How should you structure commission pay for HVAC and plumbing service techs?

The first decision is what the percentage multiplies.

A revenue basis pays a percentage of what the customer is billed.

A gross-profit basis pays a percentage of what remains after the job's direct costs — equipment, materials, refrigerant, permit fees, subcontracted work — come out first.

Same job, different paycheck, and very different incentives.

Revenue is simpler; that simplicity is also its failure mode.

A tech can read a revenue commission on the ticket, which keeps paychecks explainable.

But nothing in a revenue plan stops a tech from buying a closing rate with discounts: the commission still pays, while the profit the commission was meant to share quietly disappears.

If you run revenue, the plan needs a separate discount rule — an approval threshold, or a reduced percentage on discounted tickets — because the plan itself will not discipline price.

Gross profit protects margin by design.

A discount cuts the commission pool automatically, so the tech feels every dollar given away.

The cost is transparency and definition: "gross profit" means nothing until the plan says which costs come out.

Equipment and materials certainly; what about truck stock, warranty labor, permit fees, the dispatch fee?

Define the cost lines in the written plan, or every paycheck becomes an argument.

Techs also need a statement they can follow — a plan the earner cannot reconstruct breeds distrust faster than a lower rate.

Tiers change the shape, not the base.

A tiered plan raises the percentage as the tech's monthly total crosses thresholds you set, to pull volume past a base.

Tiers earn their keep in replacement season, when the marginal job matters most.

Their failure mode is end-of-month gaming: discounting or pulling work forward to cross a line.

Tie the tiers to gross profit if discounting is the behavior you fear.

Most service-tech plans are not pure commission anyway — they pair a base wage with a commission layer.

For how commission stacks up against hourly and flat rate, see our HVAC technician pay plan comparison.

There is no reliable published rate, and it matters that you know that before you go looking.

BLS and the Department of Labor publish earnings, not commission percentages; the percentages that circulate in the trades come from consultants or paywalled association member surveys, not primary sources.

Our research found no primary source for a typical commission percentage for HVAC or plumbing service techs, so this guide will not invent one — and you should treat any precise number someone quotes you as unverified.

What the government does publish is what techs earn in total.

The national median wage for heating, air conditioning and refrigeration mechanics and installers (SOC 49-9021) was $61,010 a year in May 2025; for plumbers, pipefitters and steamfitters (SOC 47-2152) it was $63,800.

BLS counts commissions and production bonuses inside those figures, but excludes overtime pay, shift differentials and non-production bonuses such as sign-on bonuses — so read them as market earnings levels, and expect overtime-heavy techs to out-earn them.

Set your rate backwards from your own books, not forwards from a folklore percentage.

Model last year's tickets under the candidate plan, tech by tech, and look at the total earnings it produces: a commission plan is a recruiting offer, and techs compare offers on the W-2 number, not on the mechanics.

Where the modeled total lands against the market is the check that matters — our HVAC technician salary and plumber salary pages carry the state-level wage tables.

One boundary worth drawing: a tech who sells replacements full-time — the comfort-advisor role — is a sales role, and commission design for it is its own question with its own benchmark.

This page is about service techs whose commission rides on the trucks they already drive.

A draw is an advance against the commission a tech will earn later.

Non-recoverable draws work like a base: the tech keeps them no matter what commission comes in.

Recoverable draws are a loan against future commission — in a strong month the commission pays the draw back; in a weak one the shortfall carries forward.

Shops use draws to smooth income across seasonal swings and to make a commission-heavy plan recruitable, because "your pay depends on the season" is a hard offer to accept.

Whatever you call the draw, the wage-and-hour arithmetic underneath does not change.

Under the Fair Labor Standards Act, commissions are pay for hours worked and must be included in the regular rate used for overtime, whether or not they are the tech's only pay.

A commission earned within the week folds into that week's regular rate: added to the week's other earnings, divided by all hours worked, with an extra half of that rate owed for each overtime hour.

When a commission is paid monthly or later, you can pay overtime on the hourly rate first, but once the amount is known it must be apportioned back over the weeks it was earned, with extra overtime paid for each week that had overtime hours — and a monthly commission that cannot be tied to specific weeks can be allocated by multiplying it by 12 and dividing by 52.

The one path around FLSA overtime for commissioned employees — the section 7(i) exemption — is narrow.

It requires the employer to be a retail or service establishment, the employee's regular rate to be more than 1.5 times the minimum wage, and more than half of the employee's pay over a representative period of at least one month to be commissions.

Whether an HVAC or plumbing service company qualifies is decided case by case.

Do not design the plan around that exemption; treat it as a question for your employment attorney, with your actual pay mix in hand.

The floor is also a workweek question, and slow weeks are where it bites.

The regular-rate arithmetic divides that week's pay by all the hours worked in it, however slow the week was — and the regulations think in workweeks: under 29 CFR 531.35, the FLSA is violated in any workweek where a required tool-of-the-trade cost cuts into the minimum wage or overtime owed.

What this guide will not tell you is where that floor sits for a commissioned tech: how a low base or a recoverable draw interacts with the minimum-wage and overtime minimums is fact-specific, and our research found no commission-specific rule to quote.

Before you launch a commission-heavy or recoverable-draw plan, take the plan as written to the Department of Labor's Wage and Hour Division or an employment attorney and confirm where the floor lands.

The design takeaway: a draw changes when cash arrives, not how the law counts pay — so build the floor deliberately.

A base rate paid for all hours worked, regardless of commission earned, is how shops keep a slow month from collapsing the paycheck, and it is budgeted like hourly payroll.

And note what we cannot tell you: whether a recoverable draw can be taken back out of a paycheck is governed by state wage-deduction law, which our research did not cover.

Confirm the mechanics with your state labor department or an employment attorney before you write "recoverable" into the plan.

A callback is the return visit after a failure — same customer, same equipment, your cost.

Commission pays the ticket the day it closes; the callback's cost lands weeks later.

That gap is the whole problem: a plan that pays revenue with no callback consequence rewards the overselling and rushed diagnostics that produce callbacks in the first place.

A clawback — a charge-back against commission when a callback is attributed to the tech's work — closes the loop.

Define the callback in the plan, not in the argument.

What counts: same fault, within a window you set, attributed to workmanship or diagnosis.

What does not: new faults, customer-caused damage, wear items the customer declined.

Decide what is charged back — commonly the callback's labor — and cap the exposure, because an uncapped charge-back is a paycheck the tech cannot predict.

And charge future commission where you can rather than deducting from a paycheck already earned: state wage-deduction rules limit what can come out of a paycheck, and those limits were not part of our research — confirm them with your state labor department or an employment attorney.

Watch the behavior you buy.

Punitive clawbacks teach techs to hide callbacks, argue attribution, and dodge warranty calls — costs that land on your dispatch board and your reviews instead of on the plan.

Shops that run clawbacks cleanly pair them with clear attribution, a cap, and a no-fault pay rate for warranty work, so the tech has a way to make the callback trip worth showing up for.

One compliance note that surprises owners: the charge-back does not move the commission outside the overtime math.

What the tech is paid after charge-backs is still commission, and commissions must be included in the regular rate used for overtime whether or not they are the tech's only pay.

The same holds on the upside: if the plan pays a no-callback or quality bonus, that is a quality bonus — and quality bonuses, like bonuses announced to make employees work faster or stay with the company, must be included in the regular rate.

Calling one "discretionary" does not make it discretionary; the facts decide.

We cannot give you the list, and you should be suspicious of any page that hands one over casually.

Whether a state requires a written commission agreement for commissioned employees — and what such an agreement must contain — is state employment law, and state-by-state commission-agreement rules were not part of our research for this guide.

Wage-deduction limits, final-paycheck deadlines and related pay rules vary the same way.

The honest answer is to verify before you launch: ask your employment attorney or your state labor department whether your state imposes a written-agreement requirement, and follow it.

Put the plan in writing regardless of what your state requires, because ambiguity — not malice — is the source of most commission disputes.

A complete written plan states: the basis (revenue or gross profit) and the exact formula; which job costs come out if the plan pays on gross profit; the rate or the full tier schedule; when a commission is earned versus when it is paid; draw terms and any recovery rule; the callback definition and charge-back schedule; and what happens to earned and unearned commission when employment ends.

A signed document also does the recruiting work a handshake cannot.

A tech evaluating your offer can read the plan, model their own paycheck, and trust it — which is exactly what a commission plan needs to compete with an hourly offer.

For the whole hiring picture around it, see our guide to hiring HVAC and plumbing techs.

This page is employer career and business information, not legal advice. Commission plans sit inside wage-and-hour and employment law that varies by state — confirm the plan with an employment attorney or your state labor department before it goes live.