The $4,000 I Was Losing on Every Job (And Didn't Know It)

I'm 45 years old. I don't get a lot of aha moments anymore.

It's not that people stop saying smart things. It's that after enough years running a business, most of the "smart things" are things you've already heard. You've filed them away. Sometimes you even ignored them on purpose and blazed your own path straight into a wall, just to learn the hard lesson yourself. I've done plenty of that.

So when a real aha moment shows up, you notice. And the thing about a true aha moment is that it doesn't feel complicated. It lands fast. You hear it and immediately think, "How did I not know that? How did I miss it for this long?"

I had one of those the other day on a call with Eric Corvath at GoodLeap. We were talking about financing and the metrics around it, and he said something I had genuinely never thought about. It's not the sexiest topic in the world. But it made too much sense to ignore, and once I saw it, I couldn't unsee it.

How I Learned to Think About Financing

Like most contractors, I started my company with zero experience in any of this. Early on I just knew I had to offer payment options. At first I assumed financing was for the customers who couldn't afford the job. Then I figured out it was just as much for the customers with great credit who simply liked to finance things. Back then the standard was zero percent interest, equal payments for five years.

The cost to me for offering that wasn't crazy, but it wasn't nothing either. And I'll be honest with you: in 2012 our average system was about $8,000. Please don't make fun of me. That wasn't a small number in my market at the time, and I carried some limiting beliefs about what people would actually spend to keep their house cool. I had a little bit of that "mother in the truck" mindset, assuming the customer's wallet was thinner than it was.

When I picked a finance company, the number one thing I looked at was the rate sheet. I treated it almost exactly like credit card processing. For every $8,000 I sold, how much did I have to pay to move that money? A 9.99% revolving product was great, because the dealer cost was only a couple percent, basically a credit card fee. But a 0% for 60 months could cost me 12 to 15 points. That's real money coming out of the job.

So I did what a lot of us do. I blended it. Across all the HVAC systems I sold, my overall financing cost averaged around 4.5%. Instead of fighting it product by product, I just added 4.5% across the board in my pricing and covered the cost that way. Problem solved, or so I thought.

The scale of financing in home improvement is larger than most contractors appreciate. National Association of Home Builders research shows roughly 35–45% of major home-improvement projects over $5,000 involve consumer financing — HVAC replacements trend toward the high end as average ticket prices climb past $8,000–$12,000. The more of your revenue depends on financing, the larger the exposure when approvals come back short.

The Metric That Looked Like a Win

Here's where it gets interesting. Approval rate never really gave me trouble. That math is simple: when your customers apply, how often do they get approved? Mine sat around 80 to 85%. I'd glance at that number, think "great, we're good," and move on.

But that's the trap. And it's exactly what Eric pointed at.

The Consumer Financial Protection Bureau's Consumer Credit Trends data shows that approximately 34% of U.S. adults carry a credit score below 670 — the threshold most point-of-sale lenders use to route applicants toward higher-rate products or lower approval limits. In working- and middle-class residential markets, that share often exceeds 40%. Approval shortfalls are not rare edge cases. They are a predictable part of your customer mix.

Your customer gets approved. Fine. But approved for what? Because getting approved for something is not the same as getting approved for what they actually wanted to buy.

Walk through it the way it really happens. We run the discovery and the sales presentation. The customer gives a verbal yes to a specific system. Then we apply for financing. As we got better at conveying value, our pricing climbed. A system that used to be $8,000 was now $12,000, and the amount the customer wanted to finance climbed right along with it.

Now picture three options on the table: $12,000, $10,000, and $8,000. The customer wants the $12,000 system. They apply. They get approved for $9,000. Which system do you think they end up buying?

The $8,000 one. Every time.

Or here's the other version: they get approved for the amount they wanted, but at an interest rate so high they back down anyway and drop to the cheaper option.

The Hidden Loss Nobody Reports

So that customer who wanted to spend $12,000 just bought $8,000. On my reports, that shows up as an $8,000 sale. A win.

But it wasn't a full win. It was a $4,000 miss hiding inside a sale. And you and I both know that in 2012, if you were priced right, the spread between an $8,000 job and a $12,000 job wasn't just top-line revenue. That difference was mostly bottom line. That's the good stuff.

There are two metrics that quietly disguise this. One is close rate, which shows the sale but says nothing about the downgrade. The other is take rate, which tells you what percentage of customers accept the financing offered to them, often at a lower amount or a higher rate than they actually wanted. Both numbers can look healthy while you're bleeding opportunity underneath them.

The home run turned into a base hit, and nothing in my standard reporting told me it happened. The technician knew. The customer knew. My dashboard didn't.

Research on high-ticket in-home sales confirms this pattern. Synchrony Financial's home-improvement consumer research found that 28% of consumers who could not secure adequate financing for a desired product bought a lower-tier alternative instead — and 69% of those buyers did not explain the reason to the salesperson. The sale records as a close. The revenue gap is permanent and invisible.

And it's not just replacements. Think about repair versus replace. If you run a thorough diagnostic, your repair options can get detailed, sometimes $3,000 or $4,000 with cleanings, restoration, and multiple parts, not just a compressor swap. So if a customer only got approved for $9,000 and settles for a $3,500 repair instead of the replacement they were leaning toward, is that logged as a win too? Technically yes. Really, no.

What I Actually Want to Measure Now

Here's the honest gap: right now, most of us have no clean way to see what a customer intended to buy versus what they walked away buying. Years ago we had a job tag that said "declined" with a reason, but that leaned on the technician's word for it, because customers don't always tell you straight. It was never real, customer-confirmed data.

So I've been thinking about how to actually pull this out of ServiceTitan. Most of you already have something like Zapier connected. The idea is to point it at your unsold estimates, your job notes, and your job history, and start calculating the lost opportunity cost from these financing shortfalls. What did the customer intend to spend, what did they actually spend, and what's the gap when the reason was an approval that came back low?

These are below-the-surface metrics. They don't show up on the standard dashboard, and that's exactly why they're worth chasing. If I can measure the spread between what people wanted and what they got approved for, I can finally see how much money is walking out the door on financing alone. According to HomeAdvisor's 2024 cost data, the price spread between a standard and premium residential HVAC replacement averages $3,500–$7,000. On 50 replacements per year, even a 15% financing-driven downgrade rate translates to $26,000–$52,000 in lost top-line revenue that never appears in any report.

That's the real aha. Not that financing costs money, everybody knows that. The aha is that a great-looking approval rate can be sitting right on top of thousands in lost revenue per job, and your reports will happily call it a win.

I'm pulling these numbers for my own shop first. If you're already thinking about your own approval gap, that's a conversation worth having with a financing partner who can actually get more of your customers approved for the amount they wanted in the first place. That's the whole game: making the sale you booked match the sale the customer came to buy.

So go look. Pull your unsold estimates. Find the customers who bought down. Then tell me what your real number is.