Why HVAC Service Departments Need to Charge Based on Billable Hours

If your service department is busy but the numbers never stack up, this is usually why.

Most HVAC service pricing is built on the wrong foundation.

Not bad work.
Not lazy techs.
Not lack of jobs.

Bad pricing logic.

The Core Problem With Service Pricing

Most service pricing is done one of three ways:

  • Flat call-out + parts
  • Parts markup + time estimate
  • “That’s what we’ve always charged”

None of those start with the true cost of time.
And in service, time is the product.

Service Is Not Install

Install pricing works differently:

  • Fixed scope
  • Known labour
  • Known materials
  • Predictable time

Service is:

  • Variable
  • Unpredictable
  • Time-heavy
  • Full of non-billable hours

If you price service like install, you’ll lose money.

The Big Truth No One Talks About

You pay techs for hours worked.
Customers only pay for hours billed.

That gap is where service departments leak money.

What Actually Happens in a Service Day

A tech’s day includes:

  • Driving
  • Talking to customers
  • Fault finding
  • Writing quotes
  • Waiting on approvals
  • Training
  • Meetings
  • Callbacks

Only part of that day is:

  • Tools in hand
  • Fixing the problem
  • Chargeable

In real HVAC service businesses, only about 50–55% of paid hours are billable.

That’s normal.

Ignoring it is not.

Why Charging “Per Job” Still Needs Billable Hours

Even if you use flat-rate pricing, billable hours are still underneath it.

Every flat-rate job is built from:

  • Time
  • Cost
  • Overhead
  • Profit

If you don’t know your billable hour rate:

  • Flat rates are guesses
  • Discounts are dangerous

Add-ons feel random

What Happens When You Don’t Use Billable Hours

Here’s what most service departments experience:

  • High call volume
  • Low profit
  • Techs always rushed
  • Discounts used too often
  • Owners confused by the numbers


They think:

“If we just do more jobs, it’ll fix itself.”

It won’t.

The Fix: Price Time First

A proper service pricing model works like this:

  1. Work out real billable hours per tech
  2. Work out real cost per billable hour
  3. Add overhead per billable hour
  4. Add profit
  5. Lock that rate into the system

Everything else builds on that.

Why Billable Hours Protect the Business

When pricing is built on billable hours:

  • Every job contributes to overhead
  • Every job contributes to profit
  • Techs don’t underquote
  • Discounts are controlled
  • Growth doesn’t create losses


It brings
discipline to service pricing.

Why This Is Critical as You Grow

As service teams grow:

  • Overhead increases
  • Admin increases
  • Management increases
  • Training increases

If pricing isn’t tied to billable hours:

  • Growth increases losses
  • Not profit

Billable-hour pricing scales properly.
Guesswork does not.

Simple Tradie Rule

If you remember nothing else, remember this:

Service departments sell time.
Time must be priced correctly.

If you don’t know your billable hour:

  • You’re guessing
  • Your techs feel the pressure

Your business carries the risk

Want to Know Your Real Number?

We built a simple tool that lets you:

  • Enter your wages
  • Enter productivity
  • Enter overhead
  • See what you actually need to charge

No accounting talk.
No spreadsheets.
Just trade numbers.