Free HVAC Parts Markup Chart [+ Markup Calculation Guide]
A smart HVAC parts markup strategy helps you turn a big profit on every sale. That’s why you should know exactly what to charge when selling HVAC parts or adding your parts to an estimate.
We’ll help you out. Use this guide to calculate a profitable markup for your HVAC parts and materials, see how you’ve profited on past sales, and learn how to meet your profit margin goals without turning customers away.
HVAC parts markup chart
When you’re pricing HVAC parts for a customer, use this parts markup chart to see what markup percentage will help you meet your target profit margin:
Let’s say the cost of your HVAC parts or materials adds up to $60. Adding 70% markup would bring the price to $102, giving you a gross margin of 41%.
What is the average markup on HVAC equipment?
The average markup on HVAC equipment is between 25 and 50%. If you’re selling spare HVAC parts and materials, your markup should be at 100% or higher—meaning you charge at least double what you paid for the part.
Why? An HVAC business is expensive to operate, so you need to keep markup very high to achieve net profit on most goods you sell. High markup percentages help you offset overhead costs without cutting wages or asking your customers to pay huge labor rates.
How to calculate your HVAC parts markup
Use this formula to find out your HVAC parts markup percentage for parts you’ve sold:
Markup = (Revenue – Cost of Goods Sold) / (Cost of Goods Sold) x 100
Let’s say you purchased a heat pump for $2,000 from a retailer, and you resell it to a customer for $2,985. Here’s how to calculate your markup:
(2985 – 2000) / (2000) x 100 = 33% markup
Pro Tip: Use an HVAC profit margin calculator to see if you’re charging profitable service prices that cover your material, overhead, and labor costs.
How to add parts markup for HVAC service and installation jobs
You should calculate your markup differently when you price HVAC jobs like repairs or installation. To add the right parts markup, you need to account for your labor and overhead costs.
Here are two common pricing strategies you can use to add parts markup for service and installation jobs:
Add markup to flat rate HVAC pricing
Using flat rate pricing for HVAC service work lets you charge profitable prices without confusing customers about why each line item on your HVAC estimate is priced a certain way.
This helps customers focus on the value you’re providing instead of the reasons behind each price.
Here’s how to mark up your HVAC parts for service work:
- Add up the total costs of your service parts, labor, and overhead for the job.
- Calculate the fixed markup you’ll need to charge to meet your target profit margin.
- Add markup to your initial total cost estimate.
- Put one flat rate for the job on your estimate.
Add markup to equipment and price labor separately
You can charge your customers for equipment and labor separately when you’re installing an HVAC unit or providing spare parts.
Customers who have shopped around for HVAC equipment before—and are familiar with market pricing—often want to see exactly what a new system or part will cost them.
Follow these steps to mark up your HVAC parts separately:
- Combine your parts and material costs together with the HVAC unit you’re installing.
- Calculate your labor costs and add them as a separate line item on your estimate.
- Once you have a total cost estimate, calculate the markup you’ll need to add to meet your profit goal.
- Add that markup to your product line items only.
You can add an estimated markup to specific line items when you build an estimate in Jobber. View the estimated margin on your quotes, and quickly modify your pricing in response.
You just need to enter your costs and markups once, and Jobber will help you set the perfect price every time you build an HVAC estimate.
Originally published in July 2020. Last updated on December 5, 2022.