Free HVAC Profit Margin Calculator | HVAC Business Markup Calculator

HVAC Job Cost Inputs

Labor Costs

Technician wages, helper wages, labor burden

Material Costs

Ductwork, piping, refrigerant, fittings, supplies

Equipment Costs

HVAC units, compressors, condensers, furnaces

Overhead Percentage

EPA certs, insurance, vehicles, tools (HVAC typically 15-22%)

Desired Profit Margin

HVAC industry average: 18-25% for installations

HVAC Tip: Don't forget to factor in warranty callback costs, seasonal demand adjustments, and EPA Section 608 certification renewal expenses.

HVAC Profit Margin Benchmarks by Job Type

Residential HVAC

AC Installation18-25%
Furnace Installation20-28%
Heat Pump Install22-30%
Service/Repair Calls30-45%
Maintenance Contracts35-50%

Commercial HVAC

RTU Installation15-22%
Chiller Systems12-18%
VRF Systems18-25%
Commercial Service25-35%
Preventive Maintenance40-55%

Why HVAC Profit Margins Are Different

HVAC contractors typically need higher margins than general contractors due to:

EPA Certification Requirements: Section 608 and 609 certifications require ongoing training and compliance costs
Specialized Equipment: Recovery machines, vacuum pumps, manifold gauges, and diagnostic tools are expensive
Warranty Callbacks: HVAC systems have higher callback rates, especially in the first year
Seasonal Demand: Revenue fluctuates significantly between summer and winter peaks
Refrigerant Costs: Refrigerant prices are volatile and subject to EPA regulations
Insurance Premiums: HVAC work carries higher liability due to gas and electrical work

HVAC Overhead Costs to Include

When calculating your overhead percentage, make sure to include:

EPA certification renewals and training
Vehicle costs (fuel, maintenance, wrap)
Tool replacement and calibration
Liability and workers comp insurance
Office/warehouse rent
Software and dispatch systems
Marketing and advertising
Uniforms and safety equipment

Common HVAC Pricing Mistakes

Not accounting for warranty callback costs (budget 2-5% of job cost)
Underestimating refrigerant usage and waste
Forgetting permit and inspection fees
Not adjusting prices for seasonal demand
Competing solely on price instead of value
Not tracking actual vs estimated costs to improve future bids

HVAC Profit Margin FAQ

What is a good profit margin for HVAC contractors?

Most successful HVAC contractors aim for 18-25% net profit margin on installations and 30-45% on service calls. The higher margin on service calls accounts for the diagnostic expertise and emergency availability required.

How do I calculate markup vs margin for HVAC jobs?

Markup is added to your costs, while margin is a percentage of the final price. A 25% markup equals a 20% margin. For a $10,000 job cost: 25% markup = $12,500 price (with $2,500 profit = 20% margin).

What overhead percentage should HVAC contractors use?

Most HVAC businesses have 15-22% overhead due to certification requirements, specialized tools, higher insurance costs, and vehicle expenses. Larger companies with more administrative staff may see 20-25%.

Why are HVAC service call margins higher than installations?

Service calls command higher margins (30-45%) because they require diagnostic expertise, emergency availability, and often involve older systems with unknown issues. The value is in the knowledge, not just the parts.

How should I price maintenance contracts?

Maintenance contracts should have the highest margins (40-55%) because they provide predictable recurring revenue, allow you to schedule efficiently, and catch small problems before they become expensive callbacks.

HVAC Profit Margin Calculator