Direct answer
Build full installed cost first. Divide by one minus target margin; multiplying by one plus the same percentage calculates markup instead.
| Figure | Source |
|---|---|
| Numbers shown on this page | Fictional worked example; not a market benchmark |
| Formula and definitions | Serman Tools method stated on this page |
| Your quote or operating result | Your verified business inputs |
Price from installed cost
The example is fictional. Use your actual equipment, labor and reserve assumptions.
Margin and markup use different denominators
Markup divides planned profit by cost. Margin divides planned profit by selling price. The same percentage cannot be used interchangeably. If true installed cost is $7,000, a 30% markup produces a $9,100 price and a 23.1% margin. A 30% target margin requires a $10,000 price.
Target price = true installed cost ÷ (1 − target margin). The calculator then reports the equivalent markup so the two percentages stay visible.
Build installed cost before applying margin
Keep equipment, accessories, consumable materials, technician labor, helper labor, permits, startup, haul-away, travel and allocated overhead visible. Separate lines make scope changes easier to audit and reduce the chance that equipment or labor is counted twice. Use true labor cost rather than wage alone.
A warranty reserve should reflect the exposure the contractor actually carries. The example applies the percentage only to equipment and materials. If historical warranty labor is more informative, use a separate documented allowance instead of hiding it in overhead.
Fictional installed-system example
The default inputs create $6,868.50 of true installed cost: $4,200 of equipment, $650 of materials, $1,038 of labor, $310 of permits/startup/travel, $525 of overhead and a $145.50 warranty reserve. A 30% target margin produces a planning price of $9,812.14. The equivalent markup on cost is 42.86%.
Use the output as a quote check
The result does not select equipment, calculate building load, determine airflow, verify rebates or replace code and permit review. Compare the model with the actual scope, financing fees, local taxes and contract terms before quoting. When the market price is below the modeled target, change scope or economics openly rather than deleting cost lines.
Frequently asked questions
Is a 30% HVAC markup the same as a 30% margin?
No. A 30% markup produces a 23.1% margin. A 30% margin requires a 42.86% markup.
Where should warranty cost go?
Use a documented reserve based on installed cost or historical callbacks, and include it only once.
Does this size HVAC equipment?
No. It models job economics only and does not perform load calculations, equipment selection, permitting or code checks.
NEXT STEP
Run the full HVAC job model.
The free trade calculator separates labor, equipment, startup, travel and reserves. The workbook keeps six home-service quote models and a quote log together.