Free · Pricing & profit
HVAC Job Profitability Calculator
Enter the price and the real costs of a job to see gross profit, margin, markup and profit per labor hour, then the price that would have hit your target margin.
The job
What the customer is paying, before tax
Costs
Burdened cost, not billed rate
Permit, disposal, sub, financing fee
Target
Gross margin
37.5%
Short of 40%
Markup on cost
60.0%
Profit per labor hour
$281
how fast this job earns
Price for target
$6,250
at 40% margin
Total cost
$3,750
63% of price
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Reading the margin
Gross margin is what is left to pay overhead and profit after the job's direct costs. In a typical residential HVAC company overhead runs 20–30% of revenue, so a 40% gross margin nets 10–20% and a 30% gross margin nets close to nothing. The calculator grades the job against the target you set and tells you the price that would have reached it.
Profit per labor hour
Two jobs with the same margin are not equally good. A $6,000 changeout that takes 8 hours earns its profit three times faster than a $6,000 duct job that takes 24. When you are choosing which work to chase, profit per labor hour is the better scoreboard, because labor hours are the thing you run out of first.
Where jobs lose margin
- Labor estimated at the wage. Use the burdened cost per billable hour from the labor rate calculator; it is usually double the wage before overhead.
- Hours underestimated. Add drive time, pickup, startup and cleanup. Most techs underestimate a changeout by 20–30%.
- Forgotten line items. Permit, crane, disposal, refrigerant recovery, the financing fee on a promotional rate. Put them in "Other".
- Discounts given after the estimate. A $300 "we'll take care of that" on this job costs five points of margin.
Price the next job to the target before it goes out with the markup calculator, and give customers a reason to spend more with the good-better-best calculator.
Frequently asked questions
What is a good profit margin on an HVAC job?
A 35–45% gross margin on residential installs, 50% or more on service, and 25–35% on commercial. Those are gross margins, before overhead. After overhead a healthy HVAC company nets 10–15%, which is why a 30% gross margin job is usually a break-even job.
How do I calculate profit margin on a job?
Subtract all direct costs, including equipment, materials, burdened labor, permits and subs, from the selling price to get gross profit. Divide that by the selling price. A $6,000 job with $3,750 of cost has $2,250 of profit and a 37.5% margin.
Should I include overhead in job costs?
Not as a line item, if you are measuring gross margin. Overhead is what the gross margin has to cover across all jobs. If you prefer to see net profit per job, add an overhead allocation to labor cost, typically $30–50 per labor hour, and target a 10–15% margin instead of 40%.
What labor rate should I put in the cost?
Your fully burdened cost per billable hour, which includes wages, payroll taxes, workers' comp, benefits and the unbillable hours you still pay for. It is almost always two to three times the bare wage. The labor rate calculator on this site works it out.
Is markup or margin the better number to track?
Margin. It is the share of every dollar collected that stays in the business, it compares directly to your overhead percentage, and it is what your accountant reports. Markup is only useful as the multiplier you apply to cost to reach the margin you want.