The pros and cons of a Costco air conditioner install from a couple of industry insiders.
In this article we’ll give you an insider look at buying a Lennox AC unit with installation from Costco. We’ll also tell you how buying an air conditioning system from Costco compares to buying one from Home Depot, Lowes, etc.
Update: I originally wrote the article, Costco Air Conditioner Install on April 4. 2023. I’ve reworded statements in the article after receiving a letter from Costco’s “trademark counsel”.
The letter stated, “we would appreciate you promptly removing the article …”. Stating the article contained false and/or misleading statements. Although I disagree any of the 3 statements pointed out were false or misleading, I reworded them so there was no misunderstanding or misinterpretation by our readers.
Furthermore, the letter states, “if we do not receive a satisfactory response within 10 days” … “we will have no choice but to consider the legal options available.”
Counselor: Please find the requested response within. Should you have any questions regarding my response or wish to discuss this matter further, please do not hesitate to contact me.
To the best of my knowledge there are no false or misleading statements contained in this article. If you find any statements in this article are in violation of Arizona law or Federal Law, please specifically cite which statements and how they violate law specifically, not a blanket accusation that states, “among other things” – please state which “things,” exactly are either false or misleading and I will post a correction immediately.
This article is informational and includes my opinions and real-life experience as a licensed HVAC contractor and consumer. It is not an advertisement. Nothing is this article disparages Costco or its products or misleads readers or consumers. In fact, this article is very complimentary of Costco, specifically with regards to Costco’s air conditioner install service. I go so far as to say, “In all likelihood you’ll probably get a quality installation when you buy a Costco air conditioner install.“
Original Article:
Mom Loves “Her” Costco in Chandler, AZ!
When I call mom, I often start the conversation with, “Hey, it’s the good son”.
Of her two boys, I was the biggest handful growing up, so while technically untrue, we all giggle about it. Well, my brother isn’t as amused by it as me, so technically not ‘all’ of us, but I digress.
I shared that story because I must tread very lightly when writing about my mother’s favorite place, Costco. I don’t dare lose good son status. So, I’ll share some of the pros of choosing Costco (while sharing why a Costco air conditioner install may cost more than buying elsewhere).
Seriously though, shopping in Costco can be fun. I never know if I’m going to walk out with a lifetime supply of pickles, a 100” TV, or a 6,000-calorie cookie tray – but I’m usually happy with my purchase! Depending on what I’m buying, I can often save some money buying it in bulk from Costco. So, what about buying an air conditioner with installation from Costco – can I get it cheaper from Costco or not?
Costco Air Conditioning Install Pros & Cons from Someone Who Sold Them
Today, you’re going to get inside information about buying a Lennox air conditioner from Costco directly from one of their install contractor’s former salesmen.
Plus, having once sold AC units through 5 Home Depot stores & every Maytag store in Phoenix, I’m going to share everything you need to know about big box store air conditioner installations. Magic Touch Mechanical sold ac units through both Home Depot & The Maytag Store for years. Our experience combined with my interview with a former Costco contractor’s air conditioner salesperson provides insight on how these programs work.
Magic Touch Mechanical Project Manager, Jeff
I asked one of our Project Managers, Jeff to help me out with this article. Jeff worked in AC Sales for one of the largest Costco air conditioner installers in the Phoenix, AZ market. His years of experience selling AC units through Costco lends a unique perspective I thought people would appreciate. So, I asked him to share the pros and cons of purchasing an air conditioner from Costco for our readers.
I say, “Costco air conditioner installers,” because Costco themselves doesn’t install them, a 3rd party contractor does. In the Phoenix area, one of two very large HVAC contractors did many if not most Costco AC installs. I say “did” past tense, because recently one of those companies acquired the other. While they still operate under separate names, they’re now the same company.
Interview with a Costco Air Conditioner Comfort Consultant
How Would a Costco Customer Schedule an Estimate to Buy an Air Conditioner?
The contracting company stationed a “lead generator” inside the store, they were usually stationed near the exit of the store. Their job is to get people interested in signing up for an in-home estimate. The lead generator is paid hourly and receives a bonus percentage of the sale if the “lead” buys an air conditioning & heating system.
How Were You Introduced to the Customer?
The lead generator turned the lead over to the company who would contact the customer and schedule a free estimate. I worked as a Comfort Consultant and would go review their home and discuss all the Lennox units available.
Why Would You Only Discuss Lennox Air Conditioners?
Costco has an exclusive contract with Lennox. Only Lennox Dealers can have lead generators inside a Costco store, and we were only allowed to sell Lennox units. The only exception was in an application where a Lennox system wasn’t an option. For example, some mobile homes are set up in a way where there’s no Lennox system that will work for the application. We were allowed to offer another brand in that scenario.
What Was the Best Thing About Selling Air Conditioners to Costco Customers?
Costco is one of largest retailers in the world after Walmart & Amazon. That combined with selling a quality product like Lennox gives Costco customers a lot of confidence in buying an air conditioner through them. Plus, they gave the customer a Costco shopping card for 10% of their purchase price of the air conditioner installation. Occasionally they would run a promotion for a 15% shoppers’ card.
What Was the Hardest Thing About Selling AC Unit Installation to Costco Members?
The 2 hardest things about selling air conditioners through the Costco program were cost and being limited to one brand. Other than that, the only thing that comes to mind was the laborious contract signing process – it felt like ‘sign here, initial here’ many times!
You Mentioned Being Limited to Only 1 Brand Which We’ve Discussed Before. Elaborate.
We’ve talked about it before – I really like that we (Magic Touch Mechanical) have so many different brands to offer customers. If they want a Lennox and it’s a good fit for their home, I can get them exactly what they want. But, if they don’t want a Lennox, or another brand is a better fit for their budget or wish list, I can get them that too. When I worked for the Costco contractor, it was Lennox or nothing.*
*As previously stated, selling another brand was allowed in an application where a Lennox system wasn’t an option.
You Also Mentioned Cost as One of the Hard Things Selling Costco Air Conditioners. Tell Us More.
As you already know, buying a Lennox air conditioning install through Costco often costs a lot more than from other Lennox dealers. I’ll let you as the owner speak more on that.
Anything Else That Stands Out About Selling AC Units for a Costco Installer?
I had a lot of confidence that my customers would be happy with the end results, which as you know is very important for an air conditioning consultant. We have to have a lot of confidence in the product and service we’re selling and know that the company is going to do a great job for them. The company was very professional and eager to make sure any problems that did arise weren’t escalated and reported to Costco.
How Does Selling Air Conditioners for Magic Touch Compare to Selling AC for a Costco Installer?
I have the same confidence that my customers will be happy with the end results because of Magic Touch’s history and reputation. I like being a Project Manager here better because I can offer our clients many more options besides just Lennox. Sometimes, Lennox is a great fit for them, other times there’s other brands that better fit what they’re looking for. Of course, being able to sell the same quality and results for less is a plus too!
Rich Morgan “Speaking More on That” …
Does a Costco Air Conditioner Install Cost Less?
In my personal experience selling air conditioners for decades:
- A Costco air conditioner install typically will not cost less than it would from other Lennox dealers in Phoenix. In fact, in many cases it may be significantly more expensive.
- I’m seldom the least expensive quote prospective clients I meet with have received. We take great pride in our workmanship and making sure the the job is completed not only to manufacturer’s specifications, but to our very high standard. In fact, I typically advise people to not be “sucked in” by a low price. That said, having had many clients share quotes they received from one of the big box retailers, they were almost always higher.
- Note: By no means am I suggesting a Costco air conditioner installation will always be the most expensive. As with any project you receive multiple quotes, there can be a wide spread in pricing. Large contractors that spend millions on advertising annually obviously must add those costs to their prices. Here in Arizona, there are many of these giant HVAC companies. On the flip side, a very small contractor won’t get the same pricing on equipment & materials as the big guys and must pass those costs on. So it, could just boil down to who you call. Either way, if you do get the best price from the Costco contractor, and are comfortable with that contractor, awesome – go for it!
PRO TIP
Always compare “apples to apples” on a line item by line item basis. 3 contractors quoting the same brand and model does not make them all comparable. There are dozens, if not hundreds of tasks and components that make up a complete HVAC installation. The air conditioner, heat pump, or furnace are only 1 of those components. Perhaps the biggest mistake I see people make is thinking quotes are, “apples to apples” because “they’re all installing the same equipment”. You may be paying less because you’re getting less, or worse, one contractor is taking shortcuts the others aren’t. That “cheaper” quote could end up costing you far more in the long run.
It’s not hard to understand why Costco HVAC install may cost more when you consider the following:
- It goes without saying that the HVAC Contractor incurs additional costs for participating in these programs. They must factor these additional costs into their pricing. If Contractor “B” has lower operating costs, they don’t have to charge as much to make the same amount of profit.
- Remember the “lead generator” at the beginning of the process? That person is another person on the payroll; hence their compensation and any commission are additional costs.
- The 10% (sometimes 15%) shoppers’ card: Did you get it free if you paid more for your Lennox upfront than the other quotes you received? If you had $100 in your pocket, you probably wouldn’t buy a shopper’s card or gift card for yourself with it, right? Would you rather have a gift card valid for certain goods and services, or would you rather have $100 you could spend anywhere?
The Costco Shop Card
Note: The shoppers card topic is one of that Costco’s counsel took issue with. I’ve since reworded it so it can’t be construed as misleading or false. I’ll elaborate on it further with an example:
You receive two quotes for a new air conditioner install. Contractor A‘s quote is $10,000. Contractor B‘s quote is $11,000. However, Contractor B is offering a $1,000 gift card good for other products they sell. Are both quotes $10,000?
If you choose Contractor A you have to pay $10,000 total.
If you choose Contractor B you have to pay $11,000 total. You receive a $1,000 gift card after your purchase valid only for products they sell.
If you choose Contractor A the additional $1,000 never left your pocket. You’d still have $1,000 to spend anywhere you wish – or not spend and keep in your savings.
Financing an Air Conditioner Install? You Have Options
Many people choose to finance their new HVAC system. Financing is a “product” just as an AC unit is a product. Some financing products cost less than others just as some AC units cost less than others.
Just like new AC units, it pays to shop around for financing!
Many HVAC contractors work with multiple banks. Each bank usually has their own programs, rates, and promotional offers. For example, Magic Touch works with multiple banks that offer financing, and the process is easy.
Our lenders offer instant decisions, the application only takes a few minutes to submit, and you don’t have to provide any documents, paystubs, etc., in most cases. This puts you, the consumer, in the driver’s seat. You get to choose the lender and bank that’s offering the best plan and rate for you. You may even qualify for a 0% APR loan!
Ask Your Personal Bank for a HELOC
Another way to finance your air conditioner installation is with a HELOC from your personal bank or credit union. A HELOC (home equity line of credit) can sometimes be more favorable than other personal loans.
You Don’t Need a Big Box Store Credit Card to Buy a New AC
Don’t think you have to choose a big box store to get financing for your new HVAC system.
Magic Touch isn’t unique in offering financing options. In my 27 years as a contractor in Phoenix, I’d say most of the HVAC contractors I know offer financing through one or more lenders.
How great would it be if you not only paid less for your new AC unit, but you paid less for your financing as well? Both could very well be the case when you shop around!
Note: The financing topic is another Costco’s counsel took issue with. I’ve since reworded it so it can’t be construed as misleading or false. The above statements were meant to inform readers that there are many financing products available to homeowners. You need not rely on the big box stores to obtain a home improvement loan, nor must you rely on the contractor’s financing partners.
5 Home Depot Stores / 11 Maytag Stores
Before you could buy Lennox from Costco, you could buy Trane from Home Depot & Maytag from the Maytag Store.
At one-point, Magic Touch was the primary HVAC contractor at 5 Home Depot stores and every Maytag store in Phoenix.
Each location had lead generators and Home Depot, or the Maytag Store received a percentage of the job total. All said and done, after everyone was paid their share, the project cost us about 15-20% more than non-box-store projects.
Selling air conditioners through big box stores is generally a lucrative partnership for everyone involved. They’re not going to let just anyone with a toolbelt put their reputation in jeopardy.
That means you’ll most likely get a very reputable & capable 3rd party contractor when working with a big-box retailer. That added security is one of the main selling points a contractor / comfort consultant has to offer consumers. It’s a valid consideration – who amongst us doesn’t want an added layer of security in the event of a problem? Which begs the question – how much is that added security worth to you?
Magic Touch Gives Up Home Depot Stores
Selling Trane air conditioners through 5 Home Depot stores kept our installation crews busy! We were also the only Maytag Dealer allowed to install air conditioners for every Maytag Store in the Valley. But it created problems.
Our Home Depot Installs Cost More for the Same Project
Magic Touch has been installing air conditioners in the Valley for over 27-years. We have clients that have worked with us since far before our affiliation with Home Depot or the Maytag Store. We also have multi-generational clients and people that regularly refer us to family, friends, and neighbors.
It’s awkward when one neighbor’s quote is 15% higher than another’s because one was through a retailer, and one wasn’t. We encountered several situations where we had to explain the difference in cost for two similar projects. I just didn’t feel it was ethical to raise prices for every customer to pay the for the costs of these programs. Why should customer “A” have to pay more because customer “B’s” job had higher costs associated with it?
I didn’t feel customer A should pay for the lead generator salary & commission, the big box store commission, etc. Especially considering AC isn’t exactly a tough sell in Phoenix! Air conditioners sell themselves in the desert so why pay all the middle men?
Article Correction
Note: In the original article I stated Costco was paid a percentage of the sale for air conditioners installed through the Costco Air Conditioner Install program. This statement was the last of three, Costco’s counsel took issue with. To clarify, I’ve only participated in these programs with Home Depot and The Maytag Store – both of which were paid a percentage of the sale for air conditioners installed through their program. I’ve never participated in the Costco Air Conditioner Install program so I have no direct knowledge of how Costco profits from the install program.
Counselor, the statement has been removed and replaced with I’ve never participated in the Costco Air Conditioner Install program so I have no direct knowledge of how or if Costco profits from the install program. If you’d like to clarify for my readers, I’m happy to share whatever information you provide.
The Consumer Doesn’t Get to Choose the Brand
Selling about a dozen different air conditioner brands is a big deal to us. It’s our sales philosophy – people deserve ‘options not ultimatums’. When we worked with Home Depot, our contract required we sell exclusively Trane air conditioners. Costco air conditioner installers are required to sell only Lennox air conditioners. Maytag Store required we sell only Maytag.
The problem with that is/was: Often another brand was a better fit for the customers home, budget, wish list, or all the above. As a salesperson it’s hard to sit quiet when you know there’s a better solution that will make your customer happier and you’re contractually obligated not to offer it. Even worse, you’re incentivized to sell what is quite possibly, an inferior option (for them).
Personally, I think this is the biggest con of purchasing a Costco air conditioner install (or Lowes, Home Depot, etc.). We’ve installed thousands of Lennox systems over the years to happy customers. However, we’ve also installed thousands of Bosch, Amana, Goodman, etc. because clients who were simply given options, chose them.
We Did Not Renew our Big Box Contracts!
The News Took Them by Surprise
The year we left Home Depot’s HVAC program we were awarded for the highest sales growth in the Southwest. Our sales in one store alone exceeded their “budget” by 37%. Again, it was a lucrative arrangement and I have nothing negative to say about these programs in general. Our only issues were the higher prices we had to pass on to our client and the lack of options we could offer them.
Our announcement took not only Trane & Home Depot by surprise, but I also remember friendly competitors asking if I was nuts!
Maybe I was, but here we are in our 27th year in business and everyone pays the same price. Plus, our longevity and reputation speak for themselves, so we offer the same security as the retailers – for less money.
Lennox dealers like us (we’ve been installing Lennox for 16 years) will happily quote the same models as Costco’s contractor. However, we’ll just as happily let you compare many other brands and models side by side. You’ll most likely pay a lot less for the same quality, support, and peace of mind. And that applies no matter which brand you decide is right for you and your budget.
Big Box Store Air Conditioner Install Summary
In all likelihood you’ll probably get a quality installation when you buy a Costco air conditioner install. Remember, earlier Jeff mentioned that as something that stood out to him working for a Costco contractor. That’s very important as the quality of the installation is more important than the brand you choose no matter the price.
You’ll also most likely be dealing with a well-established and reputable installing contractor. That said, in most markets there are many well established and reputable HVAC installers who you’d be equally happy with. Especially if you save hundreds or even thousands of dollars by not having to pay for everyone else’s “cut”.
If the price was a couple hundred more, being backed by Home Depot, Costco, Lowes, etc. could be worth it. However, in my experience the price difference is typically not a couple hundred more, it’s many hundreds, sometimes it’s thousands. This is especially true for homeowners replacing 2 or more HVAC systems in their home.
You may also wind up with a lower grade unit than your budget allowed for. For example, Bosch, Gree, and others offer variable speed inverter units for significantly less money than Lennox and Trane.
As independent air conditioner dealers aren’t contractually obligated to only sell certain brands, you may get more for less. And who wouldn’t want a unit that was quieter, more efficient, and provided better comfort technology for less money?
Of course, you could still use the money you save to buy that lifetime supply of pickles & a 100″ flat screen television from your favorite Costco store!
