HVAC
HVAC Net Profit Calculator
Work out what is left after every cost, direct and overhead, has been taken out.
Result
Net profit here is before tax and before any owner's draw that is not already inside overhead. If you pay yourself out of what is left, this figure is your wage rather than the company's profit.
Get a Free Business AuditWhat moves the number
- Overhead, which continues whether the trucks roll or not.
- Owner compensation, which should be a cost rather than whatever is left.
- Seasonal distribution, since a profitable year can contain loss-making months.
Where this one goes wrong
Treating owner pay as profit. If the owner is doing a job that would otherwise be hired for, the market cost of that job is an expense, and profit is what remains after it.
Questions
About this calculator
Should the owner's pay come out before profit?
Yes, at a market rate for the work actually being done. Otherwise the business looks profitable while paying the owner nothing, or unprofitable while paying them well.
What net margin should an HVAC business make?
It varies with mix, size and market, so the useful comparison is against your own trend. Chasing an industry figure without knowing how it was calculated is not informative.
Why do profitable years contain loss-making months?
Because overhead is level and demand is seasonal. Shoulder months frequently do not cover fixed costs, which is why the annual figure alone can mislead.
The formula
net profit = revenue - direct costs - overhead
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How to use this calculator
- Revenue ($). Enter your own figure; the page starts at $48,000.
- Direct labour ($). Enter your own figure; the page starts at $16,000.
- Materials and equipment ($). Enter your own figure; the page starts at $11,000.
- Other direct costs ($). Enter your own figure; the page starts at $2,200.
- Overhead ($). Enter your own figure; the page starts at $15,500.
The result updates as you type, so you can try a figure, see what it does to net profit, 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 |
|---|---|
| Revenue | $48,000 |
| Direct labour | $16,000 |
| Materials and equipment | $11,000 |
| Other direct costs | $2,200 |
| Overhead | $15,500 |
What comes out
| Result | Value |
|---|---|
| Net profit main result | $3,300 |
| Net margin | 6.9% |
| Total direct cost | $29,200 |
| Profit per working day | $150 |
That is $3,300 at a 6.9% margin, about $150 for every working day.
How sensitive the answer is
Holding everything else steady and changing only revenue, this is what happens to net profit. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Revenue ($) | Net profit |
|---|---|
| $24,000 | -$20,700 |
| $36,000 | -$8,700 |
| $48,000 example above | $3,300 |
| $72,000 | $27,300 |
| $96,000 | $51,300 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Revenue ($)
- A money amount, starting at $48,000.
- Direct labour ($)
- A money amount, starting at $16,000.
- Materials and equipment ($)
- A money amount, starting at $11,000.
- Other direct costs ($)
- A money amount, starting at $2,200.
- Overhead ($)
- A money amount, starting at $15,500.
What the results tell you
| Result | What it is |
|---|---|
| Net profit | The headline result. A money figure. |
| Net margin | A percentage. |
| Total direct cost | A money figure. |
| Profit per working day | A money figure. |
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.