Do you want to know how much HVAC businesses & contractors make monthly? If YES, here is a quick analysis detailing the income potential of HVAC contractors.
The HVAC industry reflects a fast and advanced technology, which is continuously improving. When such additions incorporate to the designs and functions of heating and cooling units, the business of HVAC grows. Most successful HVAC business owners aim for a 12 percent net profit margin.
Installing a new HVAC system which can cost a few thousand dollars, can net an HVAC business between 5-10 percent in profits. According to reports, the normal service call cost about $225 while an annual maintenance contract can net roughly $400 a year. Meanwhile, there is a lot of discrepancy as how much a business owner can make vary greatly by location.
Due to the seasonality of the HVAC business (in most climates, the prime season lasts 7 months), many HVAC contractors include a high gross profit margin (about 45 percent) on equipment and limit the use of labor hours. They prefer getting jobs done quickly and moving on to the next project.
The Exact Amount HVAC Business Owners Make
For a normal HVAC company, the owner pays most of every dollar earned to his employees, equipment costs, marketing, utilities, and other expenses before paying himself anything. Nevertheless, most times, this leaves about 6 percent of earnings to the owner.
For a company that brings in $1 million, the owner would get $60,000 in take home pay. Realistically, this is not encouraging especially if the goal of starting the business was for financial freedom.
Coupled with the fact that this 6 percent is after the few years it took to build the business and not taking an income as the owner. However, this 6 percent usually is not the end goal. HVAC business owners should strive for 10-15 percent by cutting costs in some areas or grow their profits while keeping costs the same in all other areas.
Meanwhile, the average income for HVAC owners is between $35,000 and $75,000. Few earn more than $100,000, but the ones who do are earning that much because they are employing effective systems in their business, analyzing every aspect they can, and increasing the efficiency of their work.
Many HVAC business owners fail to understand they need different pricing schemes for different services that their company offers. For example, a HVAC repair business should be priced differently from commercial HVAC installation, and an HVAC maintenance business should be priced differently from duct cleaning.
Even if you are offering more than one service, you should separate these into different departments, as if they were their own separate business. Remember, compartmentalization such as this lets business owners to clearly know the profit margins in each category and know which ones are making or losing the most money.
At this point they can fortify what is working and focus on the parts of their business that are doing well, while either changing or discarding the parts that are draining the company.
In this business, however, your profit must exclude all expenses incurred such as the material costs, labor costs, moving costs of equipment around or any extra costs like rent, insurance, cost of go down space, etc. Take your time to do a small survey around and know how much your competitors are charging, and then only decide your charges.
You can also try different options like taking a franchise of HVAC or becoming a mediator between HVAC contractors and clients. Only consider these options if you are sure you do not want to start anything on your own.