Profit Margin Calculator

1. Enter your job revenue. This is the total amount you charge the customer. Include all line items: equipment, labor, materials, and any fees.

2. Enter equipment and parts cost. Your wholesale cost for the condenser, coil, refrigerant, line set, and any other parts. Use what you actually paid, not list price.

3. Fill in labor details. Enter the number of techs on the job, total hours, and your hourly labor cost. This should be your burdened rate (wages + payroll taxes + workers comp), not the billing rate.

4. Add materials cost. Consumables like brazing rods, tape, screws, hangers, condensate fittings, and any other supplies used on the job.

5. Set your overhead percentage. Most HVAC companies run 25-40% overhead. This covers rent, insurance, trucks, office staff, software, and marketing. If you do not know yours, 35% is a solid starting point.

Margin and markup describe the same profit from different angles. Margin is profit as a percentage of the selling price (revenue). Markup is profit as a percentage of your cost. Confusing the two is one of the most common pricing mistakes in the trades.

Here is how this calculator computes each number:

Example: A $5,800 install with $2,200 in equipment, $420 in labor (2 techs x 6 hours x $35), $350 in materials, and 35% overhead ($2,030). Total cost is $5,000. Profit is $800. Gross margin is 13.8%. Markup is 16%.

The "Cost per dollar of revenue" metric tells you how much of every dollar goes to costs. If it is $0.86, you keep $0.14 in profit for every $1 collected. Top HVAC shops aim for $0.45-$0.55 in cost per revenue dollar on service work.

After completing a job. Plug in the actual numbers once the invoice is paid. Compare your real margin to what you estimated during the quote. If there is a gap, figure out whether it was labor overrun, unexpected materials, or scope creep, and adjust future pricing accordingly.

When quoting new work. Before you send a proposal, run the numbers here to make sure you are hitting your target margin. Adjust the revenue up or down until you land in the green zone. This prevents the all-too-common mistake of pricing based on gut feel and discovering you barely broke even.

During annual business review. Pull your average job revenue, typical equipment cost, and average crew size. See where your overall margin lands relative to industry benchmarks. If you are below 42%, you have a pricing problem, a cost problem, or both.