How an HVAC Company Determines Pricing

In the November 2023 Snapshot Survey, we asked contractors about pricing. Here’s one survey question and its results detailing how an HVAC company determines its pricing from the summary report, which is available in it’s entirety by Contractor University members here.

How does your company determine its pricing?

The survey reveals a diverse approach to pricing strategies among home service businesses. The most common method is “Flat rate pricing” (50%), which provides transparency and is easy to understand when it appears on an invoice. The significant usage of “Percentage of job cost mark-up” and “Gross profit per man day” (both at 31%) suggests a keen focus on balancing costs with profit margins. Additionally, the limited reliance on competitor-based pricing (8%) indicates a strategic move towards value-driven rather than competition-driven pricing models.

Here’s what an HVAC contractor from Texas said in the survey:

“We have a strong focus on flat rate pricing, with the hourly set around $300. When we don’t use flat rate, we use a divisor pricing method and attempt to be at 45% gross on each job.”

Contractor University members can click here to access all of our resources on determining pricing.