Late this summer, the air conditioner in my shop stopped working. I called our usual HVAC service and the technician refilled about 6 pounds of refrigerant. I was stunned by a bill for over $600 not counting the service call.
A week later it quit again and before I poured good money after bad, I checked with another repair service to see what they charged for R410A refrigerant. It was the same. Then I asked Google and found this.
The retail markup for R410A is about 10 times. In fairness, 410A will be phased out in a couple of years so inventories are shrinking. But I could buy it online for less than $10 per pound IF I was a licensed HVAC technician. I got an estimate for a new unit of identical size - $8300.
Back to Google, where I found a similar unit – same size but designed for DIY installation: $2800 delivered.
I took my time, but in 3 days I had replaced my old unit. The new one is a heat pump, so it works both to cool and heat with better efficiency than my old one.
My point is not that HVAC dealers are ripping us off, but that unusually large markups invite competition to offer products for home installation and for YouTube expert entrepreneurs to show you how.
There has never been a more lucrative time to employ or learn modest technical skills. My dealer was charging what the market would bear, which is justifiable. Lower priced alternatives affect what some of us in the market will bear, however.
I started wondering if this was evidence for what economists call “greedflation” which I had previously discounted. This chart from the Roosevelt Institute seems to support this assertion.
Indeed, general inflation seems to be good for corporate profits and the pandemic was a great time to raise prices.
Again, nobody is forcing us to pay for this corporate windfall, but as consumers continue to spend, manufacturers to retailers have no reason to lower prices and profits.
The American consumer is spending briskly too, even adjusting for inflation. Some of the expenditures are unavoidable, but we’re also spending on non-essentials. “Why” is the big question, but clearly inflation is partly fueled by our free-wheeling spending.
