"How much revenue" and "how much profit" are different questions
A heating and air conditioning business can do $2M in revenue and net very little, or do $1.2M and run a genuinely healthy margin. Revenue tells you how much work moved through the shop. Profit tells you what's actually left after every leak has taken its share — and in this trade, the leaks are specific and repeatable enough to name directly.
Labour productivity is usually the biggest lever
Billable utilisation — billable hours divided by paid hours — is the single highest-leverage number in a home services business, and it's usually the one owners have the least visibility into. A healthy target runs 70-75%. Most shops pay for 40 hours a week and bill closer to 22-26 without realizing it, which means a meaningful chunk of every technician's paid time is producing zero revenue. Recovering even five points of utilisation typically pays for whatever it costs to fix several times over. The operating benchmarks page has the full range of targets this is measured against.
Parts markup is a quiet, compounding leak
Materials marked up inconsistently across technicians — or marked up too low across the board — is one of the most common and least visible margin leaks in this trade. A shop realizing 20% markup instead of a healthy 35-50% is leaving real money on every job, silently, because the number never shows up as a single line anyone reviews. It shows up spread across hundreds of invoices.
Install and service margins are not the same business
Install work and service/maintenance work carry different margin profiles, different labor requirements, and different seasonal patterns. A shop that doesn't track them separately can't tell whether a strong overall number is being carried by one side while the other quietly loses money. Per-service-line profitability — not a single blended number — is what actually shows you where the business makes money.
Overhead allocated evenly hides the real picture
Overhead spread evenly across every truck looks fine on a blended P&L and hides exactly which truck, which technician, or which service line is actually unprofitable. A per-truck P&L is unglamorous work, but it's the only way to find a losing truck before it's been losing money for years inside a healthy-looking average.
Run your own numbers
The math above is the same math behind the EBITDA Leak Calculator — five inputs, an estimate of what these leaks are actually costing a specific shop, not a generic range. The field guide to the seven EBITDA leaks covers all seven in detail, with how to spot each one, how to measure it, and the fix.
Profit in this business is rarely one big problem. It's usually five or six small, specific, measurable ones, running at the same time, none of them dramatic enough on their own to notice without looking.
This is IronMargin operational education, not legal, accounting, tax, or employment-law advice. See the disclaimer.
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