Commercial HVAC Services vs Residential HVAC Services

The American HVAC industry is heating up (insert overdramatic wink).

Heating and cooling service providers will earn close to $123 billion in revenue in 2023. And over the next five years, experts expect the industry to grow at a rate of 6.6%.

They expect this growth for both commercial and residential HVAC customers. But the type of clients you focus on will impact your business model.

It’s true that residential and commercial HVAC systems are similar in how they function. But commercial systems are larger and more complex. That makes for major differences in the work required.

And sometimes differences in potential revenue, too.

As a provider, you can offer residential HVAC services, commercial services, or both. Deciding what path to take will impact all areas of your business.

In this article, we’ll dive into commercial HVAC vs. residential HVAC. We’ll cover everything from differences in the work itself to profit potential and more.

What Is the Difference Between Commercial & Residential HVAC?

The main difference between residential and commercial HVAC services is the systems you work on. Namely, their size and complexity.

Commercial systems are larger than residential HVAC systems. A residential system might consist of a single stand-alone unit. A commercial system usually has a central plant with many components. Think of a single gas furnace vs. a system with boilers, cooling towers, and a ventilation system.

A commercial HVAC company works on systems for businesses and industrial facilities. This can include anything from apartment complexes to office buildings, hospitals, and beyond.

These systems might involve specialized heating or cooling equipment. Or they may be gigantic systems used to keep an entire building comfortable.

In short, if it involves a commercial system, it falls under the umbrella of commercial HVAC.

A residential HVAC provider primarily serves private homes. You may also service small businesses that rely on residential HVAC systems.

So, even if you’re a residential HVAC services provider, you still have business customers. Local retail shops, cafes, and small offices all probably rely on residential systems.

Commercial vs. Residential HVAC: Installation, Maintenance & Repairs

So, there’s a clear distinction between commercial and residential HVAC services. Especially when it comes to the actual work and expertise involved.

Let’s take a further look at how these services differ.

Commercial vs. Residential HVAC Installation

Residential and commercial HVAC installations are two different beasts. The extent of the work and materials you need will be quite different. This will affect how you price your services and how long a job will take.

Commercial HVAC Installation

Commercial installation projects usually take much longer than residential ones. They can take weeks. These installations often involve intricate planning. You’ll also need an understanding of the best way to lay out the different units.

A commercial system has to heat and cool a much larger space. Depending on the layout of the building, it might make sense to install a multi-zone system or large units.

Another difference is the location of the systems.

Residential HVAC equipment is usually located outside. Or, it can go inside on the top or bottom floor. Commercial HVAC technicians generally install the units on the roof. There are a couple of reasons for this.

First, the systems are larger, so there isn’t much room for them outside. Second, they’re louder. So, instead of creating noise pollution for customers, the system goes on the roof. That way, the loud noise is less likely to bother anyone.

Overall, the installation process is more intense for commercial HVAC systems.

Residential HVAC Installation

As a residential HVAC company, your technicians can install a unit in a few hours to a couple of days.

Installing residential HVAC equipment is straightforward. Units generally go in the yard or next to the building. Or for heating systems, they’re generally located in the basement or the attic. And most installation jobs only need one or two technicians.

For example, two licensed technicians can install a new gas furnace in one afternoon. For a brand-new central AC system, it could take three days or longer if you’re also installing new ductwork. But if you’re simply connecting a new air conditioner to existing ductwork, it may only take a few hours.

Typically, a residential provider serves a greater number of customers. This is because the scope of the work is smaller than it is for commercial systems.

Commercial vs. Residential HVAC Maintenance

Of course, you know that once you install the system, the extra workload isn’t finished. Both residential and commercial HVAC systems will need ongoing maintenance. This is another service you can offer to maximize your revenue.

Commercial HVAC Maintenance

Comparatively, commercial HVAC maintenance is more intricate than residential.

It requires more time, effort, and knowledge from industry professionals. Technicians need to check a complex system. Usually, this includes drainage pipes, ventilation components, and the units themselves.

Additionally, commercial system maintenance must happen more frequently.

Because there are more components that can wear down, servicing is needed more often. Commercial systems generally run harder than residential ones, too, which demands more maintenance.

These systems are also a huge investment for any company. Regular HVAC maintenance is critical to helping them save money in the long run. That means steady, reliable business for you.

Residential HVAC Maintenance

A residential system will typically remain in good shape with just an annual checkup. An HVAC tech can usually do these annual maintenance tasks in an hour or two, such as

• Checking for any worn parts that need to be replaced
• Clearing the condensate drain
• Verifying that the capacitors and any electrical components are in good working order
• Lubricating moving parts
• Checking system controls

Commercial vs. Residential HVAC Repair

Repair work will also be different for residential and commercial HVAC systems. But this likely comes as no surprise to you.

Commercial HVAC Repair

First, a commercial HVAC company will have to send out repair technicians more often. For example, the HVAC system in a data center runs nonstop. This is because these centers have servers running constantly. To keep them from overheating, they need ongoing AC and ventilation.

As a result, components are going to break down from time to time. That’s something that happens rarely in residential units.

Commercial HVAC customers might also be more concerned about their systems breaking down. Because if they do, it could affect their business.

As such, it’s a good idea to dispatch commercial technicians for emergency repairs. This includes repairs needed outside of regular business hours.

Residential HVAC Repair

Repairs for residential HVAC systems, like installation, will be more straightforward. As a result, your team will be able to complete them more quickly.

So, you likely won’t do repairs that are as expensive or time-consuming as commercial ones. But you’ll have more time to devote to other services or more repair customers.

Emergency repairs are also a part of residential HVAC services. But unlike with commercial clients, your company probably won’t have a contract to do the repair work. Homeowners would turn to emergency HVAC repair companies in these situations.

Residential HVAC companies do have the option of offering emergency repairs. Doing so can help you increase revenue and set yourself apart from your competition.

But, ultimately, you have the flexibility to decide if your business is always on call or not. 

Commercial vs. Residential HVAC: Most Common Problems

As an HVAC specialist, you’ll come across many of the same issues to repair in your work. But, depending on your target clients, your regular tasks will differ.

Commercial HVAC Common Problems

In a commercial system, there are more parts to contend with. For example, a more complex drainage system, an economizer, and more units. So, there are more issues that commercial HVAC technicians must address regularly.

Here are some of the common issues:

• Condenser leaks
• Condenser fan failure
• Clogged or dirty condenser coils
• Malfunctioning economizer
• Electrical problems due to connections overheating
• Compressor leaks

Residential HVAC Common Problems

The issues your company is likely to run into with residential HVAC systems tend to be easier to address.

Here are some of the most common problems with residential units:

• Blown fuses
• Malfunctioning thermostats
• Clogged air filters
• Dust accumulation on the condenser or evaporator coils

Commercial vs. Residential HVAC: Profit Potential

Everybody needs heating, ventilation, and air conditioning. So, there will always be demand for HVAC services—both residential and commercial.

That means that you can be profitable as either a residential or a commercial HVAC company.

Residential HVAC Profit Potential

Generally, it’s easier to enter the market as a residential HVAC contractor. Growing a residential HVAC company is usually easier, too. Here’s why.

• Technicians need less experience. Commercial technicians need more training to be able to service more complex systems.
• Easier marketing, lead generation, and customer acquisition. As a residential provider, you can target a larger pool of customers. This gives you more opportunities to reach and acquire customers.
• Demand is consistently high. Research shows that 88% of US households use air conditioning. Heating is also a given in most homes across the country. So, there will always be demand for your services.

Commercial HVAC Profit Potential

Concentrating on commercial HVAC services can be equally as profitable as residential. But it’ll likely be harder to grow as quickly or widely.

When it comes to commercial HVAC, there is a much smaller pool of clients to draw from.

Also, potential commercial or industrial clients tend to already have an HVAC provider. This makes it harder to attract new customers. Or, it means you must already have connections in the commercial real estate industry.

But when you do manage to secure a contract with a commercial HVAC client, you’ll earn more revenue. With more frequent maintenance and higher servicing costs come more profits.

Ultimately, there’s more profit potential in the residential HVAC sector. But, if you want to expand your business and grow, the commercial HVAC market might be a great next step.

Next Steps: Choosing Your HVAC Specialty

Understanding the major differences between commercial HVAC vs. residential HVAC services is crucial. With these insights, you’ll be able to better choose which audience you want to target.

Still stressing over deciding your specialty? Here are some easy next steps to help you breathe easy and stay cool:

• Research your local market. Knowing where the biggest gaps are in your local HVAC market will be valuable. This will help you determine which specialty will be more profitable. Start by researching data about commercial and residential real estate in your area.
• Assess your team members’ skill sets. Your current technicians may already have work experience that leans residential or commercial. If they do, your choice might be simple. Meet with your team to find out where their personal specialties and interests lie.
• Look at your current network. As we mentioned, it’s harder to break into the commercial HVAC industry. Sit down and take an in-depth look at your current clients. Do you have many commercial clients already? Or know people who can get you connections? Or are you well-established with more residential customers?