HVAC labor rate calculator: your hourly rate from your own costs
An HVAC labor rate is the yearly cost of putting a tech and a stocked van on the road, divided by the hours that get billed, then divided by one minus your margin. With the example inputs here, $118,000 a year over 1,450 billable hours is an $81.38 break-even and $95.74 an hour at a 15 percent margin. Change any box and the rate recalculates.
Worked example at the example inputs
Yearly figures for one tech and one van, plus the margin you want to keep. The answer is per billable hour. Every number in the boxes is an example input chosen to show how the math works. It is not market data or a report of HVAC wages or rates, so replace each one with yours.
| Input | Example value |
|---|---|
| Tech pay or owner pay | $75,000 |
| Billable hours | 1,450 hours |
| Overhead | $20,000 |
| Service van | $14,000 |
| Business insurance | $9,000 |
| Profit margin | 15% |
| Break-even rate | $81.38 an hour |
| Recommended rate at a 15% margin | $95.74 an hour |
The formula
($75,000 pay + $20,000 overhead + $14,000 vehicle + $9,000 insurance) = $118,000 a year. $118,000 / 1,450 billable hours = $81.38 break-even. $81.38 / (1 - 0.15) = $95.74 an hour, with $14.36 profit in every billed hour. The interactive calculator on this page recomputes the rate as you type your own numbers.
Turn the labor rate into a bid
A flat-rate price book is built from this number: task hours times the rate, plus parts at your markup. If your book was set years ago, run today's costs through the calculator and check whether the hours in each task still cover them.
How to find each input
Tech pay or owner pay
The yearly wage of the tech these hours bill, with payroll taxes, or the pay you want as an owner who runs calls yourself.
Billable hours
Hours on invoices. Shoulder seasons, callbacks under warranty, parts runs and drive time between calls all sit between the 2,080 hour year and this number.
Overhead
Recovery machine, gauges and vacuum pump replacement, EPA 608 and license renewals, dispatch phone, software, accounting and marketing for the busy season.
Service van
Payment, fuel, maintenance, commercial auto insurance and the shelving. A van carrying stock costs more to run than a pickup, so use the real figure.
Business insurance
General liability, workers comp and any bond. Refrigerant and gas work can change what a carrier charges, so ask for the actual premium.
Profit margin
What stays in the business from each dollar billed after every cost above. It is what carries the van through a mild spring.
Where the hours go
Peak season does not last all year
A heat wave can fill every hour you have, then the weeks between heating and cooling go quiet. Use a full year of invoiced hours, not a busy July multiplied by twelve.
Warranty callbacks are unbilled hours
A capacitor that fails a week after install costs a trip and an hour you cannot invoice. Those hours come out of the billable number, so the rate has to cover them.
Maintenance visits bill short
A tune-up is a short ticket with a full drive on each end. If your week leans on maintenance agreements, fewer of your hours are billable than on a changeout week.
Rate factors for HVAC contractors
Demand calls versus changeouts
Diagnostic work bills by the hour or by a flat diagnostic fee. A changeout is a flat price built from crew hours. Both start from the same labor rate; the difference is how many unbilled hours each one drags along.
Two-person install crews
A changeout often takes a lead and a helper. Bill the job from crew hours times the blended rate, or the helper's hours quietly come out of your margin.
After-hours work
A no-cool call on a Saturday night belongs at its own rate. Price it as a multiple of the base rate so emergency work never sells at the weekday number.
Equipment and refrigerant stay separate
This rate is labor only. Equipment, refrigerant by the pound and parts go on the estimate as their own lines with your markup, which keeps the labor number honest.
Frequently asked questions
How do I calculate my HVAC labor rate?
Total a year of tech pay, overhead, van and insurance, divide by the hours that end up on invoices, and divide again by one minus your target margin. The example inputs on this page give an $81.38 break-even and $95.74 an hour at a 15 percent margin.
Why is my billable hours number so much lower than 2,080?
Because a lot of a tech's paid day never makes it onto a ticket: drive time, parts runs, callbacks, training and slow weeks between seasons. Pull last year's invoiced hours and use that, even if it hurts.
Should a diagnostic fee be the same as my hourly rate?
It can be built from it, but most shops set it higher than one hour of labor because it also carries the drive and the time spent on calls that end with no repair. Whatever you choose, decide it from your numbers and print it before you go.
Is the labor rate the same as what I pay the tech?
No. The tech's wage is one input. The billing rate also carries the van, the insurance, the tools, the office and profit, which is why it lands well above the wage.
What does Staxen cost for HVAC contractors?
Staxen is $59 per month per AI employee, or $149 per month for all three. Eddie drafts the estimate from what you say on site, priced from your own past prices and your saved labor rate, and Ivy invoices the call and follows up until it is paid.