How Profitable is a Plumbing/HVAC Business (2024)?
In 2023, the U.S. plumbing and HVAC market was worth $252.8 billion, and is expected to grow to $366.3 billion by 2028. There are over 253,000 plumbing and HVAC businesses across the country, making the competition fierce.
In this article, we’ll break down average yearly revenue, start-up costs, and profitability metrics to answer the question: how profitable is a plumbing / HVAC business in 2023?
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Plumbing/HVAC market overview
As per IBIS, the plumbing market in the U.S. represented revenue of $252.8 billion in 2023 and is expected to grow to $366.3 billion by 2028.
General plumbing service represents the largest share ($68.3 billion), followed by new construction HVAC installations ($51.8 billion), mechanical services ($43 billion), HVAC maintenance and repairs ($30.3 billion), existing structure HVAC installations ($27.2 billion), refrigeration system installations, maintenance and repairs ($17.1 billion), building sprinkler system installation ($8.2 billion), steamfitting and piping services ($4.7 billion), and law sprinkler installation ($2.2 billion).
Yet, with over 253,000 plumbing/HVAC businesses across the country, the competition is also fierce.
How much revenue does a plumbing/HVAC business make?
Using the same source earlier, it’s safe to assume that the average turnover for a plumbing/HVAC business is around $999,000. Indeed, the U.S. plumbing/HVAC industry is worth $252.8 billion in 2023 and there are about 253,000 plumbing/HVAC across the U.S.
Now, using data from more than 1,100 franchised plumbing/HVAC businesses, a plumbing/HVAC business earns $1,107,000 in gross revenue per year on average. This number is the average gross per business of the largest 5 plumbing/HVAC franchises in the U.S.
For a plumbing business, with an average cost of $460 per service, that’s a total of ~2,400 services per year. Assuming 250 working days per year, that’s on average 9-10 services per day per business.
For an HVAC business, with an average cost of $5,200 per installation, that’s a total of ~213 installations per year. Assuming 250 working days per year, that’s on average 1 installation per day per business.
Yet, not all plumbing/HVAC businesses have the same yearly revenue. Logically, some will earn more than others because of many factors like size, geographical location, specialization, marketing effectiveness, reputation, and operational efficiency.
How much does it cost to start a plumbing/HVAC business?
On average, it costs between $62,000 to $202,000 to open your own plumbing/HVAC business.
This includes various costs such as vehicles, equipment, supplies, inventory, insurance, marketing, training expenses, deposits, permits, licenses, professional fees, real estate, and working capital.
- Vehicle (18%): Allocated budget for maintaining and upgrading company vehicles for efficient plumbing/HVAC service delivery.
- Equipment, supplies, and inventory (17%): Funds designated for acquiring, replenishing, and managing essential tools, materials, and stock needed in daily operations.
- Insurance (3%): Expenditure for comprehensive insurance coverage, ensuring financial protection against potential risks and liabilities in the plumbing/HVAC industry.
- Marketing (26%): Investment in promotional strategies and advertising campaigns aimed at expanding the business’s reach and attracting a wider customer base.
- Training expense (5%): Budget for ongoing training programs to keep plumbing/HVAC technicians updated on industry trends, safety protocols, and new technologies.
- Deposit, permits, licenses, and professional fees (3%): Allocated funds for securing necessary legal requirements, permits, licenses, and professional fees essential for compliant and lawful business operations.
- Real estate (4%): Resources dedicated to property acquisition, maintenance, and facilities that house the plumbing/HVAC business operations.
- Working capital (23%): Capital set aside to cover day-to-day operational expenses, ensuring smooth functioning and flexibility in responding to market demands and fluctuations.
Plumbing & HVAC Financial Model Template | Excel Spreadsheet
Download an expert-built 5-year Excel financial model for your business plan
Plumbing & HVAC Financial Model Template | Excel Spreadsheet
Download an expert-built 5-year Excel financial model for your business plan
