The best HVAC performance pay plan is one that keeps your labor cost under 20% and gives your technician a real shot at making over $100,000 a year.

Here is an example of what that looks like in practice: a tech averaging a $500 ticket, running 4 calls a day, 5 days a week, for 52 weeks. That is $520,000 in revenue from one technician. At 20% labor cost, you are spending $104,000 on that person. That includes base wages and commissions combined.

The structure below is built to land right at or under that number while giving your tech a clear reason to push.

The Components of the Best HVAC Performance Pay Plan

These components and exact commission numbers are a starting point. Do the math for your market and situation and adjust from there. Some markets run heavy on complex jobs. Some run on volume maintenance calls. Some are mostly repair work because homeowners cannot afford a full replacement right now, even when that would be the better long-term move. Every market has its own mix, and your structure needs to reflect that. The 20% labor cost target is the goal, and how you get there depends on where your revenue actually comes from.

Guaranteed Base Pay

The base salary is the foundation. It is what your tech earns no matter what happens that week. Bad weather, slow season, a string of diagnostic calls that do not convert. The base is the floor.

The starting floor is $25 per hour. That comes out to $52,000 a year on a 40-hour week. That is where you start.

The reason you start there is that you are recruiting adults with licenses, physical skills, and the ability to represent your company inside a stranger's home. A $15 or $18 base signals that you do not value that. It also signals that the commissions are a trap. Techs have become increasingly wary of compensation structures like that, due in no small part to private equity.

The base is a statement of what you expect from that technician and what you believe they are capable of producing.

Here is how that works in practice. A standard entry-level technician at a good shop is expected to generate around $500,000 in revenue per year. At $25 per hour, that expectation is priced in. The base says: we believe you can do this, and this is what we are paying you to do it. If a tech comes in and tells you they can produce $750,000 a year, that conversation changes. Based on their track record and what you see across the rest of the team, you can set a base that reflects that expectation. Higher production expectation, higher base.

This framing does something important in the hiring process. When a candidate sits across from you and you lay out exactly what you expect them to produce, and exactly how their compensation is structured to reflect that, you are going to get one of two reactions. A-players will lean in. They know their numbers. They will either agree that they can hit it or negotiate from a position of confidence. Everyone else will hesitate.

That hesitation is useful information.

A simple way to structure this is with production tiers. These are examples and we actively encourage making the tier jumps larger as long as your math supports it:

Entry tier: expected to generate $500,000 per year. Base starts at $25/hr. Commission structure applies from day one.
Mid tier: expected to generate $650,000 per year. Base moves to $28/hr once that production level is demonstrated consistently over 90 days.
Senior tier: expected to generate $750,000 or more per year. Base moves to $30/hr or higher based on sustained performance.

You also do not need to offer the tiers as a choice. You can simply say: everyone starts at entry. Here is what the entry looks like. Here is what it takes to move up. If a tech cannot hit entry-level production after a defined ramp window, you work through a performance improvement plan together or you part ways. The expectation is clear on day one.

The Base Protects the Business

Every base increase is tied to a revenue level that can absorb it. A tech generating $750,000 a year at a $30 base still sits comfortably under 20% labor cost when you factor in their commissions. Raises go out when production is already on the books to justify them. If a tech's numbers drop, their base holds where it is and the path forward is clear: get production back to the level that earned it, and the trajectory continues. The business stays protected at every stage of that conversation.

The Base Signals How You Value Your People

There is a full spectrum of how owners approach compensation. Some lean heavily on commission with a minimal base. Some prefer a stronger base with a more modest commission structure. Neither is wrong. The mix that works for your shop depends on your market, your culture, and the kind of technician you want to attract.

What the base communicates, at a level most techs feel before they can articulate it, is how much you are willing to put on the line for them before they prove anything to you. A strong base paired with a clear commission structure tells a technician that you have done the math, you believe in their ability to produce, and you are building a place where someone can plant roots. That signal matters more than most owners realize, especially when you are recruiting against shops that are offering higher commissions but a weaker foundation underneath them.

Commission on Simple Jobs: 3%

Simple jobs are your 3% tier. These are your high-volume, low-complexity calls. The tech is in and out. Skill is required, but it is not a full diagnostic situation.

Examples of simple jobs:

AC tune-up or maintenance visit
Filter replacement
Thermostat swap
Capacitor replacement
Contactor swap
Hard start kit installation
Surge protector installation
Coil cleaning

A $150 tune-up earns the tech $4.50. A $350 capacitor call earns $10.50. That sounds small in isolation, but a tech running 4 simple calls in a day at an average of $250 per ticket is earning $30 in commission on top of $200 in base wages for that day. The volume is what makes this work.

The 3% also applies to maintenance plan calls. Even if the ticket is small, the tech earns something. That matters because maintenance calls are not glamorous. Giving techs a cut, even a small one, keeps them invested in showing up and doing them right instead of treating them like a time-waster before a real call.

Commission on Standard Jobs: 10%

Standard jobs are your bread-and-butter repair calls. This is where most of your revenue is generated and where a good tech really starts to separate themselves.

Examples of standard jobs:

Blower motor replacement
Evaporator coil cleaning
Refrigerant recharge
Duct sealing
Drain line clearing and treatment
Control board replacement
Condenser fan motor replacement

A $400 blower motor call earns $40. A $600 refrigerant recharge earns $60. A tech who runs 3 standard calls in a day at an average of $450 is earning $135 in commission for that day on top of their base.

This tier is where the $100,000 path becomes realistic. A tech running 4 calls a day at an average ticket of $500, majority of which are standard repairs, will generate roughly $130,000 to $150,000 in commission-eligible revenue from standard jobs alone in a year. At 10%, that is $13,000 to $15,000 in commission from this tier.

Combined with base and the other tiers, the number compounds fast.

Commission on Complex Jobs: 13%

Complex jobs are the high-skill, high-ticket calls. These require real diagnostic ability, time, and usually a conversation with the homeowner about a significant repair or replacement. Your best techs will gravitate toward these calls. The 13% is how you compensate them for that skill.

Examples of complex jobs:

Full system replacement (2-ton, 3-ton, or 4-ton)
Air handler or condenser replacement
Full system diagnostic with multiple symptoms
Heat exchanger inspection and evaluation
Refrigerant leak trace and repair
Zoning system issues
Multi-point electrical fault diagnosis

Using a flat rate model, the commission applies to the total ticket price. A $7,500 full system replacement earns the tech $975. A $3,000 air handler replacement earns $390. A $1,500 complex diagnostic and repair earns $195.

That is the power of flat rate with a commission structure behind it. The tech gets paid for the outcome. And if done correctly, their commission is already baked into the service. A tech who closes one system replacement per week on top of their regular call volume is adding $40,000 to $50,000 in commission per year from complex jobs alone.

This is also the tier where the close matters. The tech who can sit at the kitchen table and explain why a 15-year-old system is costing the homeowner more in repairs than a replacement would cost them is a different kind of employee. You want to pay them like it.

Maintenance Plan Spiffs: $25-$50 Per Plan

Every maintenance plan a tech sells is a guaranteed future job on the schedule, a retained customer, and recurring revenue.

Pay a flat spiff on every maintenance plan closed:

1-year maintenance plan: $25 spiff
2-year maintenance plan: $50 spiff

A tech who sells 3 plans per week earns $75 additional in spiffs. Over 50 weeks, that is $3,750. The spiff builds a muscle to mention it on every call. Techs who sell maintenance plans consistently also tend to have higher average tickets overall, because they are having real conversations with homeowners about their systems. Those customers are also the ones calling them specifically when something bigger needs to be done.

One thing to keep in mind when you are reviewing your labor cost numbers: maintenance plan sales will push that number up in the short term. The spiff goes out now, but the revenue from that plan comes in over months. If a tech is selling a high volume of plans and your labor cost looks elevated, that is the reason. The margin on a maintenance visit is thin by design. The value is in the customer you just locked in for the next service call, the next repair, and the next replacement conversation.

How to Use Performance Pay To Retain HVAC Technicians

Hiring and training an HVAC tech is expensive. Losing a good one is more expensive. The plan above is designed to give your best performers a reason to stay, but there are a few specific levers that make the difference between a tech who stays two years and one who stays eight.

Base Increases Tied to Performance

Already covered above, but worth repeating here. The base goes up when production earns it. Set the thresholds, communicate them clearly, and honor them when the tech hits them. A tech who sees their base move from $25 to $28 to $31 over a year and a half based on their own production does not leave for a competitor offering a flat $30 with no path forward.

Accelerators for Overperformers

When a tech is consistently performing above expectations, standard rates start to feel like a ceiling. Accelerators remove the ceiling.

An accelerator is a rate bump that kicks in when a tech crosses a production threshold in a given month or quarter. For example:

If a tech generates over $60,000 in revenue in a calendar month, their standard commission rate bumps from 10% to 12% on everything above $60,000 for that month
If a tech closes more than 3 system replacements in a month, their complex commission rate moves from 13% to 15% on complex jobs for the rest of that month

Accelerators do not blow your labor cost. They only trigger when revenue justifies them. And they create a pull effect. A tech who sees they are at $55,000 in revenue on the 20th of the month is going to find a way to close one more call before the 31st.

TeamBuyIn Tip: Accelerators can be paired with increases tied to performance. For example, if they've performed above their monthly target revenue, and they do this for x number of months, they can now be eligible for accelerators. It's another lever to pull to give them more compensation for producing where you want them to produce.

Contest Bonuses

Short-term contests keep the energy up between the big paychecks. A few that work:

Most reviews in a week: $100 cash to whoever gets the most Google reviews from verified customers
Highest average ticket in a month: dinner for two or a cash bonus
First to close 3 system replacements in a month: a flat bonus of $150 to $250
Lowest callback rate over 30 days: a bonus or a paid day off

Run them when you want a specific behavior, stop them when you do not need them anymore. Every contest should be tied to a revenue-generating or quality-protecting activity. Reviews generate leads. Low callbacks protect margin. Those are worth paying for.

TeamBuyIn Tip: Too many contests fatigue your employees and they stop paying attention to them. Make them relevant and worth it, even to your top performer. And most importantly, don’t run them too often.

Leaderboard Recognition

Most techs are wired to compete. A leaderboard showing where each tech ranks on revenue, commission, and ticket average does a surprising amount of work. The tech at the top stays because they are winning. The tech in second place stays because they want to take first. The tech at the bottom either improves or self-selects out, which is also useful information.

Visibility is a tool. Use it.

TeamBuyIn Tip: Make a big deal about the top performer every week and then every month as well. Whether it’s monetary or otherwise.

Why 20% Labor Cost or Lower For HVAC Technicians is the Target

Everything above is built around one constraint: labor cost at 20% or under.

If your labor is 20% of revenue, the remaining 80% covers everything else:

Lead generation and advertising
Admin staff and your office manager
Your own salary as the owner
Shop rent, vehicles, fuel, tools, and software
Taxes, insurance, and all the miscellaneous costs that show up every month

You should have these cost seared into your eyelids and the rest of your business should be built around the burden rate you calculated from it.

If your labor climbs to 25%, 30%, or higher, you are pulling from one of those buckets. Usually it is lead generation that gets cut first. Then growth stalls.

The commission structure above is specifically designed so that a high-producing technician earns well over $100,000 while their labor cost as a percentage of their personal revenue production stays at or below 20%. Production goes up, pay goes up, and the ratio holds.

The only time labor cost gets out of hand is when base wages climb without a matching increase in production, or when commission rates are set without modeling the math first. Both of those are avoidable.

Set the thresholds. Model the numbers. Communicate clearly. The structure takes care of the rest.

How to Run This in TeamBuyIn

This plan can be configured directly in TeamBuyIn. Each job that comes in from Housecall Pro or Jobber is automatically categorized, commissions are calculated in real time, and your techs can see exactly what they have earned before you have even reviewed the job.

No spreadsheets. No end-of-month reconciliation. No disputes over who gets what on a multi-tech job.

If you want to see how this structure runs on the platform, book a demo.

The Best HVAC Performance Pay Plan to Create $100k Technicians