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HVAC profit margins

What one-owner HVAC businesses report to the IRS, where the money goes on a HVAC job, and a calculator to check your own margin.

68.8%Gross margin, IRS sector
15.7%Net margin incl. owner pay
$102,220Average receipts per return
What do you want to work out?
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Leave at 15% if you do not know it yet. The business mode works it out.
Gross margin
35.7%
$1,250 over job costs
55.6%Markup
$725Net profit
20.7%Net margin
Free. Your numbers become an estimate you can send from your phone.

How we got this

  1. Job cost$1,200 materials + $900 labor + $150 other = $2,250
  2. Gross profit$3,500 − $2,250 = $1,250
  3. Gross margin$1,250 ÷ $3,500 price = 35.7%
  4. Markup$1,250 ÷ $2,250 cost = 55.6%
  5. Overhead share15% of $3,500 = $525
  6. Net profit$1,250 − $525 = $725 (20.7%)
MarkupGives a margin of
25%20%
33%24.8%
43%30.1%
50%33.3%
67%40.1%
100%50%

HVAC profit margin benchmarks

The IRS reports what one-owner businesses filing Schedule C earn, by sector. HVAC falls under Specialty trade contractors. For tax year 2023, 2,521,516 returns reported $257.8 billion in receipts, $80.4 billion in cost of sales and $40.5 billion in net income less deficit (the table gives thousands of dollars):

BenchmarkValue
Gross margin68.8%
Net margin, owner pay included15.7%
Average receipts per return$102,220
Average net income per return$16,054

The owner's own draw is not an expense on a Schedule C, so that net margin is mostly the owner's wage, not profit on top of it.

Where the money goes in HVAC

HVAC splits into replacements, where equipment is the biggest cost, and service, where labor and drive time are. Maintenance plan visits are mostly labor.

Where HVAC margin leaks, and how to win it back

  • Replacements priced from a rule of thumb instead of a load calculation
  • Refrigerant and parts not marked up
  • Maintenance plans priced below their visit cost
  • Callbacks on installs
  • Overtime in the first heat wave

Ways HVAC companies raise margin: sell maintenance plans to fill spring and fall; offer good, better and best on every replacement; price repairs flat so a fast tech earns more; mark up refrigerant and parts like any other material.

Check your HVAC prices against the costs

The typical national prices from our sourced calculators are a check on whether your prices leave room for margin:

ServiceTypicalRange
Central AC, 3 ton, installed$5,888$3,650 to $8,125 a job
Heat pump, 3 ton, installed$7,700$5,300 to $10,100 a job
Gas furnace, installed$6,900$3,800 to $10,000 a job
Electric furnace, installed$4,500$2,000 to $7,000 a job
Air duct cleaning$0.24$0.15 to $0.33 a sq ft
Dryer vent cleaning, ground floor$126$90 to $163 a job

Work out the margin on each line of your menu, not just the big jobs. The usual HVAC menu: central ac, 3 ton, installed; heat pump, 3 ton, installed; gas furnace, installed; electric furnace, installed; diagnostic visit; ac tune-up; furnace tune-up; capacitor or contactor replacement; refrigerant leak search and repair; air duct cleaning; dryer vent cleaning, ground floor; thermostat install; maintenance plan.

Overhead comes out of the margin before profit. In HVAC it includes general liability insurance, which Insureon's customers who are HVAC installers pay an average of $101 a month for; commercial auto at $286 a month on the same figures.

Work out your own margin

Put one recent HVAC job into the calculator above, or switch it to "My margin for the year" to set your year next to the IRS benchmark. A 50% markup is a 33% margin; the markup calculator shows the rest.

Sources

Last checked October 9, 2026. This page is general information, not legal or tax advice. Rules change and differ by state and city, so confirm with the agency named before you act.

FAQ

What is a good profit margin for an HVAC business?

As a benchmark, one-owner businesses in specialty trade contractors reported a 68.8% gross margin and a 15.7% net margin to the IRS for 2023, with the owner's pay inside that net figure.

How can HVAC companies raise their margin?

Sell maintenance plans to fill spring and fall, offer good, better and best on every replacement and price repairs flat so a fast tech earns more.

What are the biggest costs in HVAC?

HVAC splits into replacements, where equipment is the biggest cost, and service, where labor and drive time are. Maintenance plan visits are mostly labor.

Where do HVAC companies lose margin?

Replacements priced from a rule of thumb instead of a load calculation, refrigerant and parts not marked up and maintenance plans priced below their visit cost.

More for HVAC companies

Tools listHVAC tools listWhat HVAC companies buy first, then the pro kit and van stock.Services and pricesHVAC services listThe HVAC service menu with typical prices.InsuranceHVAC insuranceWhat HVAC companies pay for each policy, and state rules.SuppliersHVAC suppliersWhere HVAC companies buy, and the pro programs.Maintenance plansHVAC maintenance plansPlan tiers and a sales script for HVAC companies.Koira for HVACHow HVAC companies run on KoiraThe office side of an HVAC business, done for you.

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HVAC Profit Margins: Benchmarks and a Calculator | Koira