The HVAC industry is highly competitive, and choosing which HVAC market segment to target can be hard.
Residential and commercial HVAC services differ greatly in many aspects. You need to understand what sets them apart to make the best decision.
We’ll explore eight differences between commercial and residential HVAC systems and how automated HVAC software like ServiceTitan can enhance HVAC business operations.
What is Residential HVAC?
As a residential HVAC contractor, you work on residential buildings' heating and cooling systems.
Residential jobs are usually less time-consuming than commercial ones and more accessible to complete.
That’s because residential HVAC systems are typically placed on the ground and are easy to install, repair, or maintain.
Residential HVAC technicians are usually independent contractors with flexible schedules. They might earn more money during peak seasons.
What is Commercial HVAC?
Commercial HVAC involves working with larger projects for office buildings, restaurants, hospitals, schools, etc.
Both residential and commercial HVAC systems have the same purpose: to maintain comfortable indoor temperatures.
Commercial HVAC systems are a different beast compared to their residential counterparts. While home systems typically involve a single unit, commercial setups involve multiple packaged units working together. This complexity makes installation, maintenance, and repairs more challenging, requiring specialized knowledge and skills from HVAC professionals.
Commercial HVAC technicians require more education to perform commercial work and install and repair complex heating and cooling equipment.
What Are the Differences Between Commercial and Residential HVAC?
To determine which HVAC market to focus on, you must know the key differences between residential and commercial HVAC.
We listed them here, and we’ll discuss each in detail below:
Key Difference 1: System Scale and Capacity
The size of a residential AC system in the US can range from 1.5- to five-ton units.
Commercial HVAC sizes start at two tons and can go up to 30 tons for large buildings like hospitals.
As mentioned, residential systems are standalone units, while commercial systems are modular and comprise multiple components.
For example, modular rooftop units, usually installed on top of commercial shopping centers, come in ten-, 25-, and 50-ton units.
This difference in scale affects not only the size of the equipment but also its power and capacity.
Unlike residential HVAC units, which may only need to heat or cool a few thousand square feet, commercial systems might require:
Multiple rooftop units
Larger ductwork
More advanced control systems
Key Difference 2: Equipment Types
Since residential and commercial HVAC systems have different sizes and capacities, they also use different types of equipment.
For residential HVAC units, equipment may include a few simple elements:
Compressors
Chiller
Evaporator
Boiler
Standard ductwork
In contrast, commercial HVAC systems are typically altered and customized based on the building or area they serve.
Commercial HVAC techs need to know how to install and repair the following equipment:
Cooling towers
Water pumps
Condensers
Variable refrigerant flow systems
You may wonder why commercial HVAC systems need such equipment.
Advanced HVAC components can handle higher loads, varied climate zones, and long operating hours typical of commercial buildings.
Key Difference 3: System Complexity
As residential and commercial HVAC systems vary in size and structure, so does their complexity.
Because HVAC systems must manage multiple areas, each with its own climate requirements, they have more advanced features in commercial settings.
Typically, these features include automated controls, energy management systems, and integrated ventilation solutions.
This complexity makes commercial HVAC systems harder to install, repair, and maintain.
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Key Difference 4: Energy Efficiency Standards
The U.S. Department of Energy or the Environmental Protection Agency usually sets energy efficiency standards for residential HVAC.
These standards may focus on:
Reducing energy consumption and waste in homes
Reducing utility costs and environmental impact
As you can imagine, commercial HVAC efficiency standards are much more complex. Here, the emphasis is on sustainability.
Commercial standards often require HVAC companies to optimize system performance consistently to meet stringent environmental regulations.
As a commercial HVAC provider, you may need to comply with the standards of the American Society of Heating, Refrigerating, and Air-Conditioning Engineers.
Commercial energy efficiency standards usually vary based on the size and type of building you serve.
Key Difference 5: Installation and Maintenance Requirements
Commercial HVAC systems are modular and require a lot of space, so they are typically installed on the roofs of commercial properties.
This also minimizes disruption when installing or repairing the systems, as HVAC technicians require minimal operational space inside the building.
Installing residential HVAC systems typically involves mounting outdoor components, running ductwork, and connecting indoor units. One or two technicians can easily do this job.
Residential HVAC systems are more affordable because of their simplicity and long-term durability.
Conversely, commercial HVAC units tend to cost more and need more frequent maintenance due to their continuous operation and higher demands.
Key Difference 6: Customer Needs and Expectations
Residential HVAC customers, mostly homeowners, seek comfort, convenience, and energy efficiency.
They expect quick responses for emergencies and convenient service scheduling. They may also prioritize cost-effective HVAC services.
In the commercial arena, customers prioritize reliability, indoor air quality, and energy costs. Due to health and safety regulations, they also expect high-quality and certified HVAC services.
Key Difference 7: Business Operations
Project scales and customer types are the main differences between residential and commercial HVAC business models.
Residential HVAC firms often operate as small, family-owned, and local businesses.
HVAC contractors who work with residential customers might offer installation, repair, or maintenance services. Their income usually comes from individual jobs on a pay-as-needed basis.
Contracting is generally done short-term or service-based.
Commercial customers, however, are a different story. These companies have a broader service portfolio for large-scale systems, and their pricing models often involve service contracts or maintenance agreements.
Such contracts provide recurring revenue for commercial HVAC businesses and ongoing service for commercial customers.
Key Difference 8: Regulatory Compliance
Like energy efficiency standards, regulatory compliance is more complex for commercial HVAC service providers.
Key compliance areas include energy efficiency, refrigerant handling, safety standards, and equipment performance.
Although regulations for residential HVAC contractors are not as complex, they are important nonetheless:
Equipment standard
Installation practices
Permit regulations
Compliance can be time-consuming and costly, but failure can hurt your HVAC company even more.
Should Contractors Focus on Commercial or Residential HVAC?
Before choosing who you market your business to, have a look at this overview of key differences between commercial and residential HVAC:
Streamline Your Commercial or Residential HVAC Business
ServiceTitan is a home services software provider that simplifies HVAC business operations.
From streamlining service agreements from proposal through execution to automating marketing practices to attract new customers, ServiceTitan is an end-to-end solution for HVAC business owners.
We’ll now examine how ServiceTitan can help commercial and residential HVAC companies.
For managing commercial clients:
1. Commercial service agreements: With ServiceTitan’s Service Agreement Software, commercial HVAC companies can tailor each contract based on customers’ needs that auto-generate in proposals.
The software also provides service agreement insights, like budgeted vs. actual labor, burden, and material costs, for a clear view of your margins.
You can also automate agreement renewals to increase recurring revenue.
2. Inventory management: The Contractor Inventory Management software provides a centralized workflow for managing all your commercial business inventory.
Scan barcodes, organize items in trucks and warehouses, use custom stock lists for any location, and streamline manual inventory processes.
3. Job costing: ServiceTitan’s Job Costing software helps you manage your HVAC job progress.
More precisely, you get real-time breakdowns of job costs based on materials and equipment to help you measure profitability.
You can also add project labels to each job to categorize your revenue and expenses and increase visibility.
4. Reporting and analytics: The Field Reporting software provides robust analytics to help you understand business profitability.
You can access a dynamic dashboard that lets you track revenue and trends, sort transactions, and put it all together in real time.
The technician scorecard is a feature that provides insights into generated revenue, memberships sold, and completed jobs for each technician.
For managing residential clients:
1. Scheduling and dispatch: With Scheduling Pro, residential and commercial HVAC companies can access fully integrated online booking features.
This software streamlines job bookings by showing real-time availability based on your dispatch board and making it easy for customers to book from anywhere.
2. Customer relationship management: ServiceTitan’s CRM software optimizes customer service by allowing HVAC service representatives to view customer information and history.
For example, an HVAC customer service representative can see if a customer has an aged HVAC system that needs replacement. They can use this information to contact the customer and potentially close a sale.
3. Marketing automation: ServiceTitan’s Marketing Pro software is an all-in-one marketing automation tool that residential and commercial businesses can use to maximize their marketing efforts.
You can automate email campaigns, manage online reputation, set up targeted Google ad campaigns, and analyze marketing insights from one platform.
4. Mobile app: ServiceTitan Mobile is a powerful tool for commercial and residential HVAC contractors to streamline operations in the field.
They can access job details and customer information from their phones or tablets. They can also create invoices and process payments on-site. This reduces paperwork and improves customer service.
When it first started using ServiceTitan’s Marketing Pro, Rainforest Works Inc. was struggling with time-consuming manual processes that were hindering its growth.
“When we joined up with ServiceTitan, we were just cracking $12 million,” recalls Dallin Tippets, Rainforest’s operations director. “In four years, we’ve hit the $22 million revenue mark for the 2022 calendar year. We've also gone from about 45 technicians or trucks on the road to 65, and moved from a one-acre complex to a three-acre complex.”
Besides growing its business, Rainforest Plumbing & Air, as it’s now known, has also improved its customer service and reputation, reaching 1,000 five-star Google reviews.
“I couldn’t imagine trying to start a different division without [ServiceTitan)],” says Tippetts. “To not have the tools to manage any of it would have been a disaster.”
Intelligent Design also saw positive results after using ServiceTitan in its sales department.
Scheduling Pro 2.0 helped the residential and commercial plumbing, electrical, HVAC, and roofing shop reach $182,000 in sales.
In less than two months, it booked 79 touchless jobs.
“That’s $182,000 in sales,” says Zack Kays, the firm’s software administrator. “That's like having your own employee for a month.”
“With 2.0, it's so easy to create a new tag and see what your dedicated revenue is,” he adds. “And when you're looking at the reports, you can see where your money's coming from.”
The Bottom Line
By now, you probably understand the main differences between commercial and residential HVAC work and systems.
Which one you choose to market is a business decision that only you can make.
Whichever HVAC market you target, though, partnering with ServiceTitan can greatly enhance all parts of your business.
ServiceTitan is a comprehensive software marketing solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, roofing, and chimney sweep shops across the country—and they have increased their revenue by an average of 25% in just their first year with us.
ServiceTitan HVAC Software
ServiceTitan is a comprehensive HVAC business software solution built specifically to help service companies streamline their operations, boost revenue, and achieve growth. Our award-winning, cloud-based platform is trusted by more than 100,000+ contractors across the country.
