What HVAC contractors charge

A four-truck shop bills service at $145 an hour, prices spring tune-ups at the same $145, and prices changeouts at labor hours plus 20% on the equipment. One number, three products. He is profitable on service, breaking even on tune-ups, and giving away four figures on every system he replaces — and because it all lands in one bank account, nothing tells him which line is losing.

Each of the three runs on different logic, but all three sit on your loaded cost per tech-hour. Work that out once using contractor hourly rate and treat it as a floor, never a price.

Service: the price comes from a book, not a clock

Flat rate means the repair has a published price before the tech starts: a capacitor is $X whether the swap takes twenty minutes or an hour.

You build the book from a task's standard labor time, a billable hourly rate, and the marked-up part. That billable rate is not your cost per hour: it absorbs the calls that produce no sale, the callbacks you eat, the parts riding on the truck, and the fact that a tech's eight-hour day holds five or six billable hours.

Price the visit separately, as a diagnostic or trip fee — minimum service call fee sizes it. If you credit it toward the repair, the book price has to carry the credit.

Take a capacitor swap. Wholesale prices for the part are published under $50. An hourly shop bills half an hour plus the marked-up part and collects around a hundred dollars. A flat-rate shop publishes a task price and defends it as a diagnosed, warrantied, done-today repair. Consumer cost guides put the finished job between about $150 and $450, depending on the capacitor, the region, and whether the diagnostic fee sits inside the price. Sanity-check your book against that spread; do not copy it.

Maintenance agreements: what you are really selling is October

The usual structure is a subscription: two visits a year, cooling in spring and heating in fall, priced per system per year with extra systems at a lower increment. Published residential plans run roughly $150 to $500 a year for one system, tiered — a bare tune-up at the bottom, priority scheduling and repair discounts in the middle, waived diagnostics and no-overtime emergency service at the top. Check what shops in your county publish; a national figure will not settle it.

Per visit it looks like weak work: an hour of tech time for less than an hour of revenue. Wrong frame. It buys three things you cannot get any other way.

• Shoulder-season load. October and April throw off far fewer weather emergencies than July or January. Agreement visits keep those weeks booked instead of sending techs home.
• Replacement leads. The tech who has seen the furnace twice a year is the one who gets believed when he says it is time.
• Cash before the work. Annual prepay lands the money ahead of the equipment you buy on terms.

Let the same seasonality shape your discounts. A peak-week discount rarely buys work you were not already getting; a real incentive on an October install date fills a week that would sit empty.

Keep the agreement to scheduled maintenance in writing. Once a plan promises to repair or replace parts that fail, some states regulate it as a service contract or warranty rather than a maintenance agreement, which is a different rule book. A construction attorney can read your plan in an hour.

Replacement: the same job, priced two ways

Take a 3-ton heat pump changeout. The numbers are invented to show the arithmetic; your costs and crew hours are local.

Equipment and materials, your cost        $4,200
Install labor, 16 hrs × $55 loaded        $  880
Permit, lift, old-unit disposal           $  350
Direct cost                               $5,430

Priced off the clock: 16 hours at $145, equipment marked up 20%, plus the extras — about $7,710. Gross margin 30%.

Priced to a margin target: the same direct cost at a 45% gross margin is $9,873.

Same crew, same day, $2,100 apart. The hourly method capped the equipment contribution at 20%, then billed labor at a service rate never meant for an install day.

Trade sources put installed-replacement margin in a 35% to 50% band, lower than service work because equipment is a big cost line you cannot mark up like a $4 fitting. Published guidance on HVAC equipment markup runs roughly 20% to 50% over cost, and shops pricing to a margin target often land near double their cost. There is no credible national average. What moves your number: distributor tier and rebates, whether you carry the labor warranty, and whether the job is a straight swap or a duct redesign.

The federal refrigerant transition is live and still moving: equipment cost, what your recovery gear is rated for and the training your techs need have all shifted with it. Do not price next season off this season's distributor sheet — ask your distributor and check epa.gov.

What you cannot look up

EPA Section 608 certification. Federal law requires technicians who maintain, service, repair or dispose of equipment containing regulated refrigerants to be certified under Section 608, in the type that matches the equipment: Type I for small appliances, Type II for high-pressure, Type III for low-pressure, or Universal for all three. Apprentices working under a certified tech are the exception. Since 2018 the requirement has covered most substitute refrigerants, HFCs included, and that same certification is what lets you buy refrigerant at the counter at all. Certification, recovery equipment and refrigerant tracking are real cost lines. How much record-keeping you owe depends on the appliance and its charge size, and that is the part that keeps moving: EPA's HFC leak repair rules and its technology transition rules both changed recently and were still being revised into 2026. Read the current requirements on epa.gov, not a forum.

Licensing. Many states license mechanical or HVAC contractors, and some also set what an estimate must say and what insurance or bond you carry. Ask your state licensing board. Roughly a third of states have no statewide HVAC license, which does not mean no license: where the state is silent, the city or county usually is not.

Sales tax. Ask your state revenue department whether labor is taxable where you work. A repair, an installation that counts as a capital improvement, and a maintenance agreement are not always taxed the same way, and several states tax an agreement differently from the repairs done under it. How you itemize the invoice can change the answer by itself.

Keeping three price books straight

Three pricing logics need three sets of priced items, not one rate adjusted from memory at a kitchen table. In DoneQuote, flat-rate repair tasks, agreement tiers and equipment packages are separate saved services, so the price you worked out is the price that reaches the customer. Upload your flat-rate book or distributor list as a file and DoneQuote reads the prices into your catalog.

The short version

• Service comes from a flat-rate book built on a billable rate, not your cost per hour.
• Judge agreements on shoulder-season load and replacement leads, not on one tune-up's margin.
• Price replacement to a margin target on the installed job. Hourly labor plus a thin equipment markup lands well under the 35% to 50% band.
• Section 608, licensing and sales tax are cost lines. Verify all three at the source.