Templates Guides
HVAC Markup Chart: Free Google Sheet Pricing System
HVAC
In reviewing the HVAC markup charts that have been passed around online, industry experts at ServiceTitan have found two key issues:
“HVAC markup chart” seems to mean different things to different people. For example, some charts show differences between gross margins and net profit margins, while others share recommended markup multipliers for price ranges of HVAC parts and materials costs.
Most HVAC markup charts available online have limited practical utility for HVAC companies (or worse, provide flat-out bad methods). Specifically, they don’t account for key variables such as labor costs, desired gross and net profit margins, department-specific overhead costs, membership or club discounts, etc. — all of which can vary from business to business and need to be taken into consideration when doing markups.
So in this post, we share two comprehensive Google Sheet pricing templates (one for equipment installations, one for service and repair departments), designed by one of our industry veterans, Bill Powers. HVAC businesses can use these templates to correctly calculate their markups and service prices based on their business’s own costs and variables.
Below, we’ll walk through the two sheets and how you can use them. Then, we’ll discuss how ServiceTitan can further streamline pricebook management and solve other key operational challenges related to hitting your profit goals. Finally, we’ll wrap up with answering some frequently asked questions about HVAC markups.
HVAC Markup Guide: Table of Contents
How to download and use our free HVAC markup and pricing spreadsheets
How ServiceTitan streamlines pricebook management & HVAC pricing
Connecting your pricebook to the rest of your business operations
Note: ServiceTitan protects your bottom line by giving you the tools you need to stay on top of the fluctuating prices of materials and equipment. If you’d like to find out more about how ServiceTitan’s all-in-one HVAC contractor software can help you streamline pricebook management and grow your HVAC business, book a free demo.
How to Download and Use Our Free HVAC Markup and Pricing Spreadsheets
Each of the following spreadsheet templates have detailed instructions in the first tab that explain how to use the sheet for your business.
In each spreadsheet, there are three types of cells:
Yellow cells. Yellow cells are input cells where you need to input values.
Blue cells. Blue cells have default values or formulas, but you can type over them to show values that reflect your business.
White cells. White cells are calculated cells — they are protected and can't be changed.
Below, we’ll share links to each sheet and a bit more information about what each sheet contains.
1. Markup and Pricing Module for HVAC Equipment
The HVAC equipment spreadsheet contains dedicated tabs for calculating markups of the following types of equipment and HVAC system components:
Air conditioning
Gas furnaces
A/C unit and furnace combinations
Heat pumps
Air handlers
Heat pump and air handler combinations
Condensers
Other options and miscellaneous items
At the top of each tab, there are “global” setup values for you to fill in (e.g. your profit margin divisor, tax rate, hourly rate or labor rate, warranty reserve percentage, cost package details, etc.) that are applied and accounted for in the calculations of the pricing table below.
Each row of the pricing table allows you to input details for specific equipment or parts and materials, and the spreadsheet formulas calculate your retail pricing based on those global values, along with other outputs such as gross profit margins for discounts that techs may need to offer to make a sale.
2. Markup and Pricing Module for HVAC Parts and Materials
The HVAC parts and materials spreadsheet (which you can copy here) was designed for service and repair departments. It provides a five-level flat-rate pricing system that you can customize based on your own labor and materials costs.
The idea behind the five-level system is to categorize all of your maintenance and repair services into five levels based on the average number of labor hours that it takes to complete those tasks. For example, a simple task such as cleaning a blower fan might take 0.5 hours on average with $10 of material costs, which you’d likely put into Level 1.
In contrast, a task such as replacing a secondary circuit board might take on average one hour with $100 of material costs, and therefore might fall into Level 3.
The spreadsheet template has a material and task-time analysis tab that lists most of the standard maintenance and repair services provided by an HVAC business, categorized into five levels. You can customize that page based on your own services, labor hours, and materials costs — which will arrange your specific services into the five levels.
Once this has been done, you can input your average number of labor hours and material costs for each level in the existing five-level tab. And the result will give you a simple flat-rate pricing model where every service that falls into a particular level is charged one selling price that is marked up to account for all of your costs, as well as your desired gross profit margin, as shown here:
Note: There are additional instructions and tab features in the document that you can use at your discretion.
Limitations to Consider
Using these pricing templates can help you calculate your pricing correctly for profitability. However, these sheets alone cannot solve key challenges involved in managing and implementing your pricing, such as:
Manually maintaining and updating your pricing spreadsheets
Ensuring that HVAC technicians always have access to the most up-to-date pricing when they’re in the field
Ensuring the correct prices are applied to every estimate across all services
Tracking and following up on open estimates to minimize lost revenue opportunities
Manually transferring pricing information from document to document throughout the job lifecycle (e.g. from estimate to work order, work order to invoice, etc.)
Accurate pricing will take you only so far. If you don’t have the tools to effectively manage and implement that pricing, you’ll be hard pressed to meet your profit goals.
In the rest of this post, we’ll walk through some of the ServiceTitan features that help solve these challenges for HVAC business owners.
How ServiceTitan Streamlines Pricebook Management and the Implementation of HVAC Pricing
ServiceTitan users can set up their pricebook using one of three basic approaches:
HVAC contractors can upload a pricebook that they’re already using. For example, if you’d used the pricing spreadsheets above to build out the foundation of your pricing, you could upload and use that pricing as a starting point within ServiceTitan.
Alternatively, users are able to create a brand new pricebook from the ground up. Our interface makes it easy to do, and for small businesses, this can be a practical option.
Finally, HVAC contractors can opt for ServiceTitan’s Pricebook Pro catalog. An upgrade product, Pricebook Pro offers a pre-built, continually managed flat-rate pricebook (more on this below).
Organize Pricebooks for Easy Navigation
HVAC business owners can organize their pricebook into categories to make locating items and services as easy and efficient as possible.
To save time — and avoid sifting through long lists and catalogs — many of our users arrange their pricebooks by business units and verticals, as shown in the screenshot below.
For example, if they offer electrical or plumbing services in addition to HVAC services, they can create separate categories for their electrical flat-rate and plumbing flat-rate pricebooks. Or they can categorize pricebooks by residential, commercial HVAC, and construction, depending on the business divisions they serve.
Keep Prices Up-to-Date with Pricebook Editing & Automation Features
To guarantee they’re pricing their services accurately and profitably, HVAC businesses must ensure that their prices reflect fluctuations in the costs of equipment and materials. So it’s vital they track those changes diligently.
To streamline this process, ServiceTitan provides an interface that allows HVAC contractors and their employees to edit prices and specs on multiple pricebook items simultaneously.
Specifically, our built-in pricebook features allow for:
Individual Pricebook Item Editing: The ability to edit any pricebook item or HVAC service as needed, any time, with just a few clicks.
Bulk Editing: The ability to make edits and markups to groups of services, packages, equipment, and/or materials. With a few clicks, changes can even be applied across an entire pricebook.
Dynamic Pricing Automations: The ability to set up rules to auto-update pricing according to customized parameters, such as when certain overhead costs change (e.g. labor rates, materials, etc.).
Pricebook Connect: With Pricebook Connect, you’ll have direct, cloud-based access to materials and equipment from top industry-supplier catalogs, with automated updates of item descriptions, product images, and pricing as manufacturers make changes.
Combined, this suite of features makes pricebook management seamless, reducing the time your team needs to spend on manual updates, and ensuring that your prices reflect evolving costs — all while protecting the profitability of your business.
Furthermore, as soon as any updates in your pricebook are made, they’re reflected in real-time on any new quotes that are created in ServiceTitan, whether from the office or the field.
Leverage Pricebook Pro for Even More Streamlined Pricebook Management
While the features we’ve described so far improve pricebook management significantly, businesses still need to make continuous decisions about which flat-rate services to offer, what to include in service packages, and how to set their flat-rate pricing to hit target profit margins. They also need to continuously monitor pricing updates from vendors and periodically implement those changes.
To take this onus off of HVAC business owners — and free up staff to spend more time focusing on providing great customer experiences or marketing activities that help grow the business — we offer our Pricebook Pro add-on feature.
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Drawing on decades of experience from industry veterans, Pricebook Pro further streamlines pricebook management in three ways:
Giving you a well-built HVAC pricebook from the outset, based on industry average prices and best practices, saving you hours of pricebook setup time. (You can add your own items and make adjustments to this base pricebook, as your business requires.)
Keeping on top of price updates. Our team monitors changes in supplier pricing on your behalf and updates prices on a monthly basis.
Providing a comprehensive range of pre-designed flat-rate services based on HVAC industry best practices and trends, which keep track of updated prices.
In combination, Pricebook Pro features help ensure that users are able to offer their customers cutting-edge HVAC services and products at prices that align with their profitability goals, all while saving HVAC companies innumerable hours on pricebook creation and maintenance.
It also gives subscribers a host of extras that can be leveraged to increase close rates and average ticket prices: product images and upgrades, recommendations, detailed item descriptions, and more.
Techs can draw on these and other resources while they’re on site to educate customers and give them confidence in their purchase decisions.
A recent survey of Pricebook Pro subscribers found that this ServiceTitan add-on boosted their revenue by an average of 13% year-over-year.
Connecting Your Pricebook to the Rest of Your Business: Creating Good-Better-Best Proposals, Work Orders, and More
Whether you’re using our base pricebook features or our Pricebook Pro add-on, all ServiceTitan users benefit from a seamless connection between their pricebook and the rest of their business operations — beginning with the creation of estimates and proposals.
With ServiceTitan, business owners, managers, office staff, and field service technicians can easily create Good-Better-Best proposals based on the services and prices defined in their pricebook.
Leveraging our mobile app — which runs flawlessly on both Android and iOS (iPhone and iPad) mobile devices — techs can build estimates and proposals right from the field. They can build estimates from scratch by selecting items from your pricebook, or leverage and customize estimate templates for common recurring services.
The ability to provide extensive product details and high-quality images supplies techs with everything they need to explain services, packages, and products to customers, whether they’re selling a system replacement or performing a simple repair job.
After a business or homeowner has made their selection, techs can then create work orders, offer financing, generate invoices, collect payments, and more — all of which are directly informed by the contents of their pricebook. And these are simply our mobile features.
The same functions are also available via desktop for office staff, including many others such as:
All of these critical features can help HVAC service contractors get ahead of the competition by streamlining their overall operations, integrating core business functions to drive revenue growth, improving efficiency, and increasing their bottom line.
Discover what ServiceTitan can do to streamline your operations, increase profitability, and improve customer experiences. Schedule a call to get a free, personalized demo of our all-in-one software solution today.
FAQs on HVAC Markups
What Is the Average Markup on HVAC Parts and Materials?
In general, the best-practice markup for HVAC parts and materials is somewhere between 3X and 6X what you paid for the item. The multiplier you use will depend on your HVAC company’s profit goals, as well as other factors such as labor costs and what businesses or homeowners in your market can handle. You generally want to shoot for a gross profit margin of 50-55% across your HVAC services.
Contrary to some of the advice that’s been shared online, it’s important to apply the same markup multiplier across all of your parts and materials. If you use different multipliers based on price ranges of material costs, you’ll end up with inconsistent gross margins, which can become a headache for your accountants and your business.
Equally important to correctly marking up your parts and materials is to determine your billable labor rate. Check out Chapter 5 of our contractor playbook for detailed instructions on how to calculate your hourly rate to cover overhead costs, break-even rate per sold hour, as well as billable labor rate that accounts for profitability.
Combined with your materials and equipment markups, your billable rate for profitability will allow you to calculate the retail prices of your services (whether you use time and materials or flat-rate pricing).
What Is the Average Markup on HVAC Equipment?
Because the cost of HVAC equipment is significantly higher than parts and materials, the average equipment markup needs to be adjusted accordingly in order to offer prices that your market can bear. Typically, equipment markups should be somewhere between 300% and 400% in order to hit your desired gross margins.
Unlike parts and materials, where the best practice is to maintain the same markup multiplier across every item, equipment is different. You should choose a different markup percentage for each category of equipment. For example, one percentage for all AC units, one for all gas furnaces, one for all heat pumps, etc.
How Do You Calculate HVAC Markups?
Markup — expressed as a percentage or “multiplier” (e.g. 3X) — is the amount that’s added to the cost of a product or service to ensure that the selling price will meet your desired gross profit margin.
For instance, if you purchase a part for $10 and want to sell it for $20, your markup percentage is 100% or 2X. The calculation would look like this:
($20 selling price - $10 cost) / $10 cost = 100% markup (i.e. 2X)
In other words, you've doubled — or added 100% of the cost — to the price of the part.
