← Service Business Mastery for Skilled Trades: HVAC, Plumbing & Electrical Home Service
Service Business Mastery for Skilled Trades: HVAC, Plumbing & Electrical Home Service
How Dual Fuel Heat Pumps Are Changing the Game for HVAC Contractors
00:49:18
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- [00:00]
A
A customer gets to decide or what temperature are we going to actually change from heat pump operation to furnace operation? You are more concerned with utility costs and you don't care as much about comfort. You can set that a little bit lower. So that's all adjustable in the field and in our tool, you can set that. Put in your utility costs for gas and electric. If you can get the information from a utility, you can actually put the emission impact for gas and electricity too. So if your electric supplier gives emissions data, you can plug that in and then it will calculate and give you four, three scenarios and it will show you estimated annual operating costs. So looking at your utilities for those
- [00:36]
B
and emissions, we are expanding our portfolio in 2026. I think we're busier in 2026 than we were in the lead up to 2025. We're continuing with our very important but longer tail products that didn't get released in 2025 that were part of the A2L transition. So our top of the line variable speed AC, the. It's 19 seer. We'll be releasing that.
- [00:56]
C
Yeah, I can talk about anything.
- [00:58]
B
I think we'll talk about the, you know, how. How resi is. You know, we're filling out our entire portfolio and entering some new spaces that we weren't covering very well in 2025.
- [01:07]
C
How about dehumidification?
- [01:10]
B
Sure. I think it's probably more exciting for commercial than resi. Resi. We've. I mean, same old set. I mean.
- [01:17]
A
Yeah, we do have dehumidification. We can. Sure. We actually have added it to our heat pumps in the last year.
- [01:24]
C
So on the commercial zone.
- [01:26]
A
Yep. Yep. Previously it's AC only. So offering it on heat pumps now as well.
- [01:31]
B
I'm happy to. I mean I could touch.
- [01:33]
C
Still able to mix the inverters with any air handler or is that not a thing anymore? You know what I'm talking about?
- [01:44]
B
No, I lasi.
- [01:49]
C
Okay, so you've had the same frustration.
- [01:51]
B
The Bosch IDS product has historically been able to be two wire communication between indoor and outdoor and as well as a thermostat wire 24 volt between indoor and outdoor. And that would include a outdoor IDS condenser as well as a UNICO air handler or whatever specialty air handler products are being selected. CVP implementation in July is. Is currently making that much more difficult. So CVP's controls verification protocol that's affecting all manufacturers.
- [02:21]
A
It's a.
- [02:21]
B
It's a federal rule. It's an HRI test test procedure basically ensures that inverter systems behave as an inverter system and actually vary the way that we've sold them to, to, to homeowners and the contractors all along. You know, some someone was wise enough to figure out that many OEMs in the industry, the inverter kind of bangs on and bangs off more like a, a two stage or a three stage or a single stage machine. And not actually being right onto the space level because if you're using a thermostat in the space should be.
- [02:50]
C
Yeah.
- [02:51]
B
How is the outdoor unit going to ever match exactly the space? It's not. It's only going to get limited signal. To really try and get gnats on, you really need to know space set point is X and I'm at Y and therefore I can dial it in as long as you don't take D. So we see the need to, to pair with multiple air handlers. But how we do that in a CBP compliant way, does that make it harder?
- [03:17]
C
I don't know anything about this.
- [03:18]
B
It's a cvp. The government wants to see that. That, that there's, there's a. Essentially a load line that looks like a ski slope. It's like flat down, flat down that, that the unit tracks with the load line and doesn't
- [03:32]
C
the load line should kind of, kind of not teeter off. Right.
- [03:37]
B
It should kind of for an actual house. Let's not, let's not conflate actual house with, with what the government said the test standard is. Right. The test standard is imperfect. There's. There's a thing where it keeps a constant enthalpy and so you're essentially injecting humidity as you go through the test which is like what are we canning in the kitchen? Like 24 7. Like this doesn't. This doesn't make sense for a typical home. We do know that the government HRI tested 10 different systems to passed and one of those was a Bosch system. So we know that we have a CVP compliant system that are. That our, that our innovation and engineering works and then we know someone else works and then everybody else was not working. That that doesn't necessarily. That everyone else is a sinner because it's not July 1st yet. So, so, so they're not necessarily out of compliance. But we, the products that were being sampled by AHRI were not in compliance. We see the market need to pair with any air handler. The question is we're trying to crack is how do we do that and still comply with cbp?
- [04:37]
C
Well, that's the challenge because if you don't have communicating indoor to outdoor unit, that makes it impossible. I mean, truly. Unless you were able to put another device somewhere else that then communicates with the inverter to tell the inverter all that information.
- [04:55]
A
We have.
- [04:56]
B
We have some ideas.
- [04:57]
A
Yeah.
- [04:58]
B
I mean, I don't want to.
- [04:59]
C
Sure.
- [04:59]
B
Yeah. Everybody's trying to solve this problem. Yeah. And everyone's coming up with different kind of solutions and patenting and, and kind of trade secrets. So we see the market need and we're working on it. I'm sure we're not the only ones working on cracking that nut commercial.
- [05:16]
A
So senior product manager on the commercial team. I own everything three to twelve and a half tons, but we build up to 150 tons. In Norman commercial split seven and a half to 50 tons. So we. Dual fuel heat pumps are a new thing for us. Right. So we launched it this year on our pro platform which will give it six and a half to 12 and a half tons. And then our choice platform goes up to 25 tons with our heat pumps. So we've got dual fuel now from 6 and a half to 25 tons. Currently our current state is single heat operation.
- [05:51]
C
Right.
- [05:51]
A
So you're either mechanical heating or furnace heating. What we're in development with right now that'll launch at the end of this year is simultaneous heating. So you'll have that kind of middle threshold where it's cool enough, you're not getting quite enough capacity out of the heat pump, but you don't want to go fully into gas heat. Right. So you'll have the middle range where your heat pump will continue to operate. We'll bring on the gas heat a little bit to supplement as your temperature outdoors drops. It's a. It's. Well, so we have on the smaller tonnage it's two stage gas heating. The larger tonnage it can be two stage or modulating. We have both options and we'll allow the simultaneous heat with both.
- [06:29]
C
What was this? A solution for what? What problem did this solve?
- [06:33]
A
Dual fuel specifically or the simultaneous heat? So dual fuel specifically, what it solved. Yeah. On the commercial side. So there is tons of appetite for electrification.
- [06:43]
B
Okay.
- [06:43]
A
Especially northern states. Canada, there are a lot of rebate dollars available still. Yep. And in Canada there are huge valuations out there. But even in the us, Massachusetts I know, has a really good heat pump rebate.
- [06:59]
C
So that goes in the commercial also.
- [07:01]
A
Yep.
- [07:02]
C
I knew about the residential side, but.
- [07:04]
A
And for the most part it'll be a dollar per ton rebate too. So you start to see some pretty big dollars associated with it. Um, obviously with a standard heat pump DX rooftop unit you get pretty limited, I mean even below 30, 25 degrees you get limited under capacity with a heat pump. So there's a lot of appetite from customers for heat pump but they got to meet your space time. So that's where dual fuel is coming in. It's kind of the mid transition point for electrification. We don't have a cold climate solution today that can really be marketed.
- [07:36]
C
Really on the heat pump side you mean?
- [07:37]
B
Right, right.
- [07:38]
A
So, so cold climate heat pump. There's a. Yeah. Department of Energy challenge for it in commercial. We are participants in it. We have a unit on a roof right now. It's performing great. The challenge that the industry is going to have is putting something out that people actually will buy.
- [07:53]
C
Right.
- [07:54]
A
It's expensive, expensive technology. So that's where dual fuel comes in. You're marrying an existing heat pump with a furnace that adds, you know, know a couple hundred, maybe thousand dollars.
- [08:03]
C
Is there an advantage? So I'm thinking about like, like Charlotte down Savannah, Florida. Is there an advantage to using that? Because like we have the heat pumps with the electric heat.
- [08:15]
B
Right.
- [08:15]
A
So what you'll see is dual fuel and a lot of it will come down to what your local utilities are like. Right. So I live in Oklahoma.
- [08:23]
C
Okay.
- [08:23]
A
Gas is always cheaper. Right. So you can use heat pumps in Oklahoma. You can have an electric heater as your supplemental heat. You know this past week we had snow, we were down single digit temperatures. So you're going to be running that thing.
- [08:37]
C
Oh yeah, non stop, full bore.
- [08:38]
A
Right. Your electric heats on. That's going to be extremely inefficient, really expensive. In Oklahoma you got dual fuel. Turn that thing on. Your furnace is going to give you heating very easy. Greater capacity than your heat pump is going to give you better efficiency than your electric strip heating is going to give you. So that's really dual fuel for us. We view it not just as a temporary measure. It is kind of initially been viewed as a gap filler until you get to cold climate heat pump. But I think it will always be a lower cost solution than a cold climate heat pump. Right. So how is going to compare to
- [09:12]
C
like a regular heat pump as far as investment goes? Because yeah, obviously you have your heat strips which cheap to install.
- [09:19]
A
Yeah. Expensive to run. Right. The other. So two things will play into your upfront investment. Right. The initial is just.
- [09:27]
B
Yeah.
- [09:27]
A
So you're getting a heat pump, you're paying for the furnace installation. Again not Going to be a big percentage increase on it. When you're looking at a traditional heat pump where you need supplemental heat so you've got the cost of installing the heater, the bigger issue is going to be your electrical upgrades. So a lot of our partners in the national accounts world, etcetera, they're looking at it going, I can't move from an AC unit with gas heat to a heat pump with backup electric heat, because next thing I got to do is I got to rip all the wires out of my building, upsize my electrical, get new supply from the utility.
- [09:59]
C
What about the vice versa? Whenever they like. Right now they have electric heat on the heat pump and they're considering that they, they probably have. They probably don't have gas on the building or they have it to appliances.
- [10:13]
A
Right.
- [10:13]
C
But not to the.
- [10:14]
A
So. Right. Yeah. If, if, if you don't already have gas, running a new gas line is going to be the biggest hurdle for someone choosing to move from heat pump with electric heat to a dual fuel.
- [10:23]
C
Right. So in the commercial side of things, and I'm going to get back to residential on the commercial side of things, though, really fast. A lot of that is like, for me, obviously, the electric heat is expensive to operate, but for me, gas heat is far more comfortable.
- [10:42]
A
Yes, yes.
- [10:43]
C
But if I also, if I own a shopping center and I don't really care about, let's be honest, like, I don't, I don't want to spend an extra $10,000 so that you're more comfortable. More comfortable while you walk through this other person's subway or grocery store or whatever it is. Have you experienced that? Like, how do you have that conversation? Or you're a manufacturer. I know that. But how, how would you advise to even have that conversation? And the benefits of the upsell?
- [11:15]
A
Yeah. So it comes really in multiple factors, and you kind of got to figure out for the owner, what do they care about. Right. So one of the easiest things to sell these days is green. So the emissions impact, you just say, look, you can either have a gas furnace for all of your heat or gas furnace for some of your heat. Right. So you go to dual fuel heat pump, you're going to greatly reduce your emissions. We actually have a calculator out there. It's a simple Excel spreadsheet tool that lets a customer go in, put in their tonnage, put in their what county they're in. And our dual fuel, it runs on a changeover set point that's adjustable. So a customer gets to decide, or whoever owns the equipment gets to decide what temperature are we going to actually change from heat pump operation to furnace operation. So if you are more concerned with utility costs and you don't care as much about comfort, you can set that a little bit lower or if, hey, you know what, I'm the maintenance guy and this unit is warming the office for the CEO. So top of the thing is going to make sure he's comfortable no matter what you bump that temperature higher, right? So that's all adjustable in the field and in our tool, you can set that again, you put in your location, you can put in your utility costs for gas and electric. If you, if you can get the information from a utility, you can actually put the emission impact for gas and electricity too. So if your electric supplier gives emissions data, you can plug that in and then it will calculate and give you for three scenarios. It'll give you an AC with gas heat, a traditional heat pump with backup electric heat, and then a dual fuel heat pump. And it will show you estimated annual operating costs. So looking at your utilities for those and emissions, so you can weigh that against each other. Basically, the selling features to go to a customer and say, okay, if you're operating a gas heat AC model, here's what you're going to spend on utilities, here's what your emission footprint is going to look like if you move to dual fuel. Again, the math is going to depend on what your utility costs look like. But if you're in the right location, hey, here's your utility savings you're going to get per year and the emission reductions you get with it. And then like I said, you can even adjust your changeover point. Play with that a little bit to see, hey, if we go 2 degrees cooler, what's the impact? What's it going to look like?
- [13:27]
C
Use the, the Bosch thermostat.
- [13:29]
A
Nope. So it is.
- [13:31]
C
You could use like an ECOB or something like that.
- [13:33]
A
So our commercial units, you can run even without a thermostat just on space sensors. So the smart equipment controller has scheduling built in. You can just run space sensors, zone sensors for temperature only, or temperature and humidity, all of that. And the controller itself is what controls your changeover point. Right.
- [13:52]
C
So rooftop inside the unit itself, all
- [13:54]
A
of our rooftop units have an outdoor temperature sensor. Even not just dual fuel. Every unit we manufacture has an outdoor temperature sensor. That's what's going to pick up your ambient temperature. And in the controller itself is where it's got your changeover point. So even if you're utilizing a, thermostat on your space. That's not what's going to control whether it's heat pump heating or gas heating. The unit itself is just going to get a heating call. It's going to look at what's the outdoor temperature and make the determination for what heat source to run and take
- [14:23]
C
all that into consideration.
- [14:24]
B
Yep.
- [14:25]
C
Yeah. So one of the clients that I do work for and all of their thermostats are controlled by corporate and so like they actually set inside the ecobee when like what temperature the heat strips are allowed to on. And so I actually got a nuisance call there the other day or say the other day, like last week or something. Right. Right after that really cold snap that we had come through. Not the most recent one, but the
- [14:51]
B
one for the one three days previous.
- [14:53]
C
Yeah, yeah, right.
- [14:54]
A
Yeah.
- [14:55]
C
And then it was 80 and back down to the teens. But corporate had it set up so that it had to be below 28 degrees before the heat strips would come on.
- [15:05]
A
Yeah.
- [15:05]
C
And I was like, you have a train precedent that's like from the 90s, right.
- [15:11]
A
Try to keep up with that.
- [15:12]
C
Yeah, rusted. Because we're five miles from the coast and it's barely hanging on and you're going to freeze them out because you don't want to run the heat drips. I was like, let me change this out over here. But yeah, so that's where I would like, I would wonder about.
- [15:27]
A
Right.
- [15:28]
C
That battle constantly.
- [15:29]
A
Yep.
- [15:30]
B
So.
- [15:30]
A
So yeah, in that scenario they would just. When you're doing your startup of the unit in the controller itself, you set the, the changeover point. So they would set it there and that's what would run it. So again, thermostat in the space is just going to send the call for heat. Say, hey, our set points, 70 degrees, we're at 60, 65. You know, we heat the unit itself based on the changeover, we'll say, okay, we'll give you a heat pump or we'll give you gas heat.
- [15:53]
C
Yeah. You were going to say something, I could tell.
- [15:55]
B
Well, you know, you were touching on it, Matt. But at the end of the day, it happens in residential, but it really happens as commercial. Different customers want different things and dual fuel is not right for all customers. If it's a landlord, that's already. If you're Mississippi and you have have a heat pump and landlord tenant divide exists, they're not going to run a gas pipe. It's not the right solution. They already got a heat pump. They're happy with the heat pump. You don't need a transitionary product. If you're already at a heat pump and you're happy with and you're. And you're. The results are adequate enough for what you're. What you're trying to achieve. Right.
- [16:27]
C
It may be advantageous to someone who has like a straight cool system or maybe they have gas now and then they get. Well, then you'd have to run electrical upgrade. If you had to write.
- [16:38]
A
No, if you. If you've got a. So a standard heat pump without electric heat backup.
- [16:44]
C
Yeah.
- [16:44]
A
Versus an ac, there's a little bit higher amp drop but, but not much. So you don't typically. If you're going from a straight AC to a straight heat pump, ignoring electric heat, you're not typically going to have to upgrade your electrical on the building.
- [16:56]
C
So if you had a gas scenario
- [16:57]
A
is if you've got gas. If you're an AC with gas heat, you've got gas there and you want to move into the heat pump world.
- [17:03]
B
Yeah.
- [17:04]
A
But your climate doesn't support heat pump only operation. Take the AC off, put the dual fuel in. So you've still got the gas there but the heat pump allows you to use the gas a lot less often.
- [17:14]
C
Yeah.
- [17:15]
A
Cool.
- [17:16]
C
What's new in the Resi world? Can you talk any about the like York and, and all that corporation?
- [17:25]
B
No.
- [17:25]
C
I mean I don't know anything about it.
- [17:27]
B
We're, we're both primarily York guys. I mean we're both legacy, what we call new Bosch employees. So we have been Bosch employees for a decade. We've been bosch employees for six months. Six months and two days. February 1st was the, was this. It was the six month marker. So you know, for, for York Resi, we are expanding our portfolio in 2026. I think we're going to have a busier launch season.
- [17:55]
C
What will change with York now because of Bosch?
- [17:59]
B
Well.
- [17:59]
C
Or will anything change?
- [18:00]
B
Yeah, no, we are, I think we're busier in 2026 than we were in the lead up to 2025. Wow. So then the h. Well changeover. Right. So we, we're, we're continuing with our very important but longer tail products that didn't get released in 2025 that were part of the A2L transition. So our top of the line Ace, you know, variable speed AC that it's 19 seer will be releasing that. Our top of the line heat pump that hits 21 seer. But you know those, those tops of the pyramid products. The, the best on the good, better best. We're, we're releasing those. We're continuing our res pack releases and you know those. And what refrigerant in 454B?
- [18:37]
A
452.
- [18:38]
B
Okay. For all those products, we are releasing a low profile res pack that will be R32. That'll address kind of the manufactured housing market where it's not a cube shape, but it's more kind of a six pin Lego block type of shape. It's not over under side by side. Yeah, yeah. So some, some companies might call it a small package product or we, we call it a residential package product. A B baby. Rooftop is also a preferred term sometimes, at least internally.
- [19:10]
C
Yeah, I actually got one of those. Not your brand, but it was a different brand.
- [19:15]
B
You didn't have to say that part. That wasn't necessary.
- [19:18]
A
I got one of those.
- [19:18]
B
Yeah.
- [19:19]
A
Yeah.
- [19:19]
C
Well, so I'll tell you why I said that. Because they set, they were supposed to be a rooftop unit, right. And it was spec'd on the job and I went and picked it up and I was like, there's no holes in the bottom.
- [19:32]
B
This just is no downflow.
- [19:34]
C
There's not a downflow. And I was like, so it was two rooftop units, new construction. One of them did have it, the other one didn't have it. Same model number on both of them. Craziest thing in the world. I put it up on the. I, we loaded on a trailer, took it to the job site, which was 50 miles, 50 minutes away. And I get it there, get on the crane, crane lifts it up, puts it up. I looked. That's exactly what I did. I was underneath it. I look up, I'm like, there's no holes under that. And then I looked like I climbed up on the roof and looked into it and I was like, there are holes in it. All the weeping holes, the drain holes. Literally it rained that night and rained into the building because it had all of the weeping holes for a regular outdoor unit so that the, the dirt could weep out of it, but no holes for the supply and return. And I was like, you've got to be kidding me. I done paid a crane to lift this thing up here because I called the manufacturer too. And they were like, yeah, this is a rooftop unit. And I was like, all right, I agree. Model numbers are the exact same, but the bases on these are not the same at all. And so like, it definitely it was. They're both 3 ton units too. So like they were, they were made. And that's the other thing. They were like, these are made for residential but they have commercial capabilities. And so like oh this is great. This is, this is awesome. And then I get there and it's like not awesome. This just, just cost me a lot of money and headache and frustration and explaining to the church pastor that why your roof has got water coming down in it. Yeah, so yeah, that was, that was though.
- [21:12]
B
Well then I'm glad that that wasn't us.
- [21:14]
A
As I saying, you don't want this
- [21:16]
B
story to be your product. We've released our single stage res packs in AC and in heat pump. We're rolling out our two stage 15, two AC and Respac, our three phase res packs. We're going to launch a what we call the side by side or the manufactured housing target entry tier and then mid tier respack. So we'll have a 13, 4 and a 15.2. The 15, 2 will be inverter driven. So that'll be a good better for that, that side by side horizontal dedicated market.
- [21:44]
C
Do you ever do. Are these the same package units that some would put on a regular stick built frame built house or is that a different style?
- [21:53]
B
You know it, it, it depends on the applicant. I, I live, I live in North Carolina. I have a respac that, that goes underneath, underneath the house for the ground floor and then a split system tied to the attic for the, for the second floor. So you see that throughout the Carolinas, Throughout Georgia. Right.
- [22:07]
A
You, you could.
- [22:08]
B
My kitchen window is high enough that my cube style res pack does not block my kitchen. My kitchen window. That's typically what ends up happening and see if someone needs to go to the low profile to, to get under the kitchen window. You know, again we'll, we'll have the option of either one that'll be available. So we'll have a 15:2 cube style and a 15:2 side by side style.
- [22:28]
C
So with Bosch and York together, does anything go away or do you still keep a full Bosch line? Do you still keep a full York line in?
- [22:36]
B
You know, eventually, probably. O of right now. You know, I was joking around with some people on Sunday night. I said, you know, step one is you get married and you move everything in together and then you pick out which couch you prefer. Right. You don't, you don't start with freaking out which, which couch you prefer. Right.
- [22:50]
C
I don't know because whenever I got married remarried, it was very adamant that that ex wife's couch was not going in my house.
- [22:59]
B
There's probably some feeling, corporate feelings like that also. But we try and put those biases aside and make the Right. The business. This is just three.
- [23:05]
A
Yeah.
- [23:06]
B
We gotta.
- [23:06]
A
And you know, ignore it a little bit.
- [23:08]
B
We do have those biases and we do have those internal discussions and kind of where we're at right now is let's get everything released and then let's see where customer demand goes and we'll follow customer demand. And if customer demand for certain products dries up, well, then that will be the clear signal that we bias doesn't matter. Customers have. Customers will speak with their dollars and with their, with their purchase choices.
- [23:31]
C
How do you convince the contractor to continue to offer X, Y or Z? Like, because during I. And correct me if I'm wrong, if y' all see something different during the COVID years, let's say like 20, 21, 22, especially whenever equipment got really short, a lot of companies had to go to whatever they could get their hands on. Sure. Um, and I, I don't know this to be true, but I feel like it was almost the downturn of brand loyalty because it was like, all right, well, I'm just getting whatever I can get. I'm going to get it and put it in.
- [24:12]
A
I bought this brand for 30 years, but now.
- [24:14]
C
Right.
- [24:15]
A
I've opened up the floodgates.
- [24:16]
B
Yeah.
- [24:16]
A
And so coming out of COVID Exactly. Don't necessarily go back to just.
- [24:20]
C
Do you, do you try and go back to developing the brand loyalty again?
- [24:25]
B
I think everything you said about COVID kind of breaking brand loyalty is, you know, spot on. And we've seen that. Right. You know, if, if, if you can't provide someone product that they need to install to put bread on the table, that is, nothing else matters. They've got to put, they've got to be a provider for their family and that's what. And for their employees and keep their employees busy and employed and that's. That's what matters. You know, we still have, you know, brand partnership building programs. Right. We have dealer programs where there's co op dollars and you know, other. Other manufacturers have similar, similar programs. Where do the partnership. We build each other's businesses up and we invest in each other's businesses and we, we help contractors, you know, wrap their vehicles, invest in marketing, do co. Branded marketing, et cetera, et cetera. You know, does that have.
- [25:11]
C
All the way or.
- [25:12]
B
And we continue to lean into that. You know, I think maybe in the, in the past, maybe pre Covid, we might estimate that maybe brand loyalty was like 90, 10, that you might have had 90% of someone's wallet. I think that's probably shift, you Know, Covid probably shifted that to 50, 50, 60, 40 splits or. Or 40, 30, 30. As contractors tried to try to diversify their ability to make sure that they had product. I do feel that we're getting more and more back to contractors realizing. Coming back to being more loyal because. Because the loyalty programs are profitable for contractors. Right.
- [25:47]
C
So as long as you use them properly, track it.
- [25:51]
B
It's the same as airline. Right. Like which airline you want to put your butt in. Right. The one you're trying to earn upgrade certificates and free trips and et cetera, et cetera. Right. So if you switch between Delta America and United every week, you're never going to achieve status with anyone. Right. So it's. It. We do that. We do the same thing in. In H Vac.
- [26:09]
A
Refrigerant transition hurt a little bit too, though, I think from product availability and. And refrigerant. Refrigerant itself.
- [26:15]
B
You're not in spl, exactly.
- [26:17]
A
Let me tell you. Ex. Yeah, I could say that without the same level. But even. Even in our local market, you know, I had a friend who had to change out their system. They're figuring out, do I put a 410A or 454B in. The contractor they're talking with is, well, normally this is what I sell, but right now I can't get the refrigerant for it. So I'm going to give you a X brand instead of this, if that's what you want to go with. And so that was just less than a year ago. Right. So you get out of COVID start to recover a little bit, but then refrigerant comes in. We did a new hurdle into it.
- [26:48]
C
Well, I got a call, a service call, and was talking to a tech, and I was like, what are you working on? Because I knew that we had recently replaced it. And I say recently, like two, maybe two years ago, replaced it. And he was like, oh, it's this brand. I was like, no, it's not. We've never. We don't put that in like his. And he told me the date and I was like, oh, that's probably the only thing that we could get.
- [27:13]
A
Yeah, exactly.
- [27:14]
C
Okay, that makes. That makes a little bit more sense.
- [27:15]
B
I think we're going to return to a period of stability. Right. We had. We had Covid. So we had equipment shortages. We had the R454B or the more broadly we should say the A2L transition. And there was equipment shortages across different OEMs, as some folks shifted earlier and didn't have 410A equipment. When contractors went in 410A then, then folks had 454 or A12 shortages at the factory level. So there's equipment shortages then there were, then there was the infamous 454B shortage throughout the summer. I think as we get into 2026 we're going to see everybody return to a level of normalcy of equipment stability of availability and refrigerant availability. Right. The refer the refrigerant manufacturers are that they're improving their ability, they're improving their forecasting the pressure relief valve on the tanks that they didn't have enough tanks. They've now come up on the forecast of that and we start to the pendulum has been swinging wildly all over the place. I think we're going to come back to stasis. We'll be able to win contractors back with having a full assortment being easy to do business with having an industry leading app in the pocket that helps make installs easier. You know just, just, just touching on that. You know with our app on resy if you use that to, to do, to register the warranty you get an extra a six month labor warranty. They read that it's also on commercial to, to help people, you know to encourage people to use the app and, and submit online startup reports via the app. So I think you know my, my competitors will do similar things right as we all, we will all return to. People won't be only going to one store because they're the ones with bananas and app bananas and bread before the hurricane. Right. We'll return to stability and we'll get back to competing based on features, benefits and, and taking care of contract.
- [29:06]
C
So let me ask you this for personal reasoning. Where are you, where do you predict that you're going to be on the proprietary controls like thermostats? Like you have to have a York thermostat, you have to have a Bosch thermostat in order to be able to operate the inverter properly. I feel like it's heading in that direction. But I also feel like Google's got a lot of money and if they have any say so when it comes to any kind of nest or anything like that, they're not going to want to be done away with because we're going to proprietary software.
- [29:46]
A
So commercial is easy because we don't have anything proprietary. Right. We don't have our own stat development. No. At this point. No. So even when you get into some of the more complicated for us it's always easier to have our own equipment control do it. All right, so when we're moving into variable speed modulating, reheat modulating this, that everything modulating is what the future holds. Right. All of that is going to be easier for our own unit to control it. It just wants look, what's your temperature? What do you want it to be? We're going to figure out what we need to do to make that happen.
- [30:18]
C
So as a technician, when it comes to diagnosing that, is that going to make diagnosing a lot more difficult? I'm used to like y1 called in and y1 called out. Like why 2 we got signal in and we have signal for why to out. So we're board's good.
- [30:36]
A
So our. No, our controller is very robust. So I don't know your familiarity. Smart equipment is our standard control. It's a microprocessor controller for everything. Right. So it's going to give you on the unit controller itself, it's a LCD screen that's going to show you any alerts, any alarms, give you pressure of readings, temperature readings, all of that. And then the same app Charles was talking about, the GoTemp Pro app will. So we have native Bluetooth on all of our equipment moving forward as well. So you use the Goten Pro app to connect to the unit. You can see all your alerts. You can set up notifications through that
- [31:08]
C
go the homeowner as well. Like is that a homeowner?
- [31:12]
A
But so it's, it's going to more be for the commercial side of things, a technician, targeted contractor, installer. But if you've got a, you know, say it's a Nashville account, they've got multiple sites, et cetera. They've got service personnel that work on it. You can have a site person that's in charge of look, you're the one that's going to access it, look at it and notify us if something's up. Right. So or school district, you know, you've got your maintenance personnel, they can access it and look at it. So it's not obviously it's not going to be. You don't want the principal of a school logging in and looking at something bright. But you can have whatever technician on site, not just the installer, but we, we have access. So it, a lot of it is powered through what we call our Solution Navigator tool. It's our web tool where you can access technical specs, unit selections, order processes, warranty, all of that. So all of that functionality is built into the Goten Pro app. And there are capabilities that you can do in the app only with a login. So some things is locked behind a login, but there are a lot of things you can do without a login. So that's where, you know, if it's a contractor that isn't working with our equipment every day, but they got a job and they go to one of our dealers, they get the unit, we can still encourage them, hey, download the app, you're still going to be able to do your startup processes, all of that, even without a login. But it doesn't make sense for us to give you a login and go through that whole process because you just, you won this one job, you bought it, that's it. Right. So the app has a lot of capabilities without having to log in, but then some stuff that we keep behind the wall. So in a little bit of it is just we don't want people to get dangerous, go deeper than they need to go. So it's a way that we help almost protect, help them protect themselves.
- [32:52]
B
So, yeah, totally sense, you know, on the residential side, you know your question, we need a, a proprietary thermostat for controls verification, protocol procedure compliance. The tightest way to comply with CVP is to know what the space temperature is and what the space set point is and that be communicated directly to the outdoor unit one way or another. That is absolutely the cleanest way because then you will absolutely know where the load line is and be able to track the load line. There are other ways around that with algorithms and with inferences and measuring the refrigerant pressure and temperature as it comes back to the outdoor unit. This looks a little trickier for heat pump when it's in heating mode, we see our ourselves innovating it as well as some other competitors innovating in that space for. And you'll generally see those systems be able to operate without a proprietary stat, but get to tighter levels of control and tighter levels of comfort where they don't have to make as many estimations or inferences. If you know exactly what's going on, you can deliver exactly what's needed. Right. So you'll have kind of upgrades to a proprietary stat. So on the York side, our top of the line AC and our top of the line heat pump will require. They are a communicating system and requires an SHC 510 as a fully communicating stat. For ease of troubleshooting. It will be easier than having to drive something to say, Y1. You'll be able to put it into a troubleshooting mode. We did do a lot with that new generation of product too. Suppress what negative information the homeowner sees. So in the past we used to give a lot of negative information to the homeowner and then if the contractor made a mistake or an oversight, when they show back up to the house for their callback, they don't say oops, my bad. They besmirch the brand. Yeah. So for sure we realized like, let's just tell the contractor that there is, there is, there is an alert and not wave that red flag to the homeowner because it makes the contractor not, not happy with us if we're tattletailing on them left and right. So those, those communicating systems, the stat will ship with the condenser since it's required for the system. We're not going to make it something that can be an oversight or missed on the job site is going to be included with the condenser and then that also allows us to price the condenser with that included and not have this communicating control. The price get, get out of our, our tight control if you will. We have a new series of modulating heat pumps that we're releasing this year. It'll be released mid summer so It'll be a YD5, a YDV and a YDC that'll be a 152 to 18 seer entry mid tier heat pump. A high, high tier heat pump that goes to 20 seer and then a cold climate heat pump is not as big in Georgia but still an interesting thing to be able to talk about and technology demonstration. Those systems will be able to operate with a Nest Honeywell home.
- [35:49]
C
I was thinking some of the smart home solutions, some of them that I know of require like the thermostat is the main control of all the rest of smart home.
- [36:01]
B
So those, those YD series products will be able to use any proper non communicating stat that takes 24 volts. So the indoor and the outdoor will communicate via two wire but the indoor to the thermostat will take standard 24 volt signal. We do have an SHC 350. SHC stands for Smart Home Comfort or Smart home control. The 350 is a Wi fi enabled stat and that will tighten up the comfort as we kind of discussed because it will be able to detect what's going on in this space Even though it's 24 volt to the indoor, it's connected to the cloud via wi fi and the outdoor units will be connected via to the cloud via A cell phone signal that, that comes standard on that.
- [36:45]
C
Is there a subscription with that?
- [36:47]
B
As of the first two years of that subscription are included and then we're looking at. We have historically said that third year was going to need to be paid for and that at least on the Bosch side the third year was waived. That cell phone signal also that stat and that cell phone Signal also enables HRI 1310 or 1380. Excuse me, 1380 demand response compliance. So some utility companies want to be able to send a doctor signal and say do X but then receive a report back that X has been achieved and been executed and not just send one way signals but to get a two way signal. So to have a two way signal like my, my nest at home, I can, I can sign up for rush hour rewards and receive a signal and then theoretically it clips Y2 off or W2 off and just does you know, Y1 and W1 but it doesn't report anything back. It has no idea that my conventional equipment did what was asked or feels
- [37:45]
C
bypassed and it's actually not doing it. And we're actually comfortable with 1380.
- [37:51]
B
Compliance is going to push for more and more integration into the unit to 1380 requires that the unit report back. So it has to be communicating equipment. To your whole point of how does Google. Google has billions of dollars and how do they feel about this? You know, my team reaches out to them when we try and discuss ways that you know, that they could lobby to, to. To you know, protect their, to protect, you know, their, their business. We see ways to align with them that if they were able to protect their business that us, us partnering with them would be beneficial for both of us. As of right now, when we see H R I 1380 discussed in CVP, I see a huge threat to, to, to. To non proprietary stacks.
- [38:35]
C
Sounds like that to me. The other thing is, is like immediately I'm thinking of what happens when you sell your house in year two of it being replaced and then it runs perfect for a year and then all of a sudden I didn't know I had to have a subscription. And then you get pissed off at the manufacturer or because the contractor naturally is not going to say oh my bad, I was supposed to tell you whenever we were out here, the cell
- [39:01]
B
phone signal runs out, right? The unit will default to running off of 24. The 24 volt out the stats of the indoor and it'll still operate normally. The, the, the. The precision of the comfort control will be a little bit more muted and a little bit more Inference, that's the question. So it's likely that they, they don't notice would be they would lose their, they would lose their doctor subscription. But they would either know that or not. Now this, this a problem for the utility companies because utility companies might pay, they might not pay an annual or a monthly doctor subscription or pay into the homeowner to be enrolled enrollment kind of incentive. They might pay a installation incentive and the installation incentive might work on day one and they could send an inspector out and it works day one. But then someone changes a WI FI password.
- [39:52]
C
Yeah.
- [39:53]
B
And it doesn't work WI FI password
- [39:56]
C
or change the name of the WI fi. Oh, you guys break the whole system. Yeah, yeah, 100%. Okay. So speaking on that technology a little bit, where in the what world wide world of AI are you? Like it's, it's so we have to have servers cooled down. So that's a major. Like I know they're, they're building out manufacturing specifically for server farms and stuff like that. But in the inference of AI on the residential side of things, is there anything there or is it not really going to affect you much?
- [40:39]
B
We, we are, where we're approaching AI is not in the making money off of the data center business. Right. The air cooled show and the water cool chiller guys, they're selling the, the picks and the shovels for the gold rush. Right. We're not, we're not selling picks and shovels. Where we're, we're seeing AI and we're roadmaping. To use AI is to make life easier for the contractor, particularly around install and around service where we see the future being. Well if we can feed all of our written literature and if we could feed all of our history of tech service calls to a large language model, then you could have a H Vac version of Siri and you could say hey York, I'm working on a YH4 and I'm seeing X, Y and Z or what should. Please outline my troubleshooting steps and have the app say these should be your steps. That's, that's the vision and you know, I think will be there sooner, sooner rather than later.
- [41:43]
C
I'm, I can only imagine the amount of data that you can collect in general anyway.
- [41:47]
B
People say well it's going to take so long for it to learn. And I'm like no, no, no, no. You could give it the Library of Congress and in 48 hours it can ingest all of that. All that information is. Do you have the information for it formatted that you can give the AI to ingest. The other piece of it is parts and being able to search for parts and on a service call level. And this is where we think that, you know, having that functionality adds to the, to the brand loyalty and to the contractor signing this. If we make your life easier, who do you want to work with? Whoever makes your life easier and faster to get on and off a job.
- [42:19]
A
And even on the commercial side, some of the future applications will be looking at predictive maintenance, predictive performance. So you start to monitor your pressures, your temperatures. And again, looking at service history, you can start to predict, say, okay, we're seeing degradation in performance here. So not just, hey, don't forget to clean your coils, but oh, by the way, your pressures are off. Check your refrigerant charge. Do this before you've got a compressor failure, before you've got a bigger issue. It's okay. These are the things that we're going to recommend. You go look at service and before you've got a problem, let's find it and solve it.
- [42:53]
C
So it'd be cool if you had ability to, to test and alert on inrush of like electricity because man on commercial complex, like an outlet mall. Like we have a couple of units that they just get inrush power every time you have a lightning strike 15 miles away and all of a sudden they're popping high voltage fuses. And I'm like, what in the world? This is the only unit on the whole roof that does it, but it does it every time. And it'd be really cool to be able to monitor and fix it or prevent it from being an issue.
- [43:29]
B
My biggest thing with AI is there's got it. There's always got to be a business case. I walk around the show and there's some booths that have AI plastered all over their booth. And it's like we have a. You know, I sent someone on my team that's in charge of digital controls for the CES show here a couple of months ago and he's like, oh, there's all these kitchens. And they all say it's an AI enabled kitchen. I'm like, is the fridge talking to the stove? And they're having an offline chat like, what is the value? And why am I going to spend a nickel more for like what's, what's the value to anyone in the value chain? So that's where I have you seen
- [44:01]
C
an AI enhanced refrigerator? And literally monitors all the stuff in the refrigerator and it could tell you
- [44:09]
B
some if something's going to expire and some.
- [44:11]
C
And when it comes to orders supposed
- [44:13]
B
like recipes, like what's in your algorithms on that stuff and see there, there's
- [44:17]
C
value but if, if you use it, if it's properly set up, like a lot of ifs in there.
- [44:22]
B
So everything I want to build is have a use case, have someone that's going to have perceived value or someone needs to be willing to pay for it or be willing to buy more from us or be a more loyal customer because we're giving them more value. And actually because we did, we did AI and a buzzword for some reason
- [44:41]
C
like I've, I present like
- [44:45]
B
I want
- [44:45]
C
to say 48 times on AI. I presented on it. Literally the first two or three presentations I loaded on down with some AI and right over everybody says eyes glazing over 10 minutes into a presentation and then I had one slide at the very end that showed all these automations and they're like, that's the AI that we want.
- [45:10]
A
Right.
- [45:10]
C
You don't want AI, you want automation. So that figured out AI gets butts in seats and automation is the solution to what they actually want. But the buzzword is there and so naturally manufacturers, suppliers, they're just going to try and cash in on that buzzword when in reality they don't really need AI this and AI that. We want some very robust automation is what we want.
- [45:37]
B
And we, we, we, we are, we think the, the, the kind of H Vac Siri in your pocket where you can have a conversation, like a troubleshooting conversation with. We think that there's good value there, can self prompt. It doesn't hallucinate, right?
- [45:53]
C
Yeah, no hallucinating and self prompt because we know that like a good prompt will get you a really good result. But you know, a technician in the field, right. They're not gonna do a full right
- [46:05]
A
service training on how to prompt your AI to show you that a fixed.
- [46:09]
C
It's going to have to be very intuitive of oh, you said this but you probably meant you want this over here. And that's the, that's the part that takes a little bit more time to train.
- [46:19]
B
It'll, it'll take time but you know, I think we're heading in the right direction and you know we're, we're talking to people.
- [46:23]
C
Exciting that you're even discussing that aspect of it because that's going to really help out junior techs that are intimidated as well. Yeah, so that's really cool.
- [46:33]
B
So a lot of times we hear from Junior techs that they. They want an outlet to be able to ask a question without having to call their boss and let their boss know they have this knowledge gap. Right.
- [46:41]
C
And have a wrench thrown at them. Yeah.
- [46:44]
B
So it gives them a nice off
- [46:46]
C
ramp for questions I loved. So back when I was first a technician, I had a trained tech support guy. His name was Bill, and he was kind of a brash guy. But I love the network.
- [47:03]
A
I love tech support. Brash.
- [47:05]
C
As long as I gave him the Delta T and my pressures and my voltages when I kept. When I called him. And if I had that information, he'd help me walk through that entire system. And it would be something as simple as go to the control panel and take that number 10 screw, tighten it a quarter turn unit. Come on. I was like, bill, how'd you know that? And why do I have to get all this other information just so you tell me to turn that screw? He's like, because I want you to get in the habit of giving me all the information. But Bill was my guy that I could go to no matter what, and I learned so much from that. That was a nice resource to have. And so I'd have to call the owner of the company or service manager again.
- [47:46]
A
You don't have to show that. I'm not sure that I know what this is about. Your guy.
- [47:49]
C
Yeah, Exactly. Yeah.
- [47:51]
A
Cool.
- [47:51]
C
Guys, is there anything that we didn't cover? I don't even know how long.
- [47:54]
B
Yeah, I mean, I could talk about products all day long, but I think, you know, we've had a pretty solid conversation and hopefully delivered some value. Good intel.
- [48:04]
A
For suppose.
- [48:05]
C
For those who are interested in becoming a dealer, what's the best way to make that happen? Like if they. If they're not a Bosch or York dealer or anything like that? What's that?
- [48:17]
B
If there's show notes, we could provide some links where they could go and reach out and. Perfect.
- [48:22]
C
So we have some links to go to.
- [48:23]
B
All right. Contact a local distributor and, you know, we'll sign people up to be a CCE dealer and we can provide that link to make sure it's in the show notes. Oh, sweet.
- [48:32]
C
Perfect. Thanks, guys. Appreciate you.
- [48:45]
D
Thank you for listening to this episode of Service Business Mastery. Now that you are equipped with essential business advice from this impactful conversation, you are one step closer to becoming the successful owner of your dreams. If this episode is has been helpful to your business journey, don't forget to subscribe to the show, leave a rating, and share it with other owners as well, visit servicebusinessmastery.com to learn more.