If you're running an HVAC business and still guessing on prices, you're probably leaving money on the table — or worse, losing it on every job.
Most HVAC contractors started out working for someone else. You learned the trade, got good at it, and eventually went out on your own. But nobody taught you how to price a job so your business actually makes money after expenses.
Here's the thing: pricing isn't about being the cheapest. It's about knowing your numbers, covering your costs, and building in enough margin to grow. Let's break down exactly how to do that.
Why Most HVAC Contractors Underprice
The biggest mistake? Using a competitor's price as your starting point. Their overhead is different. Their truck payments are different. Their insurance costs are different. Matching their number without knowing your own costs is a fast track to working hard and staying broke.
The second mistake is forgetting about all the hours you don't bill for — driving to the job, ordering parts, doing estimates, handling callbacks. If you only price for wrench time, you're working for free half the day.
Step 1: Know Your True Costs
Before you price a single job, you need to know what it costs you to operate. Grab a calculator and add up everything for a typical month:
- Vehicle costs (payment, fuel, insurance, maintenance)
- Insurance (liability, workers' comp)
- Tools and equipment
- Office costs (phone, software, bookkeeping)
- Marketing and advertising
- Licenses and permits
- Your salary (yes, pay yourself — you're not a volunteer)
Let's say your monthly overhead comes to $8,000. If you work 20 billable days a month, that's $400/day in overhead before you even pick up a tool.
Step 2: Calculate Your Hourly Rate
Here's a simple formula that works:
Hourly Rate = (Overhead + Desired Profit) ÷ Billable Hours
If your monthly overhead is $8,000, you want to earn $6,000/month in salary, and you want a 20% profit margin on top of that:
- Total needed: $8,000 + $6,000 = $14,000
- Plus 20% profit: $14,000 × 1.20 = $16,800
- Billable hours per month (realistic): 120 hours
- Hourly rate: $140/hour
That might feel high compared to what you've been charging. But this is the number that keeps your business alive and growing. Anything less and you're subsidizing your customers with your own future.
Step 3: Price Materials with Markup
Never sell materials at cost. You're sourcing them, picking them up, storing them, and guaranteeing them. That has value.
A standard markup for HVAC materials is 25-50%, depending on the item. High-cost equipment like furnaces or condensers might get a 25% markup. Smaller parts and consumables can go higher.
Material price to customer = Your cost × 1.25 to 1.50
Keep a running list of your most common parts and their marked-up prices so you can quote fast and consistently.
Step 4: Build Your Job Pricing Template
For each type of job you do regularly, build a template:
| Component | Example: AC Tune-Up |
|---|---|
| Labor (1.5 hrs × $140) | $210 |
| Materials | $35 |
| Material markup (40%) | $14 |
| Travel/trip charge | $50 |
| Total | $309 |
Do this for your 10-15 most common jobs. You'll be able to quote on the spot without doing mental math in a customer's driveway.
Track Your HVAC Job Pricing & Expenses
The ProTradeOps toolkit includes pricing templates, expense trackers, and job costing sheets built for trade businesses.
Get the free toolkit →Step 5: Flat Rate vs. Time and Materials
Most residential HVAC work does better with flat-rate pricing. Here's why:
- Customers prefer knowing the price upfront. No surprises means fewer disputes.
- You get rewarded for efficiency. If you finish faster because you're skilled, you earn more per hour.
- Quoting is faster. Pull up the template, adjust for specifics, done.
Time-and-materials works better for complex commercial jobs where the scope isn't clear upfront. For everything else, flat rate is your friend.
Step 6: Review and Adjust Quarterly
Your costs change. Fuel goes up. Insurance renews at a higher rate. Parts prices shift. If you set your prices once and never look again, your margins will slowly evaporate.
Set a reminder every three months to:
- Review your actual expenses vs. what you estimated
- Check your profit margin on completed jobs
- Adjust your hourly rate and templates if needed
This doesn't have to be complicated. Even 30 minutes with your numbers once a quarter will keep you ahead of most competitors who never look at theirs.
Common Pricing Mistakes to Avoid
- Discounting to win jobs. Competing on price attracts price shoppers who'll leave you for $10 less. Compete on reliability and quality instead.
- Not charging for estimates. If you're spending an hour on-site for a complex quote, that has value. Many successful HVAC companies charge a diagnostic fee that gets applied to the repair.
- Forgetting callbacks. Build a small buffer into your pricing for warranty callbacks. They happen, and they shouldn't come out of your profit.
- Ignoring seasonal demand. You can (and should) charge more during peak season when your schedule is packed. Offer value pricing in slow months to keep crews busy.
The Bottom Line
Pricing HVAC work for profit isn't about gouging customers. It's about running a sustainable business that lets you pay your people well, invest in better equipment, and still be around in five years.
Know your costs. Use a formula. Build templates. Review regularly. That's it.
The contractors who struggle aren't the ones who charge too much — they're the ones who never sat down and figured out what "enough" actually looks like.
Start with your numbers today. Your business will thank you for it tomorrow.
Tools that help with this: Jobber is solid for HVAC shops that want to send professional quotes from the field instead of scribbling on notepads. For invoicing and expense tracking, FreshBooks keeps things simple without the learning curve of enterprise accounting software.
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