The average profit margin for air conditioning equipment typically ranges from 25 to 50%. If you are selling spare parts and materials for air conditioning systems, your profit margin must be 100% or higher, meaning that you charge at least double what you paid for the part. This requires precise accounting and estimation skills, as prices are constantly changing. It is important to know how much you spent on each part before you can mark it correctly.
The total cost of the job also includes a profit margin for labor, since more is charged per hour for the technician's time than he is paid. These two margins can be combined to make your business profitable. When you increase 100 percent of your materials, you usually increase your labor force less, for example, 25 percent. The amount of profit a HVAC company makes depends on a variety of factors, such as the number of contractors in a city or region, the level of competition, and other factors.
Average HVAC profits can range from 15% to 35% of total sales. The industry standard profit margin for HVAC services is 20%. Most customers won't be able to tell a great HVAC installation from a regular one, but they're sure to remember the company that sent them maintenance reminders just when their filters were getting dirty. Nobody would blame them for having little patience to sit down every quarter auditing the company from top to bottom to determine their average profit margin on air conditioning systems, starting with each sheet of paper purchased and paid for with company funds and up to each truck.
By reaching out to new customers and selling to them, you can increase your HVAC company's average revenue and profits.
