What it actually costs to run your HVACR business (and why the math doesn’t add up)
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Let’s talk about money: specifically, the money you’re working too hard to earn and leaving on the table because of outdated pricing strategies, hidden costs, and financial myths that need to die.
At ACCA 2025, financial experts broke down the real numbers behind profitable HVACR businesses, and some of what they revealed might surprise you. More importantly, they showed contractors actionable strategies to plug the leaks in their revenue streams and start building wealth from their businesses.
ACCA members can watch all ACCA 2025 session recordings any time. Watch here
The brutal truth about what HVAC service calls really cost
Do you know how much it actually costs every time you roll a truck to a service call?
In his “The Cost of Rolling a Truck: How to Lose Money Without Trying” session, Jim Fultz, from ACCA Platinum Strategic Partner Copeland, did the math. When you factor in the real costs — wages, benefits, vehicle expenses, insurance, and windshield time when your technician isn’t billing anyone — the average cost to roll a truck is hovering around $84.40 per hour. That’s before you’ve made a single dollar of profit.
Now, if you charge $89 for that call that took 30 minutes, are you making money? Barely — only about $4.60 an hour.
The biggest drain on profitability is supply house runs. Every time you send a technician to pick up a part, you lose roughly an hour of billable time. Do that five times a month, and you’re leaving nearly $22,000 on the table annually per truck. Fifteen trips per month hemorrhage over $60,000 per year.
The solution isn’t complicated. Stock your trucks properly, use parts runners, or set up restock systems that keep technicians on site and billing. Your truck inventory isn’t just convenient; it’s one of your biggest profit drivers.
Watch “The Cost of Rolling a Truck”.
HVAC financing isn’t optional anymore: It’s survival
Most homeowners aren’t sitting on big savings. About 75% live paycheck to paycheck, which means when the A/C fails and replacement costs reach $8,000, it’s a financial strain.
Contractors who offer financing on every call see real results: close rates rise by 30%, and average ticket sizes grow by 20%. Yet, 80% of all financing still comes from just 10% of contractors.
That gap often comes down to presentation. Many contractors don’t mention financing, or they only bring it up when a customer asks. Others assume that someone with a nice home or new cars won’t need it.
Kelley Heller, from ACCA Premium Strategic Partner Synchrony, advises against making assumptions. Offering financing upfront as part of the project removes stress for customers by providing an immediate solution to their heating and cooling needs. And it increases the likelihood that your technician will close. “Go in with financing, lead with financing,” she says.
Doing that takes training. Your sales team should feel as comfortable presenting financing as they do equipment options. Heller notes that finance partners should be hosting trainings for your team, showing how to present offers effectively, and sharing tips for breaking down barriers.
Erica Leonor from GoodLeap adds that the most popular financing option isn’t the deferred interest promotion. “People are financing systems at 15 years,” she said during her “Understanding Finance Solutions” session. “What people want is a low monthly payment.” Many customers would rather pay $250 a month for years, even with interest, than come up with $8,000 today.
Watch “Understanding Finance Solutions”.
Want to learn more? Synchrony recently hosted a free webinar, “Grow Your HVAC Business with Financing”, on how contractors can use financing to win more business. ACCA members: watch any time.
Your HVAC service pricing strategy may need work
If you’re still pricing by gross margin percentages or markup formulas, you’re missing critical insight into your true profitability. Two jobs with identical 40% gross margins can tell completely different stories—one might earn you $73 per hour, while the other could actually cost you $21.68 per hour to complete.
A better approach is to price by net profit per hour. Start with your desired net profit (the national average for residential service is around $75 per hour), then add your overhead cost per hour (typically $40–$50), followed by your direct labor costs. Factor in your non-billable time percentage, and you’ll arrive at your true hourly rate.
This method gives you more control. During slower seasons, you can lower your target profit to stay competitive. When business is booming — or when a project is more complex — you can increase it.
In her “Debunking Financial Myths” session, business consultant Ruth King shared an example of a contractor who took this approach. He strategically bid a public works project at just $5 net profit per hour during winter — not to maximize earnings, but to keep his crews working until spring. They won the bid and ultimately came out ahead at $6 per hour.
The metrics that matter
Forget about hitting some arbitrary 20% net profit margin. “You cannot take your percentages to the bank,” King emphasized. Two jobs can both show 20% net profit, but if one took 16 hours and the other took 40 hours, you’re making $125 per hour on one and $50 per hour on the other.
Track these numbers religiously:
- Overhead cost per hour: Total overhead divided by total billable hours
- Net profit per hour: Total net profit divided by total billable hours
- Billable hour percentage: The number of your technician’s paid hours that are billable (Realistically, this maxes out around 91% annually when you account for holidays, vacations, training, and drive time.)
When you start tracking net profit per hour for each technician and crew, patterns emerge. You’ll discover which crews are making you money and which are costing you.
Stop ignoring your balance sheet
Your profit and loss (P&L) statement tells you if you made money last month. Your balance sheet tells you if you’re building wealth. King noted that one of her contractor clients had seemingly decent profit percentages but was actually generating just $7.21 per hour in net profit. “Are you happy earning what you can make at McDonald’s?” she asked.
That same company eventually grew to $10 million in revenue and sold for $9 million cash by focusing on the right metrics and building actual value.
Your balance sheet also reveals collection problems, inventory issues, and cash flow constraints. If you’re only looking at your P&L, you’re missing half the story.
Watch “Debunking Financial Myths”.
Making it work for your HVAC business
You didn’t get into this business to work 60-hour weeks for $7 an hour. You took on risk, invested in equipment and training, and built a company that solves real problems for customers.
The contractors making serious money aren’t just working harder; they’re measuring smarter, pricing strategically, removing friction from the sales process with financing, and ruthlessly eliminating the hidden costs that drain profitability.
Start by calculating your overhead cost per hour and your current net profit per hour. The number might sting, but at least you’ll know where you really stand. From there, you can make informed decisions about pricing jobs, staffing crew, and choosing work that is actually worth your time.
Missed a session? ACCA members can access all ACCA 2025 recordings here.
Not a member? Join now
Posted In: Building Performance, Leadership & Planning, Money, Strategic Planning
