Prices are moving again. Quietly, but steadily.
The Producer Price Index for HVAC equipment has ticked up for eleven months in a row. It’s not necessarily making headlines, but it’s worth your attention. Undoubtedly, you’ve already raised prices due to tariffs or manufacturer increases, but are you sure you’re keeping pace? Every month, something is going up. Are you identifying what changed, capturing it, and passing it along?
If your contractor customers are bidding work based on numbers from the beginning of 2025 – or even last quarter – there’s a good chance they are behind. This isn’t just about inflation. It’s about helping your customers avoid costly quoting errors and protecting your margins before one or both disappear.
What the PPI Measures and Why It Matters
The Producer Price Index (PPI) tracks the average prices domestic manufacturers receive for the goods they sell. The PPI sits upstream in the supply chain. It reflects what OEMs are charging distributors, not what end customers are paying at retail.
The PPI is also not the same as the CPI. The Consumer Price Index captures what consumers pay, often after multiple layers of markup. The PPI serves as the canary in the coal mine for price movement in the channel. When it goes up, distributor costs follow. And contractors need to be brought up to speed quickly.
In HVAC, the PPI includes key equipment categories: split systems, rooftop units, condensers, packaged systems, commercial refrigeration, and more. If it’s in your warehouse or your stocking order, it’s probably in the index.
What the Latest Data Shows
Take a look at the PPI trend from July 2024 through June 2025. The index rose from 223.1 to 231.3. That’s a 3.7% increase in 12 months. It might not sound like an enormous change, but in a low-margin, high-volume environment, it matters.
What stands out in the graph is the consistency. No dips. No resets. Just a slow, steady climb. Each month, the number ticks up. And those gains compound.
Contractors who based their Q2 bids on old numbers may already be feeling it. If you’re fielding calls about rising system prices or quote mismatches, this is likely why. Your team may also be absorbing margin compression unless updated pricing has been pushed out consistently. In my experience, the vast majority of distributors have “Valid for 30-Day” boilerplate on their quotes. Relying on this kind of quote language can be tempting when a less-than-sedate contractor is questioning your family lineage, but you do so at your own peril. Proactive outreach to advise valued customers of price changes demonstrates that value to them, and you just might wind up selling something in the process.
What the OEMs Are Saying
Trane and Carrier aren’t just reacting to rising costs – they’re leading with price adjustments of their own.
Carrier executives have forecast equipment price increases of 15–20% over a two-year span, citing rising costs tied to the R-454B refrigerant transition and global supply chain pressure. They’ve already begun rolling out new models with updated pricing. This isn’t speculation—it’s already happening.
Trane Technologies announced a 2–5% price increase on select commercial products, effective January 2025. They’ve also confirmed plans to pass along tariff-related cost increases of nearly $100 million over the coming year. Both companies have made clear that they expect elevated pricing conditions to continue through 2025.
For distributors, this reinforces what the PPI already shows: equipment costs are climbing, and pricing discipline at the branch level is going to matter more than ever.
Why It Matters to Distributors
A big price spike makes the phone ring. A gradual rise rarely does—until there’s a problem. That’s the risk right now.
Contractors often reuse templates or recycle last quarter’s quotes. If you’re not keeping them updated on price trends, their margin losses can become your customer service and satisfaction issue. On its own, the PPI increase would be enough to throw a wrench in the works. Now layer on refrigerant transitions, shifting stocking preferences, and lingering tariff uncertainty, and you’ve got a very chaotic pricing environment to navigate. This slow-burn PPI trend starts to create friction you can see at the counter.
The core issue: unless someone flags the change, most customers are working off outdated assumptions.
Practical Moves Distributors Can Make
Here are a few ways to stay ahead of the curve:
- Push price updates early and clearly. Waiting until customers complain is too late. Get ahead of it.
- Encourage customers to check quotes. Especially those who bid projects 60 to 90 days out. A simple reminder can save a frustrated call later.
- Train counter staff to flag refrigerant transitions. R-454B equipment is already commanding a premium over R-410A. Make sure everyone knows where the price gaps are.
- Proactively address freight or lead time impacts. If incoming costs are up, use that to frame urgency around stocking decisions.
- Reinforce your value. The best distributors are advisors, not just order takers. Use PPI data to show you’re watching the road ahead.
None of this is about creating alarm. It’s about running a proactive branch and helping customers make better decisions in real time.
The Takeaway
The PPI isn’t sexy, but it is useful. It gives you a window into cost pressures before they become margin problems. If you’re watching the trend lines and keeping customers in the loop, you’re doing more than selling equipment. You’re protecting their business. And your own.
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