HVAC Commission Pay: How to Design a Plan That Drives Profit (Not Problems)

If you're an HVAC business owner, there are many ways you can pay your techs:

• Hourly: Show up, get paid, regardless of results
• Flat rates: Do the job, collect the check (often used with sub-contractors)
• Straight salary: Same monthly takehome regardless of hours or performance

Then there's commission-based pay.

Commission-based pay (or performance pay) means techs get paid based on what they actually bring to your business. More sales = more money. Better results = bigger paychecks.

And that changes everything.

Suddenly your employees start to think like business owners. They're looking for ways to help customers, sell maintenance agreements, and grow your revenue, because their income scales the better they perform. 

Whether you're an HVAC owner wondering if commission pay could transform your business, or a tech curious about making more money, this guide breaks down exactly how it works.

What Is HVAC Commission Pay?

Commission pay is structure where technicians or salespeople earn a percentage of the revenue they generate. So instead of just getting a salary paid for their time, they can earn more based on work they do or the sales they make. 

The purpose of commission pay is straightforward, it links earnings with performance. So your best-performing techs can earn way beyond their hourly pay or annual salary. 

Here’s the difference between hourly, salaried and commission based pay:

• Hourly workers get paid the same rate regardless of what they accomplish during their shift. 
• Salaried employees receive consistent paychecks regardless of how busy they are. 
• Commission workers, however, can see big swings in their income based on their performance.

Typical Rates And Structures For HVAC Commission

So what does HVAC commission actually look like?

Most HVAC companies with commission structures pay between 4-8% commission on the total sale or service value. The exact percentage depends on the employee's role, experience level, and what they're selling.

Commission pay is most success when it’s implemented as part of an overall business strategy:

• Want more system sales? Offer higher commission on equipment and systems to your techs. 
• Need more maintenance agreements? Offer techs a bonus or commission on every maintraince agreement they upsell. 

Here are the 3 most common ways HVAC companies structure commission:

1. Straight Commission

With a straight commission plan, the employee’s entire pay comes from commission on their sales, meaning there is no base salary. However, it's extremely high-risk for the employee, leading to income instability and high turnover. 

Commission-only pay almost guarantees high-pressure, "sell-at-all-costs" behavior that destroys customer trust. This model is best reserved for pure, high-ticket sales roles where the company provides a steady, high-quality stream of leads. It is a terrible model for service or installation techs. Honestly, I’d avoid this approach at all costs.

2. Hourly + Commission

A more balanced approach where the employee earns an hourly wage (or salary) and receives a commission or bonus on top for sales. It gives your team stability while still providing a strong incentive to perform. The only real con is that it can be harder to balance — if the salary is too high, the commission isn't a motivator, but if the salary is too low, it doesn't provide real security.

3. Tiered Commission

A tiered bonus structure means the commission percentage increases as the employee hits higher sales targets. For example, they might earn 8% on the first $50k in sales, 10% on $50k-$100k, and 12% on anything over $100k. 

A tiered approach is great for motivating your A-players to keep pushing instead of coasting once they've hit a "good enough" number. The downside is that it can be complex to track and may be demotivating for mid-level performers who feel they can never reach the top tiers. It's best used for sales-focused roles to reward elite performance.

4. Flat-Rate Incentives (Spiffs)

HVAC SPIFFs encourage specific actions with set dollar amount bonuses. For example, if a tech gets a 5-star review, they get a $20 bonus or if they arrive at the job on time they get $10. Its main pro is that it's incredibly simple to understand and track, and this clarity is highly motivating. This is the perfect way to incentivize specific, high-value actions for service and installation technicians without turning them into high-pressure salespeople.

Choosing Between Hourly Pay and Commission 

The pay model you choose directly impacts the performance of your team, customer experience, and your bottom line.

Some HVAC owners like to keep it simple with hourly pay. But, after seeing how performance pay has helped over 200 service business, I know they're missing out on huge growth oportunity.

Here's a quick comparison of how different pay models impact your business:

Benefits Of Hourly Pay

Hourly pay remains popular in HVAC for good reasons:

• Technicians know exactly what they'll earn each week
• Companies can budget labor costs with precision
• No pressure on techs to sell unnecessary services
• Simpler payroll processing and compliance

This model works well for maintenance-focused businesses or companies that handle mostly warranty work where upselling isn't a primary concern.

Hybrid Approaches (The Sweet Spot)

Here's what I've seen work best in the real world:

Most successful HVAC companies aren't doing pure commission or straight hourly. They're doing hybrid hourly rates + performance-based commissions. 

Here's why this crushes the other models:

• Your techs have income stability (they can pay their mortgage)
• But they also have serious upside (they can make real money)
• You get consistent customer service (they're not desperate for every sale)
• Plus motivated sales behavior (extra money is still extra money)

Real example: Tech makes $25/hour for all their scheduled time, PLUS 5% commission on any additional services they sell.

So on a typical service call:

• Show up and fix the AC = $25/hour (guaranteed)
• Sell a $500 air purifier = Extra $25 commission
• Sign them up for $1,200 maintenance agreement = Extra $60 commission

That single service call just went from $25/hour for your tech to $110 for 1 hour of work. That's makes a huge difference to not just the motivation of your techs but the satisfaction if your customers as they're no longer recieving a servce from a tech who gets $25/hour no matter what, to someone who is incentivized to offer the best possible service.

Common Commission Pitfalls (And How To Overcome Them)

1. Tracking And Reporting Errors

If you have a multiple techs taking 3-5 services calls each day, there's a lot to keep on top of. So tracking performance pay manually can often lead to mistakes, disputes, and frustrated employees.

When techs don't trust the tracking system, their motivation suffers.

2. Over-Aggressive Upselling

The biggest customer complaint about commission-based techs? Feeling pressured to buy services they don't need.

The solution here is training. You need to teach your techs when to push upsells and maintenance plans. It’s not about ramping up the services for every customer, you need to make sure that the upsell and customer needs are 100% aligned. 

To prevent unethical upselling:

• Create clear guidelines about appropriate recommendations
• Tie part of the commission to customer satisfaction scores
• Require documentation or photos justifying suggested repairs
• Monitor unusual selling patterns that might indicate pressure tactics

Remember that one pushy technician can damage your company's reputation for years.

3. Complicated KPIs

If your techs need a calculator and a PhD to figure out their commission, you've already lost.

Here's my rule: Your KPIs should be so simple that your tech can explain them to their spouse in 10 seconds.

"I get $20 for every 5-star review, $100 for every maintenance agreement I sell, and 3% on any equipment."

From working with over 200 service businesses to implement performance pay, here are the KPIs that I see actually move the needle:

• 5-star reviews (your reputation = more leads)
• Maintenance agreement sign-ups (recurring revenue = higher business value)
• Parts and equipment sales (higher average ticket)
• Zero callbacks (customer satisfaction + efficiency)

When KPIs are clear your tech walks into every job knowing exactly how to make more money. They're not confused about what matters. They're not guessing what you want them to focus on.

They see an opportunity for a maintenance agreement? They know that's $100 in their pocket.

Customer seems happy? They're asking for that review before they leave.

Clear KPIs turn every service call into a revenue opportunity because your techs know exactly what actions pay them more.

How to Calculate Commission Rates That Actually Work

Here are the most common, sustainable pay structures… 

For advisors and dedicated sales roles, the best model is typically a Salary + Commission, with a commission rate between 8% - 12% of Gross Profit.

For service and installation technicians, the preferred model is an Hourly Wage + Spiffs. These spiffs are flat-rate bonuses for specific, high-value actions. This could include:

• $25 - $75 for each new Maintenance Agreement sold
• $10 - $50 for specific accessories like a smart thermostat
• $25 for getting a 5-star review that mentions their name
• $50 - $100 for generating a qualified lead for the sales team.

This model keeps your service techs focused on their main job (service and repair) while rewarding them for finding opportunities that build the business. 

Building a True Performance Pay Plan

Commission is just one tool. The real goal is to shift from "commission" to holistic "incentive pay."

Your sales team's job is to get the first check. Your service team's job is to get all the others. That's why you must reward the behaviors that create long-term customers.

Here are some incentives you can offer your techs to drive the right behaviours that deliver growth for your business: 

• 5-Star Reviews: We mentioned it before, but it's critical. A tech who gets a 5-star review just created a marketing asset that will generate leads for years. Reward them.
• Maintenance Agreements: This is the lifeblood of your business. It's predictable, high-margin revenue. This spiff should be one of the most generous you offer.
• First-Time Fix Rate: Reward technicians who are prepared, efficient, and solve the problem on the first visit. This drives customer satisfaction and operational efficiency.
• Team Profit Sharing: Create a team-based profit sharing pool. Set a monthly or quarterly Gross Profit goal for the whole company. If the team hits it, everyone gets a bonus. Suddenly, techs start helping each other, sharing knowledge, and keeping the trucks clean to reduce costs.

These are all forms of HVAC technician incentives that create an "owner mentality" in everyone on your team.

How to Launch Your Plan 

Great employee incentive programs live or die by their rollout. You can't just send an email and hope for the best.

1. Prioritize KPIs That Actually Drive Growth

Before you launch, make sure your plan is focused on the right targets. Your compensation plan should be a direct lever for your core business goals. If your goal is long-term, sustainable profit, you should focus on HVAC KPIs like gross profit, new maintenance agreements, and 5-star customer reviews. Prioritize the actions that create value, and your team will follow.

2. Keep it Simple

If a tech can't explain their pay plan to their spouse in 10 seconds, it's too complicated. A complicated plan causes confusion. A simple plan drives action.

• Good: "I get a solid hourly wage, plus $50 for every maintenance plan I sell and $25 for every 5-star review." 
• Bad: "I get my hourly, plus 3.5% of gross profit on non-discounted service calls, 5% on accessory sales over $300, and a 1.2x multiplier if the team hits its monthly revenue target..."

Keep it simple and easy to follow. 

3. Be Transparent

This is the most critical part. Motivation dies in the dark.

If your team has to wait for a "mystery spreadsheet" you calculate at the end of the month, they’ll never know hoe they’re performing in the moment. They will assume you're shorting them. They have no way to track their progress, so they can't get motivated.

You must have a way for them to see their performance and potential earnings in real-time. This transparency is non-negotiable.

Use ShareWillow to launch and manage your plans, too — our new mobile app makes it easy for your techs to see their incentive pay and track their KPIs from their phone.  

4. Communicate the "Why"

Don't just present the numbers. Hold a team meeting and explain why you're doing this.

"We are launching this new performance plan because we want to build the best company in the city for our customers and for us. This plan is designed to reward you for the 5-star work you already do and to give everyone a clear path to earn more. When the company wins, you win."

The most important thing is to get buy-in from your team. They need to understand how your commission pay and incentives will benefit them personally and the company.

How ShareWillow Makes Performance Pay Simple

You can't have real-time transparency if you're running your plan on a complicated spreadsheet that's updated once a month. It's a nightmare for you to manage and it also kills all motivation for your team.

At ShareWillow, we've helped hundreds of companies design their plans. We've built ShareWillow to be the simplest platform to help you design a plan, based on what we've learned from that experience.

By using ShareWillow, you can give your team the real-time tracking and transparency they need to stay motivated, and it saves you hours of administrative headaches.

Final thoughts

Your compensation plan is an investment in the culture you want to build.

A-players aren't afraid of being measured, they crave it. A clear, transparent performance plan gives them a roadmap to winning. It shows them that if they perform and help the company grow, they will directly share in that success.