 

In the Southeast, shops in Florida stand out as not at all affected by the cold waves, very much like California. In contrast, shops in North Carolina see an impressive revenue increase of 145% from their cold spells. 

Toward data-driven planning

To help HVAC shops better plan for the cold spells this season, ServiceTitan created an interactive state-level dashboard with the key take-aways from this analysis.

“So many people say don’t worry about the weather, but we want to be prepared for it and understand what it can do for our business,” said Hunter. This dashboard arms the HVAC business owners with some of the key numbers needed for planning and capacity adjustments this winter season. “Although no one knows when the chill will hit, we now have a deeper understanding of what’s coming once we see a cold spell in the forecast.” 

[Methods: For this analysis, ServiceTitan used regression models to isolate the causal impact of cold spells from other factors that affect the shops’ performance. We defined a cold spell analogously to how the Environmental Protection Agency defines a heat wave: a period where 2 or more consecutive days had maximum daily temperature below a local threshold, set at 15% of historical winter temperatures. Temperature values for cold spells indicate these local thresholds, with the average cold spell temperatures falling even lower. The winter season is defined as November through February. Weather data comes from the Global Surface Summary of the Day (GSOD) dataset. Daily revenue is defined as all revenue from jobs initially booked during the cold spells. (Note that many of those jobs were completed after the cold spells passed.) Numbers are based on three most recent winters (November 2018 - February 2021) and rounded to the nearest 5%.]

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Dr. Marina Miller is an Economist on the ServiceTitan Data Science team. She has a Ph.D. in Economics from University of California, San Diego, and extensive experience modeling the U.S. economy. 

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