How to Build a Profitable Pricing Structure for Your Ontario HVAC Business
Stop Guessing - Price With Purpose
For many HVAC business owners, setting prices feels more like art than science. One day you’re slammed with calls and wish you’d charged more; the next, you’re cutting rates just to keep your crew busy.
In Southwestern Ontario, where long winters and humid summers drive sharp swings in demand, the wrong pricing structure can quietly eat away your profits. The good news? With the right framework, you can set prices that reflect your true costs, win more of the right jobs, and create predictable cash flow year-round.
Why Pricing Feels Like Guesswork
Most HVAC businesses don’t struggle to find work — they struggle to price it properly.
Too often, owners:
Copy competitor rates without knowing their cost base.
Forget to include overhead like trucks, insurance, and admin time.
Pay their team for 40 hours but only bill for 30.
Even busy companies can lose money when their rates aren’t built on solid numbers. And in a region like Southwestern Ontario — from Windsor to Kitchener — labour costs, travel times, and market expectations vary widely. The key is building a pricing structure that reflects your business, not someone else’s.
The Three Core Pricing Models for HVAC Businesses
Flat-Rate Pricing
Customers pay a fixed price for defined tasks — not hourly rates.
This model removes surprises for the customer and keeps techs focused on completing the work efficiently.
This works best for service and maintenance calls, tune-ups, or common repairs, for example, replacing a blower motor might be $625 flat — covering average labour time, materials, truck cost, and a built-in profit margin. You can use software services like Jobber or ServiceTitan to standardize flat-rate books. Each task should be built around a loaded labour rate — not just the technician’s wage.
Read more on how Ironwood can help you incorporate software into your business
Time and Materials (T&M)
The traditional model — charge an hourly rate plus materials.
This pricing framework works best for custom or diagnostic work where the scope is unclear. Pricing off of time and materials protects you when there is uncertainty on the amount of work required.
One danger of T&M is that owners often undercharge because their hourly rate doesn’t fully recover overhead. A technician making $35/hour actually costs closer to $55–$60/hour once benefits, vacation, and truck costs are added. To stay profitable, most small HVAC firms in Ontario should charge $115–$150/hour for service labour.
Tiered or Value-Based Pricing
Gives the customer control while anchoring value - giving a “Good, Better, and Best” options.
This pricing model is used primarily for installations and retrofits, helping you compete on value instead of price. The higher tiers often carry the best margins.
Example:
Basic: Standard efficiency unit, 1-year warranty
Standard: Mid-range model, 5-year warranty
Premium: High-efficiency unit, 10-year warranty + priority service
Calculating Your True Cost of Doing Business
Here’s the simple formula most owners never build:
Loaded Labour Rate = (Hourly Wage × Burden) + Overhead Recovery + Profit Target
Example for a small HVAC company:
Technician wage: $35/hour
Burden (EI, CPP, insurance, vacation, etc.): +45% → $50.75
Overhead recovery: $25/hour
Profit target (15%): $11.40
→ Minimum billable rate: $87/hour
But because not every hour is billable, your actual charge rate must be closer to $120–$130/hour to stay profitable.
That’s why copying another contractor’s rate can be a recipe for thin margins. Your numbers (your team, your trucks, your admin hours) define your pricing.
Matching Price to Market Conditions
Ontario’s HVAC market is seasonal by nature:
Winter: Heating service calls surge, overtime climbs.
Spring/Fall: Maintenance work dominates — time to run promotions or memberships.
Summer: Cooling installs peak — ideal for premium tiered pricing.
Smart contractors adjust accordingly:
Add a premium for after-hours or emergency calls.
Offer membership plans
Use data from your past jobs to adjust hourly rates or flat-rate books annually.
The goal is to build consistency, not rigidity. Your pricing should flex with demand, but always be grounded in cost.
Improve Pricing Consistency Across the Business
As your company grows, inconsistent quoting becomes one of the biggest profit killers. Standardizing pricing ensures every tech and estimator follows the same logic.
Practical steps:
Create a task library with standard jobs, labour hours, and materials defined
Build quote templates with pre-set markups
Use software to automate quoting and track margins in real time
Train your team to explain pricing confidently and consistently
When pricing is systematized, you protect margins even when you’re not the one writing the quotes.
Key Takeway: Price With Intention, Not Instinct
Your pricing should tell a story — one of professionalism, sustainability, and confidence.
In the HVAC world, where materials and labour costs rise each year, staying profitable isn’t about being the cheapest. It’s about understanding your numbers and charging what your expertise is truly worth.
If you’re unsure whether your rates are keeping you profitable, or if you’ve been quoting jobs on instinct, it may be time to run a Business Health Diagnostic.