HVAC Contractor Business Overview

A heating and air business provides installation, repair, and maintenance services for heating, ventilation, and air conditioning (HVAC) systems in homes, offices, and industrial facilities. These businesses handle everything from simple thermostat replacements to complex system installations. A contractor might work independently or manage a team of technicians who perform installations and repairs.

Many heating and air contractors start with residential services before expanding into commercial work, as residential jobs typically require less specialized equipment and smaller teams.

Related: Checklist To Start A Business

How Do Heating and Air Contractors Make Money?

HVAC contractors generate income through various installation, maintenance, and repair services for both residential and commercial clients. Their revenue comes from both one-time projects and ongoing service agreements.

The primary ways HVAC contractors earn money can include:

• New Construction Installations: This represents the biggest source of income for many HVAC contractors because new construction projects typically require complete system installations, which command higher prices than other services.
• Replacement Installations: Installing new HVAC systems in older buildings when existing equipment reaches the end of its lifespan or requires upgrading.
• Maintenance Contracts: Regular maintenance agreements provide steady income through scheduled check-ups, filter changes, and system tune-ups.
• Emergency Repairs: On-call repair services for malfunctioning HVAC systems, often with premium pricing for after-hours or weekend work.
• Parts and Equipment Sales: Selling HVAC components, filters, thermostats, and other related equipment to customers during service visits.
• Refrigeration Services: Installing and maintaining commercial refrigeration systems for restaurants, grocery stores, and other businesses.
• Energy Efficiency Upgrades: Modifying existing systems to improve performance and reduce energy consumption.

Industry Statistics

Heating, ventilation, air conditioning, and refrigeration contractors work with homeowners, businesses, and builders to install and maintain temperature control systems. This industry falls under NAICS code 238220: Plumbing, Heating, and Air-Conditioning Contractors.

Here are some statistics that show what’s happening in the HVAC industry:

HVAC Industry Size & Growth: HVAC contractors generated $133.7 billion in revenue during the last year. The industry showed steady performance with an annual growth rate of 0.8% over the past five years. Growth is projected to continue as rising temperatures increase demand for air conditioning services, while healthcare facilities and manufacturing plants are expected to require more HVAC installations (IBISWorld).

Number of HVAC Contractors: There are approximately 114,000 HVAC contractors operating across the country. Large companies control a small portion of the market, with Comfort Systems USA and EMCOR Group being the biggest players. (IBISWorld).

HVAC Contractor Profit Margin: HVAC contractors maintain stable profit margins due to consistent demand for maintenance and repair services. The industry average profit margin is approximately 12% (Department of Energy).

Also See: Ideas for Naming a Heating and Air Business

Costs To Start an HVAC Contractor Business

Starting an HVAC contracting business could range from $25,000 to $100,000 depending on the type of services offered and coverage area.

Here are some of the main costs to consider when starting an HVAC business:

Equipment and Tools: An HVAC contractor needs diagnostic tools, hand tools, power tools, refrigerant gauges, vacuum pumps, and recovery machines. Basic equipment and tools for a single technician can cost between $10,000 and $25,000.

Vehicle: A service van or truck outfitted with proper shelving, storage systems, and ladder racks to transport tools and equipment can cost between $15,000 and $40,000.

Insurance and Licensing: Professional liability insurance, workers’ compensation insurance, and required state/local licenses and certifications for HVAC work can cost between $2,500 and $5,000.

Training and Certifications: HVAC technicians must complete EPA Section 608 certification and may need additional manufacturer-specific training. Initial training and certification programs can cost between $1,000 and $3,000.

Location: A small commercial space with storage for equipment and supplies requires the first and last month’s rent plus a security deposit and basic renovations. Initial costs can range from $5,000 to $15,000.

These figures represent rough estimates, and actual costs will vary.

Resources: 
Air Conditioning Contractors of America
Air Movement and Control Association
American Society of Heating, Refrigerating and Air-Conditioning Engineers
Indoor Environment Energy Efficiency Association
International Institute of Refrigeration
Refrigeration Service Engineers Society