HVAC
HVAC Labor Markup Calculator
Check what your billed labour rate recovers against what an hour actually costs once burden and unsold time are counted.
Result
Markup is measured against your cost, margin against the price you charge. A 50% markup is a 33.3% margin, not a 50% one. Pricing off the wrong one is the most common way a job that looked profitable turns out not to have been.
Get a Free Business AuditWhat moves the number
- Burden on the wage, which is substantial once insurance and benefits are counted.
- Billable share of the paid day, which is well under a full shift.
- Overhead per billable hour rather than per calendar hour.
Where this one goes wrong
Setting the billed rate as a multiple of the wage. The multiple that works depends on your burden, your utilisation and your overhead, and a rule of thumb borrowed from another company imports their numbers.
Questions
About this calculator
What multiple of wage should the billed rate be?
Whatever your burden, utilisation and overhead require, which is a calculation rather than a constant. Companies with the same wage can need very different rates.
Why is unsold time so important?
Because it is paid. If a technician is paid eight hours and sells five, the whole day's cost has to be recovered across five, which raises the required rate substantially.
Does this change under flat rate pricing?
The presentation changes, the arithmetic does not. A flat rate book is only profitable if the hours behind it were costed properly.
The formula
price = cost x (1 + markup%); margin = profit / price
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How to use this calculator
- Your cost ($). Enter your own figure; the page starts at $340.
- Markup on cost (%). Enter your own figure; the page starts at 45%.
The result updates as you type, so you can try a figure, see what it does to price, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Your cost | $340 |
| Markup on cost | 45% |
What comes out
| Result | Value |
|---|---|
| Price main result | $493 |
| Gross profit | $153 |
| Margin that gives you | 31.0% |
A 45% markup on $340 prices the job at $493, which is 31.0% margin, not 45%.
How sensitive the answer is
Holding everything else steady and changing only your cost, this is what happens to price. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Your cost ($) | Price |
|---|---|
| $170 | $246.50 |
| $255 | $369.75 |
| $340 example above | $493 |
| $510 | $739.50 |
| $680 | $986 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Your cost ($)
- A money amount, starting at $340.
- Markup on cost (%)
- A percentage, between 0 and 500, starting at 45%.
What the results tell you
| Result | What it is |
|---|---|
| Price | The headline result. A money figure. |
| Gross profit | A money figure. |
| Margin that gives you | A percentage. |
Before you rely on this number
Sizing, capacity and load figures here are planning estimates. A real installation depends on the manufacturer's data for the specific equipment, the duct system it is going into, and a proper load calculation for the building. Use this to sanity-check a number or price a job, not to select equipment.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.