HVAC
HVAC Pricing Calculator
Set a price from full job cost and the margin you intend to keep, rather than from a markup applied to parts.
Result
Overhead and margin are taken as shares of the selling price, which is why the cost is divided rather than multiplied. Adding 15% to cost does not produce a 15% margin. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditWhat moves the number
- Burdened labour including travel and any second visit.
- Equipment and materials at true landed cost.
- Overhead recovery per job, which is the part most often left out.
Where this one goes wrong
Applying a margin figure as a markup. A 40 percent markup produces roughly a 29 percent margin, and pricing a year of work on that confusion is the most expensive arithmetic error in the trade.
Questions
About this calculator
Should HVAC use flat rate pricing?
Flat rate gives the customer certainty and removes the argument about hours, provided the book is built from real costs and real times. Built from optimistic times it prices work below cost consistently.
How often should the price book be reviewed?
Whenever equipment cost, wages or fuel move, and at least annually. Price books drift out of date quietly and the gap only shows up in the margin report.
Should overhead be in the hourly rate or added separately?
Either, as long as it is deliberate and counted once. The failure mode is assuming it is in the rate when the rate was set from the wage.
The formula
price = direct cost / (1 - overhead% - margin%)
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How to use this calculator
- Labour cost ($). Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($). Enter your own figure; the page starts at $210.
- Other direct costs ($). Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%). Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%). Enter your own figure; the page starts at 15%.
The result updates as you type, so you can try a figure, see what it does to price to quote, 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 |
|---|---|
| Labour cost | $290 |
| Materials cost | $210 |
| Other direct costs | $0 |
| Overhead rate | 22% |
| Target net margin | 15% |
What comes out
| Result | Value |
|---|---|
| Price to quote main result | $793.65 |
| Direct cost | $500 |
| Overhead recovered | $174.60 |
| Net profit | $119.05 |
| Gross margin | 37.0% |
| Markup on direct cost | 58.7% |
Quote $793.65 to cover $500 of direct cost, recover $174.60 of overhead and leave $119.05 of net profit. That is a 58.7% markup on cost.
How sensitive the answer is
Holding everything else steady and changing only labour cost, this is what happens to price to quote. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Labour cost ($) | Price to quote |
|---|---|
| $145 | $563.49 |
| $218 | $679.37 |
| $290 example above | $793.65 |
| $435 | $1,024 |
| $580 | $1,254 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Labour cost ($)
- Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($)
- A money amount, starting at $210.
- Other direct costs ($)
- Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%)
- Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%)
- A percentage, between 0 and 80, starting at 15%.
What the results tell you
| Result | What it is |
|---|---|
| Price to quote | The headline result. A money figure. |
| Direct cost | A money figure. |
| Overhead recovered | A money figure. |
| Net profit | A money figure. |
| Gross margin | A percentage. |
| Markup on direct cost | 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.