Gross margin by job type is revenue minus direct costs, divided by revenue, calculated separately for each kind of work you sell. It is the most useful single split an HVAC owner can make, because replacements, repairs and maintenance have completely different cost structures and a blended number hides which one is slipping.
Why one blended margin misleads
A company-wide gross margin is an average of very different businesses. Repairs often carry high parts markup and short labour time. Replacements carry a large equipment cost and long install hours. Maintenance visits can be thin on their own and valuable for what they lead to.
Work through an example. Say a shop billed $2.4 million last year:
| Job type | Revenue | Direct costs | Gross margin |
|---|---|---|---|
| Replacements | $1,320,000 | $910,800 | 31% |
| Repairs | $672,000 | $268,800 | 60% |
| Maintenance | $264,000 | $171,600 | 35% |
| Add-ons (filtration, humidifiers, thermostats) | $144,000 | $64,800 | 55% |
| Total | $2,400,000 | $1,416,000 | 41% |
A 41% blended margin looks fine. But if next year the owner adds two install crews and grows replacements by $600,000 at the same 31%, blended margin falls to about 39% even though every job type held steady. Nothing went wrong in the field; the mix changed. Without the split, the owner chases a problem that is not there.
What is included
The service has four parts, delivered in this order:
- Job-type rules. We agree four to six job types with you and simple rules for coding every invoice, including how to treat a repair that turns into a replacement.
- Direct-cost mapping. We decide with you which costs sit inside gross margin: equipment, parts, burdened field labour, permits, disposal and subcontractors. Your CPA's chart of accounts is the reference; we do not change it.
- A twelve-month baseline. Using your history, we calculate margin for each job type by month so seasonal patterns are visible.
- A monthly margin line. Each job type gets a target and a line on your owner dashboard, with a short note whenever it moves more than two points.
Who it is for
This work suits owners with at least a year of invoice history in a field-service or accounting system, and a mix of at least two job types. It is most valuable for shops that are growing installs, adding heat pumps alongside furnaces, or taking on light-commercial work, because those are the moments when mix shifts fastest.
It is less useful for a one-truck operation doing only service calls. There, revenue per technician-hour usually tells you more.
Timeline
A typical first pass looks like this, confirmed in writing before we start:
- Weeks 1–2: job-type rules agreed and data exports collected.
- Weeks 3–4: twelve-month baseline built and reviewed with you by phone.
- Month 2 onwards: monthly margin lines on the dashboard, with a short commentary.
How results are measured
We measure the service by whether you can answer three questions every month without guessing: what each job type earned, whether it moved against target, and why. Margin improvement itself depends on your pricing, purchasing and crews, which you control. We report the numbers honestly whether they move or not.
Common mistakes to avoid
- Leaving install labour out. Equipment cost is obvious; the second day on a difficult install is not. Unburdened or missing labour can overstate install margin by several points.
- Counting warranty callbacks as overhead. A callback on last month's install is a direct cost of that job type. Hide it in overhead and replacements look better than they are.
- Mixing rebate timing into margin. If a utility or government program pays you rather than the homeowner, the money still belongs to the job. Ask your CPA how it should be recorded, and keep the job's margin whole.
- Changing job-type rules every month. Consistency matters more than precision. Change rules once a year, not whenever a number looks odd.
Next step
Send one year of invoices grouped by job type, or the closest report your software produces, and we will tell you how far the data can take you. See pricing for how engagements are quoted, or read the cash-flow guide to see how margin and cash interact across the year. Call, text or email to start.
Frequently asked questions
What counts as a direct cost?
Costs that exist only because the job happened: equipment, parts and materials, the technician and installer hours spent on it with their payroll burden, permits, disposal and any subcontractors. Rent, office wages and marketing are overhead and stay out of gross margin.
Can't my CPA just give me this?
Your CPA's statements show company-wide gross profit, usually quarterly or yearly. Splitting it by job type each month needs operating data from your field-service software. We build that split and keep it running; your CPA keeps the books it reconciles to.
How many job types should I track?
Four to six. Replacements, repairs, maintenance visits and add-ons cover most residential shops. Light-commercial work or new construction usually deserves its own line because the cost pattern is so different.
What if my job costing is messy?
Most is. We start with the cleanest three months we can find, agree a few simple rules for coding jobs, and improve accuracy over time. A rough split that is directionally right beats a perfect one that never arrives.