HVAC cost estimator

Flat rate pricing fails when the rate is copied from a book or from what the shop down the road charges. This builds it from your business. It loads your technician wage with your real burden, spreads your monthly overhead across the billable hours you actually sell, adds the net profit you intend to make rather than the one you hope for, and turns that into an hourly billing rate. Then it prices one task against that rate with its parts and your parts markup, which is the number that goes in the book.

Billable hours, not paid hours, are the divisor

The single most common error in contractor pricing is dividing overhead by the hours a technician is paid for rather than the hours you actually sell. Drive time, restocking, warranty callbacks, training, holidays and slow weeks all come out of it. If you divide by the paid figure you understate the overhead in every price you quote, and the shortfall shows up as a busy year with no money at the end of it. Put your real billable figure in the field and watch what it does to the rate.

What labor burden actually contains

Burden is everything the technician costs you beyond the wage on the payslip: employer payroll taxes, workers compensation, general liability, health contributions, paid time off, uniforms, phone, tools and training. Take it from your own profit and loss and your own payroll rather than from a rule of thumb, because it is the number most often guessed and most often guessed low. Workers compensation rates alone vary enough between states to move it several points either way.

Net profit is a cost, not what is left over

Putting the profit target into the rate is deliberate. If profit is whatever survives after the year, it will not survive the year. Decide what you intend to keep and put it in the field, because it belongs in the divisor along with everything else: that is why the billing rate here is the break even rate divided by one minus the margin, rather than the break even rate with a proportion added on top.