I watched an HVAC shop owner spend 45 minutes troubleshooting a customer's thermostat, charge $89, and pat himself on the back for being "competitive." His technician made $18 an hour while he worked. He wasn't competitive. He was broke.
Your Cost Per Hour Is Higher Than You Think
Most HVAC owners calculate labor costs by dividing salary by 2,000 annual hours. Stop there and you're already behind. Your actual cost per technician runs 1.3 to 1.5 times wages when you factor in payroll taxes, insurance, uniforms, tools, and vehicle maintenance.
If you pay a tech $22 an hour, your actual cost is $28.50 to $33. That's your floor. Anything less and you're subsidizing the work yourself.
The Service Call Baseline
Every service call has fixed costs before the tech even diagnoses anything. Travel time. Truck overhead. Dispatch management. A 30-minute diagnostic that looks simple costs you $30 to $40 minimum just to show up.
I know shops charging $49 for a service call in 2024. Those places either go out of business or they're desperate. Most markets support $85 to $125 for a basic diagnostic, depending on your location and reputation.
The mistake owners make: they charge a flat rate and hope the job sticks. It doesn't. Half your calls are warranty work, no-pays, or quick fixes that don't cover your time. You need the profitable jobs to carry the weight.
Build Pricing Around Time Blocks
Forget the old "charge per part" model. It's a relic. Price based on what the job takes.
Set three tiers: diagnostic only ($99), simple repair (1 hour, $189), complex repair (2+ hours, $289 plus parts). A thermostat swap takes 20 minutes but involves customer education, testing, and paperwork. That's your 1-hour tier.
A refrigerant charge or capacitor replacement with diagnostics hits the 1.5 to 2-hour range. A furnace rebuild can be a half-day job. Price accordingly or you'll hate your life in six months.
Don't Leave Markup on the Table
Parts markup is where most shops actually make money. Labor covers overhead. Parts markup is profit. Charge 40 to 50% over your parts cost, minimum.
If you're buying a capacitor for $12 wholesale, you sell it for $18 to $22. If a customer balks at that, they're shopping prices anyway. You won't win them by giving up margin.
Track your actual part costs and your markup percentage. If you're averaging 25%, you're leaving money on the table because you're not confident in your pricing.
The Psychology of Service Pricing
Customers don't know if $150 is fair for a service call. They know if it feels transparent. Quote the diagnostic fee upfront. Explain what's included. Show the problem with photos or video if you can. Then present repair options with pricing.
"Your compressor is failing. Option A is replace it at $1,800 with a warranty. Option B is repair the current one for $450 and get six months. Option C is limp along another year and replace in the off-season." Customers respect choices. They hate surprises.
Stop Competing on Price
You can't win a price war against a shop owner who doesn't track his costs. Don't try. Compete on speed, warranty, and reliability. A customer who calls you back three years later because you fixed it right just paid for itself ten times over.
Raise your prices 10% this quarter. You'll lose maybe 5% of price shoppers. You'll keep 95% of your customer base and gain 20 to 30% in revenue per call. Do the math.
Track Everything
You can't price right if you don't know your costs. Use a job costing system that breaks down labor time by technician, parts by job, and travel time by call. Every invoice should tell you if you made money.
Most HVAC shops think they're profitable because they have positive cash flow. They're actually leaving 15 to 25% on the table because they're flying blind on pricing. That changes when you know which jobs are winners and which are money losers.
Use WerkOps to track your service calls, parts inventory, and labor time in one place. Stop guessing on pricing and start making decisions based on real numbers from your business. That's the only way to know if you're actually making money on every call.
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Written by
Dina Good
Founder, WerkOps
Dina grew up in the trades. Her father was a contractor, then a building inspector, and the job site was her classroom long before any formal one was. She went on to own her own contracting company, which is where she first felt the pain of running a skilled trade business on bad software and worse spreadsheets. A love of data pulled her into programming, and the two worlds eventually collided into WerkOps - software built by someone who has actually been on the truck.