APPENDIX 5A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS 

TABLE OF CONTENTS

5A.1 DETAILED WHOLESALER COST DATA ........................................................... A-1

5A.2 DETAILED MECHANICAL CONTRACTOR DATA ........................................... A-2

5A.3 DETAILED GENERAL CONTRACTOR COST DATA ........................................ A-3

5A.4 STATE SALES TAX RATES .................................................................................. A-5

LIST OF TABLES

Table 5A.1.1 Disaggregated Costs and Expenses for Wholesalers .................................... A-1

Table 5A.2.1 Mechanical Contractor Expenses and Markups Used To Scale the 

Incremental Markups .................................................................................... A-3

Table 5A.3.1 General Contractor Expenses and Markups .................................................. A-4

Table 5A.4.1 State Sales Tax Rates (Percent) .................................................................... A-5

5A-i 
APPENDIX 5A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

5A.1 DETAILED WHOLESALER COST DATA

Based on data provided by the Heating Air-conditioning & Refrigeration Distributors 

International (HARDI), Table 5.6.1 of chapter 5 shows wholesaler revenues and costs in 

aggregated form.1

 Table 5A.1.1 below provides the complete breakdown of costs and expenses. 

The column labeled “Scaling” in Table 5A.1.1 indicates which expenses the U.S. Department of 

Energy (DOE) assumed to scale with only the baseline markup and which with both the baseline 

and incremental markups. As described in chapter 5, section 5.5, only those expenses that scale 

with both baseline and incremental costs are marked up when there is an incremental change in 

equipment costs. 

Table 5A.1.1 Disaggregated Costs and Expenses for Wholesalers

Item

Percent of Revenue

% Scaling

Cost of Goods Sold 73.7

Gross Margin 26.3

Payroll Expenses 15.1 Baseline

Executive Salaries & Bonuses 1.7

Branch Manager Salaries and Commissions 1.5

Sales Executive Salaries & Commissions 0.5

Outside Sales Salaries & Commissions 2.1

Inside/Counter Sales/Wages 2.8

Purchasing Salaries/Wages 0.4

Credit Salaries/Wages 0.2

IT Salaries/Wages 0.1

Warehouse Salaries/Wages 1.4

Accounting 0.5

Delivery Salaries/Wages 0.7

All Other Salaries/Wages & Bonuses 0.8

Payroll Taxes 1.0

Group Insurance 1.1

Benefit Plans 0.3

Occupancy Expenses 3.6 Baseline

Utilities: Heat, Light, Power, Water 0.4

Telephone 0.3

Building Repairs & Maintenance 0.2

Rent or Ownership in Real Estate 2.7

5A-1 
Table 5A.1.1 Continued Disaggregated Costs and Expenses for Wholesalers

Other Operating Expenses 5.5 Baseline & Incremental

Advertising & Promotion 0.9

Insurance (business liability & casualty) 0.2

Depreciation 0.4

Vehicle Expenses 1.4

Personal Property Taxes/Licenses 0.1

Collection Expenses 0.3

Bad Debt Losses 0.3

All Other Operating Expenses 1.7

Total Operating Expenses 24.2

Operating Profit 2.1 Baseline & Incremental

Other Income 0.4

Interest Expense 0.5

Other Non-operating Expenses 0.0

Profit Before Taxes 2.0

Source: Heating, Air-conditioning & Refrigeration Distributors International. 2012. 2012Profit Report (2010 data).

Note: The wholesaler costs and expenses are percentage values as opposed to the per-dollar of sales revenue values shown in Table 6.6.1.

5A.2 DETAILED MECHANICAL CONTRACTOR DATA

Tables 5.6.2, 5.6.3, and 5.6.4 of chapter 5 provide mechanical contractor revenues and 

costs in aggregated form by ‘Cost of Goods Sold’ and ‘Gross Margin.’ The tables are based on 

data in the 2005 edition of Financial Analysis for the HVACR Contracting Industry, published 

by the Air Conditioning Contractors of America (ACCA).2

 The ACCA report did not provide a 

more disaggregate tabulation of these costs and expenses. The gross margin category was 

assumed to scale only with the baseline markup. 

The more disaggregated breakdown of costs used to scale the incremental markup are 

shown in Table 5A.2.1, presented in both dollar value and percentage terms from the 2007 

Economic Census.3 As the ACCA data were used to calculate the baseline markup, in Table 

5A.2.1 only the categories in the ‘Scaling’ column that scaled with both the baseline and 

incremental markups are marked when there is an incremental change in equipment costs.

 

5A-2 
Table 5A.2.1 Mechanical Contractor Expenses and Markups Used To Scale the Incremental 

Markups

Item

Dollar Value

$1000

Percentage

% Scaling

Total Cost of Equipment Sales 107,144,428 67.80

Cost of materials, components, and supplies 59,023,964 37.35

Payroll, construction workers 31,373,558 19.85

Cost of construction work subcontracted out to others 13,646,192 8.64

Cost of selected power, fuels, and lubricants 3,100,714 1.96

Gross Margin 50,895,129 32.20

Payroll Expenses 27,626,376 17.48 Baseline

Fringe benefits, all employees 13,585,040 8.60

Payroll, other employees 14,041,336 8.89

Occupancy Expenses

Rental cost for machinery, equipment, and buildings + 

Cost of repairs to buildings and other structures + 

Purchased communication services

3,436,208 2.17 Baseline

Other Operating Expenses 6,165,776 3.90 Baseline & 

Depreciation charges during year Incremental 2,297,550 1.50

Computers + Insurance and other business services + 

Advertising and Promotions + Taxes and License Fees

3,868,226 2.40

Net Profit Before Income Taxes 13,666,769 8.60 Baseline & 

Incremental

Source: U.S. Census Bureau. 2007. Plumbing, Heating, and Air-Conditioning Contractors: 2007. Sector 23: 238220. Construction: Geographic 

Area Series. Detailed Statistics for Establishments: 2007.

Note: Mechanical contractor costs and expenses are first presented as total dollar values and then converted to percentage values.

5A.3 DETAILED GENERAL CONTRACTOR COST DATA

Based on U.S. Department of Census data, Table 5.6.8 of chapter 5 shows general 

contractor revenues and costs in aggregated form. Table 5A.3.1 below shows the complete 

breakdown of costs and expenses provided in the 2007 Economic Census.4 The column labeled 

“Scaling” in Table 5A.4.1 indicates which expenses DOE assumed to scale with only the 

baseline markup and which scaled with both the baseline and incremental markups. Only those 

expenses that scale with baseline and incremental costs are marked up when there is an 

incremental change in equipment costs.

5A-3 
Table 5A.3.1 General Contractor Expenses and Markups

Item

Dollar Value 

$1000

Percentage 

% Scaling

Total Cost of Equipment Sales 250,657,006 76.24

Total payroll, construction workers wages 16,449,830 5.00

Cost of materials, components, and supplies 74,148,280 22.55

Cost of construction work subcontracted out to others 157,873,840 48.02

Total cost of selected power, fuels, and lubricants 2,185,056 0.66

Gross Margin 78,113,967 23.76

Payroll Expenses 25,948,454 7.89

Baseline Total payroll, other employees wages 16,652,791 5.07

Total fringe benefits 8,666,079 2.64

Temporary staff and leased employee expenses 629,584 0.19

Occupancy Expenses 3,301,046 1.00

Baseline

Rental costs of machinery and equipment 1,403,979 0.43

Rental costs of buildings 1,045,163 0.32

Communication services 385,109 0.12

Cost of repair to machinery and equipment 466,795 0.14

Other Operating Expenses 10,770,620 3.28

Baseline & 

Incremental

Purchased professional and technical services 1,121,644 0.34

Data processing and other purchased computer services 127,031 0.04

Expensed computer hardware and other equipment 219,601 0.07

Expensed purchases of software 67,977 0.02

Advertising and promotion services 290,239 0.09

All other expenses 6,321,197 1.92

Refuse removal (including hazardous waste) services 233,831 0.07

Taxes and license fees 807,872 0.25

Total depreciation ($1,000) 1,581,228 0.48

Net Profit Before Income Taxes 38,093,847 11.59 Baseline & 

Incremental

Source: U.S. Census Bureau. 2007. Commercial and Institutional Building Construction. Sector 236220. Construction, Industry Series, 

Preliminary Detailed Statistics for Establishments: 2007.

Note: General contractor costs and expenses are first presented as total dollar values and then converted to percentage values. 

5A-4 
 

5A.4 STATE SALES TAX RATES 

Table 5A.4.1 State Sales Tax Rates (Percent)

State

Combined 

State and Local 

Tax Rate State

Combined 

State and 

Local Tax Rate State

Combined 

State and 

Local Tax Rate

Alabama 8.55% Louisiana 8.75% Ohio 6.80%

Alaska 1.35% Maine 5.00% Oklahoma 8.35%

Arizona 8.15% Maryland 6.00% Oregon 0.00%

Arkansas 8.35% Massachusetts 6.25% Pennsylvania 6.40%

California 8.40% Michigan 6.00% Rhode Island 7.00%

Colorado 6.15% Minnesota 7.20% South Carolina 7.10%

Connecticut 6.35% Mississippi 7.00% South Dakota 5.40%

Delaware 0.00% Missouri 6.60% Tennessee 9.45%

Florida 6.65% Montana 0.00% Texas 7.95%

Georgia 7.10% Nebraska 6.00% Utah 6.70%

Hawaii 4.40% Nevada 7.85% Vermont 6.05%

Idaho 6.05% New Hampshire 0.00% Virginia 5.00%

Illinois 8.05% New Jersey 6.95% Washington 8.90%

Indiana 7.00% New Mexico 6.60% West Virginia 6.05%

Iowa 6.85% New York 8.40% Wisconsin 5.45%

Kansas 8.00% North Carolina 6.85% Wyoming 5.35%

Kentucky 6.00% North Dakota 5.90%

Source: The Sales Tax Clearinghouse at https://thestc.com/STRates.stm (Accessed on February 2013) 

5A-5 
REFERENCES

1. Heating Air Conditioning & Refrigeration Distributors International, 2012 Profit Report, 

2012. <http://www.hardinet.org/Profit-Report> 

2. Air Conditioning Contractors of America, 2005 Financial Analysis for the HVACR 

Contracting Industry, 2005. 

3. U.S. Census Bureau, Plumbing, Heating, and Air-Conditioning Contractors. Sector 23: 

238220. Construction: Industry Series, Preliminary Detailed Statistics for 

Establishments, 2007., 2007. 

4. U.S. Census Bureau, Construction: Industry Series: Preliminary Detailed Statistics for 

Establishments: 2007. Commercial and Institutional Building Construction. , 2007. 

5A-6