Step 1: Job Labor
| True hourly labor cost (burden cost only, no markup or margin) ⓘ×This is the raw fully burdened cost of the technician's time: wages plus payroll tax, workers' comp, and benefits. It comes from the Labor Rate Worksheet, Step 4. | |
| Labor markup % ⓘ×Markup applied on top of the burden cost to reach your billable rate. Needs to cover overhead recovery and profit. | % |
| Equivalent Gross Margin % | 0.0% |
| Billable Rate Per Hour | $0 |
| Estimated hours for this job ⓘ×Realistic total labor hours to complete the job, including diagnosis, install, and cleanup time. | |
| Labor Price for This Job | $0 |
Step 2: Materials
| Materials cost (your actual cost) ⓘ×What you actually pay your supplier for parts and materials on this job, before markup. | |
| Materials markup % (cost-based, not margin) ⓘ×This is markup, calculated on your cost: Price = Cost x (1 + Markup%). It is not the same as gross margin, which is calculated on the selling price instead. The Equivalent Gross Margin % below shows what this markup actually works out to as a margin, so the two numbers don't get confused. Markup covers carrying inventory, warranty risk, and handling. Reported ranges vary widely by source, but 25% to 50% is commonly cited for HVAC materials. | % |
| Equivalent Gross Margin % | 0.0% |
| Materials Price for This Job | $0 |
Step 3: Equipment (Install Jobs)
Leave at $0 for a service call with no equipment installed.
| Equipment cost (your actual cost) ⓘ×What you actually pay for the unit or system being installed, before markup. | |
| Equipment markup % (cost-based, not margin) ⓘ×This is markup, calculated on your cost: Price = Cost x (1 + Markup%). It is not the same as gross margin, which is calculated on the selling price instead. The Equivalent Gross Margin % below shows what this markup actually works out to as a margin. Equipment markup typically runs lower than materials markup, since it's a bigger ticket item and often more price-competitive. 15% to 25% is a commonly cited range. | % |
| Equivalent Gross Margin % | 0.0% |
| Equipment Price for This Job | $0 |
Step 4: Permits & Other Pass-Through Costs
| Permits & other pass-through costs ⓘ×Permit fees and any other costs billed straight through to the customer at cost, with little or no markup. |
Step 5: Minimum Price
Minimum Price = Labor Price + Materials Price + Equipment Price + Permits & Pass-Through Costs
Minimum Price (Floor)
$0
This is the floor. Quoting below this number means the company loses money on the job even though it may look profitable on the invoice.
Step 6: Recommended Quoted Price
Most pricing frameworks build in a cushion above the floor for negotiation room, unexpected job conditions, and to protect margin if a discount gets asked for.
| Negotiation / cushion % ⓘ×Extra percentage added on top of the minimum price to leave room to negotiate or absorb surprises, without dropping below the floor price. | % |
Recommended Quoted Price = Minimum Price × (1 + Cushion %)
Recommended Quoted Price
$0
This is the number the technician actually presents to the customer. It leaves room to negotiate down toward the floor without ever quoting below it.
A Note on These Benchmarks
Materials and equipment markup ranges vary by distributor, region, and company model. Treat the defaults above as a starting point for discussion in class, not a fixed rule. What matters most is that every job gets run through this same math consistently, not that the exact percentage matches a national number.