When you’re starting in the HVAC field or simply need to update your HVAC service pricing, you may be unsure how much to charge.
HVAC is specialized work, and you deserve to be paid fairly for it. Plus, knowing how to price HVAC unit jobs correctly can help you provide clear estimates to customers and build positive relationships with other businesses in your neighborhood. Things like if you're doing an AC installation, testing indoor air quality, or HVAC maintenance.
This HVAC pricing guide will walk you through how to make the most of your HVAC contractor expertise.
Before you can work out how much you’ll charge for your services, you’ll want to determine your operating costs and your break-even point (the point when your revenue and costs are the same).
Below are some of the costs to consider when starting your HVAC contractor business or updating your flat rate pricing.
Labor can be the most expensive part of hiring an HVAC technician, as customers are hiring you for your expertise and knowledge. HVAC repair and HVAC installation is skilled labor, and your wages should reflect that.
The simplest way to calculate your HVAC company’s labor cost is to determine what hourly wage you want to earn. According to the U.S. Bureau of Labor Statistics, or BLS, the median pay for HVAC company techs is $23.38/hour. Over a year, that equates to around $50,000 for each full-time worker. If you’re a more experienced AC repair technician, however, you may be able to charge $35/hour or more for your labor.
If you’ll be employing other AC repair technicians and apprentices, you’ll also need to account for their wages. While your business costs will rise with every new employee, your potential profits should expand, too. With more technicians, you’ll have more availability for jobs and faster installation times.
As convenient as it would be, customers typically can’t bring their broken furnaces or air conditioning units to you. Instead, as an HVAC technician, you’ll likely need to make frequent house visits.
Because you’ll be driving around between homes and businesses, factor in your vehicle costs, including:
Planning ahead for these expenses can also help you to avoid any unexpected costs, should your work vehicle need unexpected repairs.
Whether you spend most of your time repairing old HVAC systems, replacing parts, or installing new central air conditioning systems altogether, it can help to keep some materials and parts readily available. Keeping some inventory on hand allows you to serve customers more efficiently.
You’ll likely need to stock the following:
Whether you stock these AC unit supplies frequently or order them as needed, be sure to keep a list of their prices. Doing so will make it easier for you to charge customers depending on the central AC repairs or replacements they need.
While you may not need a brick-and-mortar presence to run a successful HVAC business, you’ll need somewhere to store your ductwork tools and materials. If you’re an independent contractor, you may not need much more than a storage locker. However, if you employ several technicians, you might need to lease a small warehouse building.
On average, you can expect to spend $7.00–$9.50 per square foot of industrial space.
As your small business grows, you may eventually want to have a front-facing office, too.
Other purchases and fees may seem negligible at the moment, but they can add up. As an HVAC technician, you may also need to pay for:
While these aren’t services you provide directly to your customers, they can all help you provide a better service. As such, it’s wise to factor these “non-billable” tasks and expenses into your rates.
When figuring out what to charge, you’ll first need to decide how you’ll charge. There are two schools of thought when it comes to HVAC pricing models: hourly pricing, and flat-rate pricing. Each option has its advantages and drawbacks, but comparing them can help you determine which will best suit your air conditioner business.
Many contractors (including HVAC techs) choose a “time and materials” model for pricing. Often shortened to T&M, this method involves charging an hourly rate for the labor, plus enough to cover the cost of materials.
Alternatively, you can simply calculate the value of each service you offer and include them in a flat-rate price. For example, you might decide to charge $200 for every service call. By taking all of the above expenses into account, you can come up with a set price for each job—one that allows you to earn a healthy profit without overcharging your customers.
Examining your locally new or established commercial HVAC competitors can also be a good strategy. This can help you decide how to price your service by reevaluating your HVAC service or entering a new market. There are a few things to look out for:
Now that you understand what your overhead will look like, you can calculate your rates.
If you choose to charge by the hour, you may already have your rates sorted out. In the case of hourly rates, each job will be worth however long it takes to complete, plus the cost of the HVAC equipment.
If you decide on a flat-rate pricing model, you’ll have to do some math to determine the overall value of your services, plus the cost of materials. For inspiration, here are some examples of standard services and how you might price them.
Service calls are usually quick visits that involve minor AC system repairs or consultations. A service call fee structure typically involves two parts:
While both of these charges might be a flat fee, you may also want to add an “emergency” surcharge for weekends or holidays.
Replacing part or all of an older HVAC system can often be easier than installing a brand-new system. For example, you may only need to replace the air conditioning unit, not the ducts, or you may need a new heat pump, not an air handler. As such, your rates for this service might be lower than a complete HVAC installation.
Replacing a boiler, AC unit, or furnace usually includes the price of the new unit, labor, and the cost to dispose of the old unit. According to Bob Vila, the cost of labor for an HVAC replacement typically ranges from $500–$2,500.
Installing an HVAC system in a new-build or a home without an existing system can be more costly. A new unit itself can cost anywhere from $1,000 to $10,000. You may need to charge more to account for the installation of ductwork, thermostats, and other accommodations.
With that in mind, you should factor both the time-intensive nature of the installation and the cost of the new system into your total HVAC cost. Another helpful way to consider the average cost of labor for an installation is by the size of the home. According to Forbes, the average installation cost per square foot is $15–$18. That brings the cost for the consumer to $4,000–$10,000, depending on the square footage and the unit.
Aside from making yourself available on holidays and weekends, there are other ways you can increase your potential take-home. When wondering how to grow your HVAC business, consider leveraging the following:
From ice-cool air conditioners to toasty furnaces, your HVAC business helps to keep people comfortable, no matter the season. For you to run a successful small business and maintain a comfortable profit, however, you need a steady income stream. The first step to building that is expanding your client base.
Looking to share the beauty of climate-controlled air with new customers? With a free Nextdoor Business Page, you can reach homeowners and office managers in your community. Be the first your locals to see if they are in need of furnace installation or a new air conditioner! Sign up today to start customizing your page and connect with neighbors in need.
Sources:
U.S. Bureau of Labor Statistics. Occupational Outlook Handbook: Heating, Air Conditioning, and Refrigeration Mechanics and Installers. https://www.bls.gov/ooh/installation-maintenance-and-repair/heating-air-conditioning-and-refrigeration-mechanics-and-installers.htm
Statista. Average rent per square foot paid for industrial space in the United States from 4th quarter 2020 to 4th quarter 2021, by type. https://www.statista.com/statistics/626555/average-rent-per-square-foot-paid-for-industrial-space-usa-by-type/
Forbes. How Much Does A New HVAC System Cost? https://www.forbes.com/advisor/home-improvement/new-hvac-system-cost/
Bob Vila. How Much Does an HVAC Unit Replacement Cost? https://www.bobvila.com/articles/hvac-unit-replacement-cost/