What is the difference between HVAC markup and HVAC margin?

Markup is calculated on cost: (Price - Cost) / Cost. Margin is calculated on the total bid price: (Price - Cost) / Price. A 20% markup on a $5,000 HVAC equipment job yields only a 16.67% gross margin, leaving you with near-zero net profit after overhead.

What should be included in HVAC loaded labor burden?

Loaded labor burden includes FICA/Medicare payroll taxes (7.65%), workers' compensation insurance (8-12%), general liability, paid time off, tool allowance, and technician health benefits. An HVAC tech paid $38/hr actually costs $50-$54/hr.

HVAC Trade Tool

HVAC Margin Calculator & Job Cost Estimator

Protect AC replacement and furnace margins with true loaded labor burden and consumable protection.

Interactive HVAC Job Estimate

HVAC Equipment & Unit Cost ($)

Refrigerant, Line Sets & Consumables (%)

Tech Base Wage ($/hr)

Labor Burden (Taxes, WC, Insurance %)

Estimated Install Hours

Target Gross Profit Margin (%)

Burdened Tech Rate: $50.16/hr

Total Direct Cost (Labor + Equipment): $5,461.92

25% Flat Markup Bid: $6,827.40

True Margin Bid: $7,282.56

Profit Preserved vs Flawed Markup: +$455.16

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The HVAC Markup Trap: Why 25% Markup Loses $450+

Many HVAC contractors make the mistake of adding a percentage markup to their equipment and labor costs. If your job cost is $5,462 and you mark it up 25%, you bid $6,827. But in that $6,827 bid, your actual gross margin is only 20%.

True Margin Formula: Bid = Total Cost / (1 - Target Margin %)

Example: $5,461.92 / (1 - 0.25) = $7,282.56

By locking in a deterministic gross margin, you ensure that overhead, vehicle depreciation, and net company profit are never eroded.

Frequently Asked Questions

How does Job Profit Kit calculate loaded labor burden?

Base wages only account for ~65-75% of your true labor expense. Job Profit Kit factors in employer FICA/Medicare, workers' compensation rates, state unemployment insurance, health benefits, and PTO to determine your true hourly cost.

Can I use this offline in basement mechanical rooms?

Yes. Job Profit Kit is a local, offline-first PWA. It runs without cell reception or internet access, storing zero customer data on external servers.