January 28th, 2014
Tax Credits are Gone and Value-Added Selling is Back!
As our calendars turned that final page to 2014, tax credits for energy-efficient doors and windows have ended. Over the past few years, many door and window consumers have been focused on qualifying for these tax credits. They have been focused mainly on the Energy Star label itself, since Energy Star eventually became the qualifying criterion for the tax incentive. The NFRC label has also been there all along, but to consumers concerned mainly about the tax incentive, it has all too often been ignored. Now that the tax credits are gone, the only way consumers can get a payback from their window investment is on the energy savings themselves. So, perhaps consumers will now look past the Energy Star label and more at the NFRC ratings when deciding which fenestration product is the best investment of their hard-earned dollars.
With tax credits in play, the thought process was more qualitative—the window either qualified for a tax credit or it did not, based upon it having the Energy Star label. The window did not have to be better (lower) than the U-value required by the Environmental Protection Agency in order to meet Energy Star—it only had to meet it. Without tax credits, the thought process is free to become more quantitative. Now, many consumers may actually ignore the Energy Star label and study the NFRC label in detail. They will do more comparison shopping while studying the various U-factors and solar hear gain coefficients shown on the NFRC labels in consideration of future rises in energy costs. They may consider other factors such as how long they are likely to remain in their home. They will also be thinking about the impact that more energy efficient windows and doors are likely to have upon their home’s resale value should they decide to sell it someday. They might even look at the condensation resistance number if it is shown and consider the health related benefits of controlling condensation on window surfaces during the cold winter months!
Instead of looking at labels in terms of just a means of qualifying for the tax credit, perhaps consumers will be more focused on how the doors and windows actually will save them energy. When tax credits were in play, the real value proposition of the window was overshadowed by the more immediate gratification of a relatively instant tax credit. However, now that tax credits are off the table, what is left to consider but the longer-term benefits of energy efficiency? These will now be pondered along with thoughts regarding future increases in fuel sources such as heating oil, natural gas, propane and electricity. Consumers will be weighing in on the future instead of merely thinking about their next tax return.
So, why do I think this is such a good thing? Well, ever since I started in this industry, consistently I have been asked by my customers, “How can your products be used to help me differentiate my product from that of my competitors?” Anyone who knows me can tell you that I have never been known to be short-winded in replying to that question.
But when the tax credits came along, many consumers didn’t seem to focus on quantitative decision-making, but rather “How do I get that tax credit!” In the process, many window systems became thought of as just plain vanilla—they all had the Energy Star label; the consumer received the tax credit, and in many scenarios, in-depth comparison shopping was short-circuited.
But now, with tax credits gone, the consumer palate will be cleansed and he or she will be free to taste all of flavors that exist and to decide which tastes best.
Yes … value-added selling is back!