How to price HVAC jobs

To price HVAC jobs, start with what the job costs you: the tech's fully loaded cost for each hour you can bill, plus parts at what the supply house charged you. Then divide that cost by one minus your target gross margin. A repair that costs you $264 sells for $480 at a 45% margin ($264 ÷ 0.55). Your target margin is your overhead percentage plus the net profit you want, both read off your own P&L.

That's the HVAC pricing guide in one paragraph. It goes wrong in two places: the labor number, and mixing up markup with margin, which can leave about $100 on a single repair call. If you run an HVAC company and your books are set up right, every input is already on your P&L.

What does an HVAC job cost you?

Two things: labor and parts. Parts are easy, because the supply house hands you an invoice. Labor is harder, because the number that matters isn't the tech's wage.

The median HVAC tech earned $29.33 an hour in May 2025, according to the Bureau of Labor Statistics. In our labor burden example, payroll taxes, workers' comp, benefits and paid time off added about a third on top, which puts that tech near $39 for every hour on the clock.

Then comes the step most price sheets skip. Drive time, shop time, warranty callbacks and the Monday meeting are all paid hours nobody invoices. If 70% of paid hours end up on an invoice, each billable hour costs you about $56. The labor burden guide walks through that math with 2026 IRS payroll rates. Run it with your own crew's numbers, because it's the biggest input in every price you set.

Set the margin from your P&L

Gross margin is what's left of the price after labor and parts. It has to pay for the office, the trucks, insurance, marketing and software, and then leave a profit. So the target comes straight off your profit and loss statement:

Target gross margin = overhead as a share of revenue + the net profit you want

If overhead ran 30% of revenue last year and you want 15% net, your jobs need a 45% gross margin on average. That only works if your techs' pay sits in cost of goods sold, not in overhead. The chart of accounts for contractors shows the setup.

Divide, don't multiply

Price = job cost ÷ (1 − target margin)

For a 45% margin you divide by 0.55. For 40% you divide by 0.6. Brandon Vaughn, who coaches home service owners, gave the partners of a pool company that one rule so their salespeople would hit a 40% margin on every bid:

…everything divided by 0.6, everything divided by 0.6. We get a bid from a contractor, divided by 0.6, divided by 0.6, divided by 0.6. And then that's how we get our pricing.

Multiplying by 1.45 feels like the same thing. A 45% markup on a $264 job comes to $383, and that's a 31% margin. You'd be $97 short on one repair call, and across 1,500 repair calls a year that's about $145,000 that never shows up.

A worked repair price

The job: a condenser fan motor and capacitor, with 1.5 hours of book time at the $56 billable-hour cost above. The parts cost is an example.

Round $480 to the number you'd print and put it in the price book. A replacement uses the same formula: equipment, install labor, permits and disposal at cost, divided by one minus the margin you need on installs. If your P&L shows replacements run a different margin than repairs, give them their own target. The post on HVAC profit margins shows how to split the two.

Is your price too low?

Your close rate will tell you. Brandon's rule is to close about half of what you quote. He gave it to a pressure washing owner, 11 years in, who was billing about $120 an hour, needed $171 to hit his targets, and was scared to make the jump:

If I was closing at 50%, I was feeling pretty good about that. If I was closing higher than that, I'd raise my prices and bump them up a little bit until I started kind of getting closer to that 50%. … you'd be surprised if you raise your prices tomorrow by 15%, you'd be surprised at how little it affects your closing ratio right out of the gate

In an HVAC shop, measure it where the customer can say no: replacement proposals and the repair options your techs present.

The other leak is the discount nobody asked for. Brandon did it himself when he was selling house washes:

I would be like, gosh, there's no way that someone's gonna pay 1,500 bucks to get their house washed, just the exterior of it. Because I would never spend that much money to wash my own house. And I remember going up to some customers' homes and I would, at the very last second before I gave them the price, knock like 300 bucks off the price. … And the customer would be like, oh really, that's it?

That's why the price comes from the book, not from a gut check in the customer's kitchen.

Put it in the price book

Flat-rate pricing turns this math into a menu your techs can present. In ACCA's Contractor of the Future study of more than 1,000 HVACR contractors, the ones using flat rate on service calls reported average net profits of 7%, against 4% for those using other methods.

Each line in the book is the same calculation: book time × cost per billable hour, plus parts at cost, divided by one minus your margin. When the cost per hour or the margin changes, the whole book moves with it.

If you're not sure your P&L shows a true overhead number to price from, bring it to a free profit call. Bookkeeping, payroll and tax sit in one house at YetiBooks, with the same specialist every time (here's how it works), so the numbers behind your prices stay current.

Questions owners ask

What should I charge for a diagnostic fee?

Price the truck roll like any other job. If a diagnostic takes an hour of billable time including the drive, that's $56 at the example cost, and $56 ÷ 0.55 is about $102 at a 45% margin. If you credit the fee toward the repair, the repair price has to carry that hour instead.

Flat rate or time and materials?

Flat rate for residential repairs and maintenance, where you can set book times. Time and materials where nobody can see the scope until the panel comes off. Either way, the hourly number comes from the same cost per billable hour.

How often should I update HVAC prices?

Every January, when payroll taxes and your state unemployment rate reset, and any time you give raises or the supply house raises prices. Check your close rate every month too. If it's running well above 50%, that's your signal.