Successful HVAC contractors typically aim for a net margin of around 12 percent for profitability. An HVAC contractor's gross profit is greater for equipment (approximately 45 percent on average) than for labor. While it's normal to make gains of 6% or less, it's not the goal. Our goal at Service Excellence Training is to keep our clients on a net margin of at least 15%.
We do this through ongoing, first-line training, as well as business consulting to maximize opportunities. The HVAC business is extremely profitable. In fact, it has one of the highest profit margins of any industry. The average company in the HVAC industry makes a profit of 21 percent, which is more than double the average for all companies.
All of these factors mean that the HVAC industry is likely to remain highly profitable for years to come. The need for commercial jobs is at an all-time high, which means it's the ideal time to take on a role as an HVAC contractor. If your margins are too low, breaking down the numbers will tell you where to make changes to maximize profits for your HVAC business. Learn how ServiceTitan's HVAC flat-rate pricing application goes further to streamline the price management experience.
One of the best ways to increase HVAC business profit margins is to invest in field service management software such as 3C Connect. If you're afraid of looking at the same four walls all day long, becoming an HVAC contractor might be the right choice for you. Because almost every home or commercial property has an HVAC system, there is a large market of customers who will need your services on an ongoing basis. When starting an HVAC business, assembling a team of experts will help you get started on the right foot.
Enroll in a one-year HVAC certification program to help you better understand diagnostic testing, how to use necessary equipment and tools, and basic knowledge of mechanics and electronics. Knowing what your competitors are doing is one of the best ways to help your HVAC business make millions. If everything we've mentioned appeals to you, becoming an HVAC contractor could be the ideal choice for you. Some people choose to go straight to a job after their HVAC certification program, but for those who want to gain all the knowledge possible (making you a more valuable candidate for the job), consider applying for an HVAC apprenticeship.
Compartmentalization like this allows business owners to see the profit margins in each category and know which ones are making or losing the most money. If you're not sure where to start in these evaluations, a business advisor or HVAC company mentor can help you evaluate your company and recommend several actions. Once they're on your email list, you can start sending them personalized messages that will persuade them to buy your HVAC services. By predicting future trends and changes in the HVAC market, you can make well-informed decisions about where to allocate your resources, what services to offer, and how to price your products and services.