How It Works

Markup is a percentage added on top of cost. Net profit margin is a percentage of the selling price.

The difference grows at higher percentages. At 40%, markup gives you 28.6% actual margin, while net profit pricing gives you the full 40%. This is why we use net profit pricing.

Overhead represents fixed business costs like rent, utilities, admin, and insurance. These costs don't scale with how many people you put on a job.

COGS (Cost of Goods Sold) is the direct cost of equipment and materials for a specific job. It's added to labor and overhead before applying the profit formula.

COGS gets the same profit margin applied. If you spend $3,000 on equipment with a 25% profit target, your selling price includes $1,000 margin on that equipment alone.

The split should reflect how your divisions consume overhead. There's no universal right answer — it depends on your business.

Productivity is the percentage of paid hours that are actually billable to customers. No technician is 100% productive — time is spent on travel, paperwork, training, breaks, and callbacks.

Because your competitors may be pricing below true cost without knowing it. The calculator gives you the number you need to charge to cover fully loaded labor, overhead, and hit your profit target. If that number feels high, the answer is not to lower your price. It is to understand where your cost is going and whether your productivity and overhead are where they need to be.

Pricing below cost to match competitors is how companies stay busy and broke.

Start with 40%. That is a reasonable midpoint for most HVAC shops and covers the major components: FICA at 7.65%, workers comp between 5 and 15% depending on your state and claims history, health insurance if you offer it, and paid time off. Once you have a cleaner picture from your payroll reports, update the number. A more accurate burden percentage means more accurate job prices.

Yes. Enter yourself as the only labor role. Your burden still applies even if you are self-employed: self-employment tax, your own health insurance, and any business insurance you carry all belong in that burden percentage. Solo operators often underestimate their own cost per hour because they do not think of themselves as an expense. You are.

Enter your best monthly average for variable expenses. The calculator is not meant to reprice every job based on last month's fuel bill. It is meant to give you a stable baseline that reflects your real operating cost over time. Review your overhead inputs quarterly and update them if your cost structure changes significantly — such as adding a truck, hiring staff, or moving to a larger space.

Price them as separate components. Use the service calculator for the diagnostic or repair portion and the install calculator for the equipment portion. Add the two selling prices together for your total quote. Blending them into one calculation can cause you to apply the wrong OPH to each portion and understate your true cost.

Because labor scales with the number of people working and overhead does not. If you swap in a higher-rate lead tech, your labor cost goes up. If you add a second person to the crew, your man-hours increase. But your OPH stays fixed to job hours because your rent and insurance cost the same regardless of who shows up. Crew selection lets you price based on exactly who is doing the work, not a blended average.

Paid hours are every hour you write a check for. Billable hours are the portion of those hours that a customer actually pays for. The gap between them includes travel, callbacks, training, paperwork, and any time a tech is on the clock but not on a job. That gap is real cost. The productivity percentage tells the calculator how wide that gap is so your overhead and labor recovery math reflects what is actually happening in your business.

Yes. If you are the owner and you do not pay yourself, your labor is invisible cost. Enter your target owner compensation as an overhead line item. Businesses that do not account for owner compensation are not actually profitable. They are subsidizing the business with unpaid labor. The calculator only produces accurate numbers if all costs are in.

Your overhead per hour will be wrong, which means every job price will be wrong. If you overstate billable hours, your OPH will be too low and you will underprice every job. If you understate them, your OPH will be too high and you may price yourself out of work unnecessarily. Use your actual time records or a conservative estimate based on what you know happens in your business, not an optimistic number.

The calculator tells you your floor. That is the lowest price at which you can cover cost and hit your target. What you do above or below that floor is a business decision. If a competitor is consistently underbidding your number, one of two things is true: either their cost structure is genuinely lower than yours, or they are pricing below their own cost without knowing it. Neither of those is a reason to follow them down.

Not as a separate line item. Callbacks are accounted for through your productivity percentage. If your techs average one callback per ten jobs and each callback costs an hour, that time should be reflected in a lower productivity rate. A realistic productivity number already prices in the reality that not every hour a tech works is a billable hour on a new job.

Enter the total job hours across all days. If a job takes two days at eight hours each, enter 16 job hours. The overhead calculation stays tied to job hours regardless of how many days the work spans. Your labor calculation uses total man-hours as usual.

Not yet. Right now the calculator uses one active overhead and labor configuration per account. If you want to model a scenario — such as what your numbers look like after hiring a new tech or adding a second truck — the best approach is to update your inputs, review the summary page, and then revert. A scenario comparison feature is on the roadmap.

It tells you the dollar value your business earns for every hour your techs are in the field billing work. If your service NPH is $15, every billable service hour produces $15 of retained profit. Multiply that by your monthly billable hours and you get your monthly profit potential from service alone. It is one of the clearest ways to see whether your pricing is working and where the leverage is in your business.

The default is a reasonable starting point, not your number. Your profit target should reflect what you actually need to grow the business, service debt, build reserves, and pay yourself. A 20% target on a business with high overhead and low productivity may leave you short. A 15% target on a lean operation might be plenty. The calculator is only as useful as the goal you give it.