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The capacitor sells at $285 because the book prices the diagnosis, the stocked van, and the warranty — not the part.
Flat-rate pricing is what separates HVAC businesses from guys with gauges. The capacitor repair bills $285 against $82 of true cost — $203 profit at $271/hr — because the book prices diagnosis, truck stock, and the callback warranty. The $5,800 changeout clears $1,616 at 27.9%. Repairs carry the margin, installs carry the revenue, and the book keeps both honest. This calculator prices both sides of the business with your real costs.
HVAC owners use it to reprice the book: the $15 capacitor bills at $285 (71% margin, $271/hr) because the book prices diagnosis, truck stock, and warranty — installs run 28% and carry the rent.
The book prices the JOB, not the minutes: a capacitor replacement is $285 whether it takes 20 minutes or an hour, quoted before work starts. That consistency is the product — customers buy a fixed price with no meter anxiety, and your tech's efficiency becomes your margin instead of their raise. The book price must carry what hourly billing hides: diagnosis expertise, stocked-truck inventory, the callback warranty (budget 2% of revenue), and overhead recovery — which is why a $15 part bills at $285 and why that is honest. The discipline that makes it work: prices built from real job histories (your actual average hours per task, not hope), techs quoting from the book never off it, and the diagnostic fee ($79–129, credited toward repair) filtering tire-kickers and paying for the drive. Flat-rate fails when the book is stale — reprice quarterly against supplier invoices, because equipment and refrigerant costs move.
Repairs: 65–75% gross margin — the example capacitor job runs 71.2% and that is normal, not gouging, because repair pricing carries the diagnosis, the truck stock, and the warranty. Installs: 25–35% gross margin — equipment markup runs 25–40% over cost (not the 100%+ of repair parts), and labor variance is the killer: a 6-hour changeout that runs 9 hours burns the profit, so install pricing should assume your REAL crew-hour averages, padded. The portfolio logic: repairs pay the margin, installs pay the rent — service work funds the overhead, and changeout volume carries shoulder-season cash flow. Maintenance agreements are the keystone on top: $150–250/yr plans create scheduled shoulder-season work, lock the customer base, generate the repair pipeline (every tune-up finds the failing capacitor before it strands the compressor), and the agreement list is what the business sells for at exit — brokers price HVAC companies on recurring-agreement counts.
Diagnostics yes, install quotes no — the distinction is which product the visit sells. A repair diagnostic visit IS the service: the drive, the gauges, the expertise to find the failed board — charge $79–129 and credit it toward the repair. Free diagnostics train customers to collect three free diagnoses and hire the cheapest fix, and your tech's Tuesday evaporates. Install replacement quotes are different: that visit is a SALES call for a $5,800 job, the industry norm is free, and charging for it just sends the homeowner to the competitor's free estimate. The leaks to plug on both sides: unbilled second trips for parts not stocked (stock the top 20 SKUs and the van pays for itself), techs quoting off-book to be nice (the margin IS the niceness budget), and warranty callbacks priced at zero when the book was written. After-hours premiums apply here too: 1.5× book for nights and weekends is the price of a stocked truck and an awake tech — publish it and the complaints stop.