New construction is a tempting market for HVAC contractors because the volume is predictable and you can stay busy for months on a single builder relationship. It's also a market that has eaten alive more contractors than I can count. Before you chase it, understand what you're actually signing up for.
The Builder Relationship Reality
Builders are not your typical residential customer. They move fast, they have margins they're managing too, and they have four or five HVAC contractors they can call if you're not available or you're priced too high. The leverage in that relationship does not run in your direction, especially when you're starting out.
Builder pricing is usually below what you'd charge for residential service and replacement. Volume is supposed to make up for margin. Sometimes it does. Sometimes you're so busy with builder work that you can't take the higher-margin residential calls, and you realize you traded up in volume and down in profitability without meaning to.
Where New Construction Can Work
Custom home builders are a different animal than production builders. Custom home projects have more complexity, more custom equipment, and more room for margin because the homeowner is less price-sensitive and the builder has a more sophisticated clientele. High-end custom construction can be excellent work for the right contractor.
Also: relationships matter enormously in new construction. If you have a genuine relationship with a builder who values quality over price, that's a different arrangement than being one of five contractors bidding against each other on a production townhouse development.
What to Negotiate
Never take new construction work without clear payment terms on paper. Draws tied to milestones (rough-in complete, final inspection, certificate of occupancy) protect you from projects that drag on and pay late. Builders who don't want to commit to payment schedules are telling you something.
Warranty terms also need to be clear. Who handles warranty calls on new construction, how long, and who pays for parts and labor on defects that aren't manufacturer-covered? Get this in writing before you start the first house.
The Portfolio Value
One thing new construction does provide: photos of clean, well-designed systems in new spaces. That's good marketing content. The mechanical room in a well-built custom home, shot well, makes for compelling before-and-after material even without a before. That content has value beyond the job itself.
Put this into practice with WerkOps
Run accurate load calculations, build estimates, and send invoices - all in one tool.
Start Free Trial
Written by
Dina Good
Founder, WerkOps
Dina grew up in the trades. Her father was a contractor, then a building inspector, and the job site was her classroom long before any formal one was. She went on to own her own contracting company, which is where she first felt the pain of running a skilled trade business on bad software and worse spreadsheets. A love of data pulled her into programming, and the two worlds eventually collided into WerkOps - software built by someone who has actually been on the truck.