HVAC Business Owner Salary: What to Expect and How to Increase Your Income

Owning a heating and cooling business offers both financial rewards and personal fulfillment, but what can you expect to earn?  

The answer depends on several factors, including the size of your operation, the services you provide, your location, and your management expertise. Given the huge diversity of HVAC firms across the U.S., it's not surprising that some owners take home less than $50,000 while others pocket $500,000+.

Our guide unpacks what HVAC business owners typically earn and the factors shaping their income. We also provide strategies to enhance your profitability and salary, and look ahead at the trends likely to influence the HVAC industry over the next few years.

What Is the Average HVAC Business Owner Salary?

The average HVAC owner's salary in the U.S. is a hard figure to pin down accurately. Numerous variables impact business operations, and by extension, owners' earnings in the industry. Most owners earn somewhere between $60,000 and $150,000+ per year.

Salaries differ hugely between small HVAC contractors and multimillion-dollar enterprises with multiple sites and a hundred technicians. Here's an idea of how incomes vary:

• Some small HVAC business owners earn well under £100,000 annually.
• Successful medium-sized company owners can earn £200,000 per year, especially if they manage multiple crews and have a steady client base.
• Owners of large, multi-location HVAC enterprises often generate £350,000+ in earnings.

Small and mid-sized contractors shouldn't expect a full salary in the startup phase. Once the business reaches a consistently profitable and stable position, earnings potential improves decently.

Most HVAC business owners begin drawing a steady, decent salary within 12 to 24 months. Entrepreneurs with an existing client base, strong industry connections, or operating in areas with high demand for HVAC services may reach profitability sooner.

Beyond salary, your earning potential includes business profits and the long-term value of your company, which can significantly boost your financial outlook.

What Impacts an HVAC Business Owner’s Salary?

Your income as an HVAC company owner depends largely on the size of your company, market conditions, business strategies, and the success of your operations. Let’s look at these in more detail:

• Business size and revenue: Larger teams generate more billable hours and complete more jobs, directly increasing revenue and potential owner earnings. 
• Local market rates: The heating and air conditioning market landscape varies across the U.S. Rates are typically higher in large urban locations or areas with higher living costs. Better earnings are also possible in regions with strong HVAC demand due to extreme temperature conditions.
• Services offered: Adding complementary services accesses more potential customers and revenue streams. This strategic diversification can boost profits handsomely. Many successful businesses focus on higher-margin services like:
  • Commercial HVAC projects
  • Long-term maintenance contracts
  • Energy-efficient upgrades
  • Smart-home system setups
  These jobs provide better margins than standard installation, servicing, and repairs.
• Operational efficiency: Managing operational efficiency helps boost the bottom line. To achieve efficiencies, pay close attention to the following: 
  • Overhead expense management, including utilities, admin, insurance, vehicles, and rental costs. 
  • Using software to streamline areas like scheduling, invoicing, reporting, and asset management. 
  • Effective management of labor costs and performance.  

How to Improve HVAC Business Profitability

Increasing business profitability is the surest way to give yourself a raise! Here are proven strategies to lift the bottom line: 

Key Performance Indicators (KPIs): You can't improve what you don't measure. Tracking the following business performance metrics will help you identify areas for improvement, leading to better margins: 

• Revenue and gross margins
• Operating cost percentage
• Job metrics like first-time fix rate and response times
• HVAC tech productivity
• Lead conversion rate
• Customer satisfaction scores
• Customer retention rate

Maintenance agreements: Maintenance contracts add value on several fronts. They not only up income but also offer peace of mind. These agreements lock in predictable, recurring revenue, smooth out seasonal fluctuations, and help build long-term client relationships.

Train your team to promote these packages and turn one-time jobs into ongoing partnerships.

Upsell and cross-sell: Successful up and cross-selling also entail employee training and motivation. Equip your technicians with the knowledge and confidence to recommend high-margin services like:

• Air quality upgrades
• Smart thermostat installations
• Refrigeration services

These sales are win-win. They bring real benefits to the customer while increasing average job value, all without significantly increasing client acquisition costs.

Implement profit sharing: Consider creating a profit-sharing pool (usually 10-15% of net profit) to share with your employees. Profit equity is generally allocated to team members based on tenure, job role, or performance metrics. 

• Giving employees a direct stake in the company's financial success delivers great payoffs. It lowers staff turnover, boosts motivation for upsells, improves customer service, and reduces costly callbacks.
• The owner gets increased productivity, more satisfied customers, higher profit margins, and ultimately richer financial rewards.
• Tools like ShareWillow can help automate and track all bonus and profit-based payouts, ensuring the process is fair, accurate, and transparent.  

Reduce employee turnover: Replacing HVAC technicians is expensive, with often uncertain results. You have to consider lost productivity, recruitment, onboarding, and training costs, without the guarantee that the new hire will work out.

This emphasizes the importance of retaining your top talent. Competitive compensation, benefits like health insurance, and innovative incentive programs play a vital role in keeping your top performers and delivering exceptional customer service.

Common Expenses That Affect Take-Home Pay

Running a thriving HVAC company comes with ongoing expenses. You want to cover these before you take your drawings. Key operating costs include: 

• Payroll: Employee salaries will likely be your largest expense. Linking compensation to performance bonuses and incentivizing upselling can improve returns on this investment. 
• Tools and  equipment costs: Invest periodically in tools and specialized equipment to stay competitive and provide a quality service. Major purchases, like upgrading your vehicle fleet, require careful budgeting to balance costs with benefits. 
• Software: The best entrepreneurs see software as an investment rather than an expense. Modern scheduling, job/ customer management, accounting, and invoicing applications streamline operations and cut down admin tasks significantly.

• Marketing: Various marketing activities and investments are necessary to get your name out there and generate leads. These might include:
  • A professional website that showcases your services and expertise.
  • Social media posts, advice, and relevant shares on LinkedIn, Facebook, X, Instagram, and other platforms.  
  • Advertising such as paid Meta and Google Local Service Ads, local directory advertising, and PR/ promotional material.
  • Networking, including attending trade and industry events. 
  • Gifts and branded merchandise to promote your name and foster relationships.
  It's important to track your marketing Return on Investment (ROI) to ensure your spending actually generates leads and business.

How to Structure Owner Compensation

Deciding how to compensate yourself is a critical financial decision. A disciplined, structured approach is always preferable to ad hoc drawings. Your living and household expenses inevitably have a bearing on when and how much to draw. So does your tax situation.

Here are some best practices:

• Salary + profit draws: A common approach is to take a reasonable, consistent monthly salary for living costs and household commitments. This can be supplemented by larger quarterly or annual profit distributions (draws) if the company’s finances support them. This arrangement balances personal stability while preserving business growth.
• C Corporation vs. S Corporation: Your legal entity structure affects your salary options. For instance, S Corporations often allow owners to take a lower "reasonable" salary (subject to IRS rules) and then distribute additional profits as dividends. These dividends are taxed differently, usually resulting in lower tax.
• In contrast, C Corporation owners are typically paid through a salary and may also receive dividends, but these dividends are subject to personal taxation.
• Your accountant or a tax professional can advise you on the best structure for your circumstances.
• Reinvesting vs. withdrawing profits: This is a constant balancing act. Should you take more money now, or reinvest profits into new equipment, expanded services, marketing, and developing  business opportunities?
• Your decision here should align with your long-term financial goals and current cash flow needs.

The Future Outlook for HVAC Entrepreneurs

The future for HVAC business owners is positive and exciting, but also challenging.

Here’s why: 

• Industry growth: The HVAC industry is projected to expand over the next several years. Annual growth of 7.5% is expected in the residential HVAC market through 2034, fueled by factors like climate needs, ongoing new construction, and aging existing systems requiring work or replacement. Adoption of smart HVAC setups and IoT integration adds to this positive outlook.
• Opportunity in maintenance and smart HVAC: Smart home technology and energy efficiency initiatives create new opportunities for HVAC companies. Meanwhile, maintenance contracts provide recurring revenue, ideally leading to higher owner income and business stability.
• Demand for skilled labor: The Bureau of Labor Statistics indicates a 9% job growth in HVAC until 2033. With over 42,000 new technicians needed every year, a shortage of skilled professionals is expected to continue.
• Businesses offering competitive and incentive-rich compensation packages will gain recruiting and retention advantages. 
  

FAQs

What is the average profit margin for an HVAC business?

Profit margins typically range from 8% to 20%, depending on the efficiency of operations, pricing strategy, and services offered. Maintenance contracts and high-efficiency equipment installations often have better margins. For most businesses, a rate close to 20% is considered a healthy profit margin.  

What are the common mistakes HVAC business owners make with money?

Some common financial pitfalls include:

• Underpricing products and services.
• Not keeping on top of overhead and labor costs.
• Overhiring or poor job scheduling.
• Using bad HVAC contractors and having to redo jobs.
• Neglecting marketing and lead generation activities.
• Poor budgeting and cash flow control.

How do I get more customers for my HVAC business?

Here are 8 popular practices to attract more HVAC customers:

1. Figure out your unique selling point and make it central to your business pitches.
2. Offer easy online quotes and bookings on your website and social media platforms.
3. Use HVAC lead generation websites like Thumbtack and Angi.
4. Optimize your free Bing, Yelp, and Google business profiles.
5. Explore targeted ads on Google, Meta, and social media, and run email campaigns.
6. Ask satisfied clients for referrals. Even better, create an easy, incentivized referral program.
7. Network at local trade events and industry meetups to open doors, and develop partnerships and referral opportunities.
8. Build relationships with plumbers and electricians to get cross-referrals or joint projects. Also, partner with realtors, property managers, and home renovators.

In Summary

Running your own HVAC business can be highly profitable, with mid-level company owners making up to $150,000. Besides company and workforce size, earnings depend on location, service range, and how efficiently the business operates.

If you want to increase your personal income, the obvious path is to grow your revenue. But that's only part of the equation. You also need to run a smarter, more efficient operation.

Attracting and retaining skilled technicians is key to building a stronger business. Today, successful HVAC owners offer winning compensation packages with a mix of incentives, benefits, and profit-sharing (or profit-share bonuses) to inspire loyalty and performance excellence.

Reach out to ShareWillow to discuss industry-leading incentive solutions. We make it easy to reward your teams with great value packages that go beyond compensation so you can drive motivation and ensure long-term success for your HVAC business.

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