An HVAC labor rate should cover the technician's wage, the employer costs on that wage, the paid hours that never reach an invoice, a share of overhead, and your margin, all per billable hour. The formula is selling rate = (labor cost per billable hour + overhead per billable hour) / (1 - target margin). With the example inputs below (a $30 wage, 173 paid hours, 15% burden, 120 billable hours, $6,000 overhead, 20% margin) that is $124.67 an hour.
Your payroll, time and overhead records will give a different number, and the input that moves it most is billable hours, not wage. The trade-neutral version is the contractor hourly rate calculator; the HVAC contractor software page covers putting the rate to work in estimates and invoices.
These are editable examples, not industry benchmarks. Replace every value with your records.
Base wage before employer-paid costs. The BLS median for the occupation is in the benchmark table below.
Use payroll hours, including paid nonbillable work prepared consistently with your burden input.
Payroll taxes, workers' compensation, insurance, retirement, and other employer-paid costs. Include each cost once; do not add paid leave here if it is already captured in paid payroll hours.
Use completed customer-work records, not scheduled capacity.
Operating costs not already counted in wages or labor burden.
Profit as a percentage of the final selling rate.
Count each cost once. Use the same accounting treatment for paid hours and labor burden, and update the inputs when staffing or seasonality changes.
Replace every example input with your records before using this rate in an estimate.
The example inputs are hypothetical. They are here to show the arithmetic, not to suggest what an HVAC company pays or charges.
| Step | Calculation | Example |
|---|---|---|
| Monthly wages | $30 x 173 paid hours | $5,190.00 |
| Employer labor burden | $5,190 x 15% | $778.50 |
| Monthly labor cost | $5,190 + $778.50 | $5,968.50 |
| Labor cost per billable hour | $5,968.50 / 120 billable hours | $49.74 |
| Overhead per billable hour | $6,000 / 120 | $50.00 |
| Fully loaded cost | $49.74 + $50.00 | $99.74 |
| Example selling rate | $99.74 / (1 - 20%) | $124.67 |
The technician is paid $30, but the business has to recover $99.74 for every hour it can bill before it earns anything. The 53 paid hours that are not billable (173 minus 120) are the biggest reason: training, callbacks, shop time, loading the truck and some driving all get paid and never appear on an invoice.
Each row changes one example input and keeps the rest. The pattern holds for real numbers too: billable hours and overhead move the rate more than a few dollars of wage.
| Change one input | Fully loaded cost | Example rate at the stated margin | What happened |
|---|---|---|---|
| Example inputs, unchanged | $99.74 | $124.67 | The baseline every row below is compared with. |
| 100 billable hours instead of 120 | $119.69 | $149.61 | Twenty fewer billable hours spread the same payroll and overhead over less revenue: about $25 more per hour. |
| 140 billable hours instead of 120 | $85.49 | $106.86 | Twenty more billable hours take about $18 off the rate. |
| Overhead $8,000 instead of $6,000 | $116.40 | $145.51 | Every extra $1,000 of monthly overhead adds about $8.33 of cost per billable hour at 120 hours. |
| Burden 25% instead of 15% | $104.06 | $130.08 | Ten points of burden move the rate less than twenty billable hours do. |
| Margin 10% instead of 20% | $99.74 | $110.82 | Cost does not change; only the divisor does. |
| Margin 30% instead of 20% | $99.74 | $142.48 | Divide by 0.70 instead of 0.80. |
That is why the billable-hours input deserves real time records rather than a guess. Contractor time tracking software separates paid hours from hours on a customer's job; the job cost calculator then checks the rate against one job's hours and materials.
No government source publishes an HVAC selling rate per hour. What is published is wages, employer costs and contractor net margins, which are the inputs. Every figure below links to its source and carries the source's own date.
| What is measured | Figure | Source and date |
|---|---|---|
| Median hourly wage, heating, air conditioning and refrigeration mechanics and installers, United States | $29.33 an hour ($61,010 a year), May 2025 | BLS Occupational Outlook Handbook, page modified August 27, 2026 |
| Lowest and highest tenth of that occupation, annual | Lowest 10 percent under $40,050; highest 10 percent over $95,210 (May 2025) | BLS Occupational Outlook Handbook, same page |
| Average HVAC technician wage reported by ACCA | $33 national; $28 in the Deep South; $38 in the Northeast | ACCA blog, June 3, 2026 |
| Employer benefit costs, all private industry, per hour worked | $14.07 of benefits on $32.82 of wages, 30.0% of total compensation, about 43 cents per wage dollar (June 2026). Includes paid leave, insurance, retirement and legally required benefits; not HVAC-specific | BLS Employer Costs for Employee Compensation, released September 9, 2026 |
| Employer Social Security tax | 6.2% of wages up to the $184,500 wage base (2026) | IRS Publication 15 (2026) |
| Employer Medicare tax | 1.45% of all wages, no wage base limit (2026) | IRS Publication 15 (2026) |
| Federal unemployment tax (FUTA) | 6.0% of the first $7,000 paid to each employee; 0.6% after the full 5.4% credit for state unemployment tax | IRS Tax Topic 759 |
| Net profit margin, HVACR contractors, after all overhead | 6% overall; 5% for contractors with up to four trucks; 8% for ten or more trucks | ACCA blog, June 3, 2026, citing the 2025 Contractor of the Future Study |
Wage rows check the wage input. Put the BLS median of $29.33 into the calculator with the other example inputs unchanged and the rate is $123.28; ACCA's $33 average gives $130.89. A few dollars of wage move the rate by a few dollars. Twenty billable hours move it by about $25.
The tax and benefit rows check the burden input. Federal payroll taxes alone are 7.65% of wages in 2026 (6.2% Social Security up to $184,500 plus 1.45% Medicare), plus FUTA at 0.6% of the first $7,000 per employee after the state credit. State unemployment, workers' compensation (rated by class code and payroll), health and retirement contributions, and tool or phone allowances come on top. The BLS figure of about 43 cents of benefits per wage dollar is an all-industry average that includes paid leave; if your paid-hours input already contains vacation and holidays, do not put leave in the burden percentage as well.
The margin row is a different margin. ACCA's 6% is company net profit after every cost, including the overhead this calculator spreads across billable hours. The margin you enter here is the margin on one hour of labor before unbilled hours and unrecovered overhead eat into it. A 20% labor margin and a 6% company net margin can describe the same business. The HVAC profit margin calculator works the job-level side with the same ACCA benchmarks.
Costs that exist only because you employ the technician: employer payroll taxes, federal and state unemployment, workers' compensation, employer-paid health or retirement contributions, and employee-specific items such as uniforms, phone and tool allowances. Take them from payroll and insurance records and count each once. The 7.65% federal share is a floor, not a burden rate.
Operating costs not already in wages or burden: vehicles and fuel, shop or storage, office payroll, general liability insurance, software, phones, marketing, licensing, tools, accounting, and the owner's administrative time if it is not in payroll. If workers' compensation is in burden, it is not also overhead.
Paid hours come from payroll. Billable hours come from completed job and time records. The gap between them is the hidden cost in every hourly rate, and it changes with the season: a slow shoulder month with the same payroll pushes the real cost per billable hour up. Use representative months and rerun the calculator when staffing or routing changes.
Margin is profit as a share of the selling price; markup is a share added to cost. A 20% margin on $99.74 means dividing by 0.80, which gives $124.67. A 20% markup gives $119.68, which is only a 16.7% margin. Use one or the other consistently in estimates.
High enough that one billable hour pays for the technician wage, the employer costs on that wage, the paid hours that produce no invoice, a share of business overhead and your target margin. Divide the fully loaded cost per billable hour by one minus the margin. The example inputs on this page give $124.67 an hour; your payroll, time and overhead records will give a different figure, and the rate changes most when billable hours change.
The Bureau of Labor Statistics reports a median of $29.33 an hour ($61,010 a year) for heating, air conditioning and refrigeration mechanics and installers as of May 2025, with the lowest tenth under $40,050 a year and the highest tenth above $95,210. ACCA reported a $33 national average technician wage in June 2026, $28 in the Deep South and $38 in the Northeast. A wage is one input to the rate; it is not the rate.
It depends on your state unemployment rate, workers compensation class, health and retirement plans and paid time off. Federal payroll taxes alone are 7.65% of wages in 2026 (6.2% Social Security up to $184,500 plus 1.45% Medicare), plus FUTA at 0.6% of the first $7,000 per employee after the state credit. Across all private industry, BLS measured benefit costs at 30.0% of total compensation in June 2026, about 43 cents per wage dollar including paid leave. Enter your own percentage and count each cost once.
The customer rate must cover the wage, employer-paid labor costs, paid time that is not billable, business overhead, and profit. In the example, a $30 wage becomes $49.74 of labor cost per billable hour once burden and unbilled hours are counted, $99.74 once overhead is added, and $124.67 at a 20% margin. The technician wage is one part of the cost of delivering an hour of service.
Yes, if the company expects labor revenue to recover some or all operating overhead. Allocate monthly overhead across realistic billable hours using a consistent method, and avoid counting any employee cost in both labor burden and overhead. If parts and equipment sales carry part of the overhead, use a smaller overhead figure here and check the whole job in the HVAC profit margin calculator.
Set the hourly rate on your services once, then every estimate and invoice uses it. Job timers record the hours that actually get billed, which is the input this calculator depends on.
From $19.99/month (Solo, one user). The trial applies to every plan.
Related: HVAC profit margin calculator, contractor hourly rate calculator, all contractor calculators.
Sources
Federal rates and survey figures change; check the linked source before relying on a number. This calculator is an educational estimate, not tax, accounting, or legal advice.