FREE TOOL — RATE MATH
HVAC Billed Hourly Rate Builder
Free, instant, no signup. Adjust the inputs and the numbers update live. Every result is a planning estimate.
The gap between your break-even rate and your billed rate is your entire margin — and it lives or dies on billable efficiency.
The math, in plain terms.
Your billed hour — the door rate on a flat-rate menu — has to recover three things across only the hours you actually invoice: shop overhead, the fully-loaded cost of paying techs for every hour whether billable or not, and the profit you want to keep. Techs get paid for roughly 2,080 hours a year, but drive time, warranty callbacks, shop time, and slow days mean only a fraction turns into invoiced labor. Price against paid hours and you starve the business; price against billable hours and the math closes.
Worked example: 6 techs at 2,080 paid hours each is 12,480 paid hours. At 65% billable efficiency that leaves 8,112 billable hours. Fully-loaded labor at $42 across all paid hours costs $524,160; add $320,000 overhead for a $844,160 cost base. To keep a 20% net margin, divide the cost base by (1 − 0.20) to get $1,055,200 in required revenue. Spread that across 8,112 billable hours and you need about $130 per billed hour. Break-even — the rate with zero profit — is $844,160 ÷ 8,112, or roughly $104.
What it means: every point of billable efficiency you lose forces the rate up, because the same fixed costs get spread across fewer invoiced hours. Drop from 65% to 55% and the required rate climbs sharply even though nothing about your costs changed. That is why the rate lever and the efficiency lever move together — raising the door rate protects margin, but so does fixing scheduling and drive-time. Model both here before you reprice.
Questions, answered.
What's the difference between the billed rate and what I pay my tech?
Your tech's wage plus payroll burden might be $42 an hour, but that is a cost, not a price. The billed rate also has to carry overhead and profit, and it is spread across only your billable hours — so it always lands at several multiples of the wage. Confusing the two is the single most common way shops underprice.
What billable efficiency number should I use?
Use your own: total invoiced labor hours divided by total paid hours over the last quarter, pulled from your dispatch or payroll records. The default here is a starting point to adjust, not a benchmark. Drive time, warranty callbacks, shop time, and training all pull real-world efficiency down, so measure it rather than assume it.
Should overhead include my owner salary?
Include whatever you need the business to actually cover: owner pay, office and admin wages, rent, trucks, fuel, software, insurance, and marketing. If you leave your own salary out of overhead, the 'profit' this tool shows is really just paying you — not building equity in the business. Decide which one you're measuring.
Is this financial advice?
No. This is a planning estimate to model your own pricing math, not tax, accounting, or financial advice. Your real numbers depend on your books, your market, and your cost structure — confirm the inputs and the output with your accountant before you reprice work.
From spreadsheet to system.
Recomputing your door rate every time labor cost or billable efficiency shifts is exactly the pricing math The HVAC OS keeps current for you.
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