HVAC Parts Markup Chart: Your Free Guide to Calculating Markup

What is HVAC markup?

Your markup is the percentage you charge for HVAC materials and equipment to reach your target profit margin (the total revenue your business keeps after other expenses are paid.)

Markup and profit margin are both represented as unique percentages. Your ideal markup and profit margin can vary depending on your service area, competitors, and target customers.

For example, say you charge $3,500 for a heat exchanger replacement. This breaks down to $2,000 for parts and $500 for labor and overhead, with a 40% markup on service. This gives you $1,000 in profit with a 28.5% margin.

Check out our HVAC parts markup chart below to see how markup and profit margin percentages align. You can also jump ahead to learn how to calculate markup.

Pro Tip: Use job costing software to keep your business profitable. Accurately price your material costs, log all of your labor hours and expenses, and track profit margins for every job.

HVAC parts markup chart

Our markup chart is a reference tool that you can use when pricing your services, or when you’re adding parts and materials to your HVAC estimates.

All you have to do is quickly check this parts markup chart to see what markup percentage will help you meet your HVAC business 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 profit margin of 41%.

How to calculate your HVAC parts markup

As an HVAC contractor, you can use this formula to find out your 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 markup to HVAC pricing

Markup isn’t the only thing to consider when you price HVAC jobs. You also need to account for your labor and overhead costs for jobs like HVAC replacement, repair, and installation.

Here are two common HVAC pricing strategies you can use to add parts markup for service and installation jobs:

1. Add markup to flat rate HVAC pricing

Using HVAC flat rate pricing lets you charge profitable prices without confusing customers about why each line item on your 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 add your markup when you’re quoting jobs at a flat rate:

1. Add up the total costs of your service parts, labor, and overhead for the job.
2. Calculate the fixed markup you’ll need to charge to meet your target profit margin.
3. Add markup to your initial total cost estimate.
4. Put one flat rate for the job on your estimate.

2. Add markup to equipment and price labor separately

You can charge your customers for equipment and labor separately for HVAC installation, or when you’re 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 parts separately for HVAC repair, replacement, and installation projects:

1. Combine your parts and material costs together with the HVAC unit you’re installing.
2. Calculate your labor costs and add them as a separate line item on your estimate.
3. Once you have a total cost estimate, calculate the markup you’ll need to add to meet your profit goal.
4. Add that markup to your product line items only.

You can add an estimated markup to specific line items when you use job quoting software like Jobber. Just check your estimated markup and profit margin on your quotes, and quickly modify your pricing to match.

You only need to enter your costs and markups into Jobber once. From there, Jobber will help you set the perfect price every time you build an HVAC estimate.