continue to increase the number of contractors participating. And, you know, I think we mentioned in one of the slides, you know, we've penetrated about 3% of the business over time. And that's if we start back and you add up all the revenue, and I think it's, Jason, you did this the other day, it's like $450 million worth of historic revenue done here, which is, you know, up against about 60, 65 million, 60,000 or 65,000 of our customers. So, we think the penetration rates can go very high here because HVAC equipment wears out, and it wears out at different times. And so, we think we're getting to a point where, you know, we continue to drive that. And, you know, the downstream effect is really positive because with newer equipment there, we reduce claims. So, with that, I'll let Jason talk about the margin. profile.

Yeah, and we're pretty excited about this business opportunity. As Bill mentioned, it started with our scale and purchasing power around equipment, and we found a way to monetize that and increase share of wallet. I think we've said before, the margins are lower than our home warranty product. They're probably low 20%, I'd say, is where we are right now. But as we've implemented dynamic pricing, we look to move that up over time. And then, as Bill mentioned, and we get the ancillary benefit kind of as that new equipment rolls into the system. One other part of your question, you asked about the impact of refrigerant. You know, we're constantly monitoring that. I wouldn't say it's had a big impact one way or the other on our ability to sell and implement the upgrade program. And, you know, we're constantly aware of that as a normal part of our business, even on the home warranty side.

All right, great. Thank you very much.

Thank you. Our next question is coming from Michael Reindos with Benchmark Company. Your line is live.

Good morning, everybody. Thanks for taking the question. Can you comment more on the real estate side? Are there any particular brokers that you're more or less aligned with, given that industry continues to consolidate?

Yeah, I probably wouldn't comment directly on which, you know, with the size of our business, we have to deal across all brokers. I think, you know, there's been a lot of talk about the fact that we no longer have an MSA with Compass. We still continue to do a lot of business with Compass. As you know, that's not an exclusive arrangement. We had it for years. So we have a great history with a lot of their agents and brokers. So we're dealing with virtually all of the companies, you know, because I think we have to to run a national business like that.

Okay. And when you talk about your service providers and your preferred contractors, can you comment a little bit on how you feel about your coverage there over major MSAs? You know, is this something that the company might consider improving, or is it comfortable with its level of coverage of preferred contractors? What's the direction there and the impact on the cost side?

You know, we have about 17,000 contractors in our network, of which about 4,000 are what we call preferred contractors. It's national coverage. We don't limit where we service clients. So we feel that, you know, we're constantly refreshing that amount because we do rate our contractors on both cost and quality. So we want to make sure the service experience is the most important part. But I think we have, you know, we have national coverage, and like I said, like Jason said, Jacob's our guy who runs contractor relations, that they do a nice job of, you know, bringing on new contractors, bringing some up to the preferreds, you know, with retirements and such, we have to keep feeding that group. But I think, I don't know, Jason, if you want to add anything.

Yeah, I think I'd just echo your comments, Bill. I'd say we have very, directly, Michael, we have very good coverage in major MSAs, as you would expect. As Bill said, that mid-80s is near all-time company highs. We like that percentage. It's both a combination of cost and quality. I'd highlight our preferreds deliver our best service experience on average, so we like that. The last piece I'd say, you asked about the impact. We estimate a 1% change in the preferred rate is somewhere between $8 and $10 million worth of gross profit. And so we stay focused on that, and the execution there has been terrific by the team.

And I didn't hear any comments on appliance sales. I thought that was part of the strategy, somewhat along with the HVAC. Is that so ongoing?

Yeah, that's our next trade that we're moving into. It's moving out of pilot now. We're expanding it more in Q4. So, yeah, so we're on pace to what we had said. We feel good about the pilot, how it's going. We think we've established the essence of the model with HVAC. It's different because it's a lower price point, but there are a lot more appliances, obviously, in the home. So we think it will be a good business, but we're in motion on that. And, you know, it's going to be the second trade that we start to expand nationally.

Gotcha. And just lastly, when you talked about dynamic pricing, Can you expand a little bit on that? What are the dynamics that contribute to dynamic pricing?

Yeah, so we've refined our dynamic pricing models over the last four to five years, and I'd say our primary focus there is in the renewal book, as you would expect. There are multiple, I think we're now up to over 60 factors. I was going to say, isn't it 65 factors? Over 60 factors that go into the model, but the easiest way I'd say it is you could think about things like geography, where the home is based, size of the home, past experience with us, and then things we learn about the home over time. So we take all those factors, and that allows us to get much more precise on the amount of price we can charge a customer and any related impact on retention. So we think there's a really nice balance there, and that's something we think we are very differentiated on against our competitors.

And like with all machine learning tools, it gets better over time as it gets more information, et cetera. So it's constantly evolving, and we think we're getting better and better at it. And obviously, I think the proof point is that our retention rates continue to be so strong.

Great. That's it for me. Thank you.

Thanks, Michael.

Thank you. If there will be any final questions, please indicate so now by pressing star 1. As we have no further questions at this time, this will conclude our question and answer session and today's call. You may disconnect your lines at this time. Sorry, sir, continue.

All right, thanks, everybody.

Oh, thank you. You may disconnect your lines at this time, and we thank you for your participation. Have a great day.