PrycebookHow to price a water heater install
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A water heater replacement is a good job to price from the ground up, because it is the same job every time: a fixed list of parts, a labor estimate you can learn, and a permit. This guide builds one price step by step. Every figure below is an assumption. Replace each with your own.
Step 1: List the parts
Say the job is a standard tank replacement, and your costs are:
| Water heater | $620.00 |
| Expansion tank | $65.00 |
| Flexible connectors | $30.00 |
| Permit | $85.00 |
| Parts and permit | $800.00 |
Step 2: Estimate the labor
Say the swap takes one technician 4 hours including haul-away, and your burdened rate is $55 an hour. The burdened labor rate is the wage plus payroll taxes, insurance and benefits, not the wage alone.
| Labor | $220.00 |
Step 3: Add overhead for those hours
Overhead is what the business costs to run whether or not the truck rolls: insurance, software, the office, your own time. Say yours works out to $30 for every billable hour. The break-even rate calculator shows how to find your own figure from your monthly overhead.
| Overhead | $120.00 |
Step 4: Add up the cost
| Parts and permit | $800.00 |
| Labor | $220.00 |
| Overhead | $120.00 |
| Total cost | $1,140.00 |
Step 5: Divide by one minus your margin
To keep a 35% margin, divide the cost by (1 - 0.35), which is 0.65. Do not add 35% to the cost: that gives a 26% margin, because markup and margin are different things.
| Price | $1,754.00 |
| Profit | $614.00 |
| Check the margin | 35.0% |
Test the price
Put your own parts, hours and rate into the job profit calculator and set a target margin to see the price it needs. If you quote water heaters often, keep this job in your price book so the next quote starts from the same numbers; see how that looks on the plumbing page.