6-A-i

APPENDIX 6-A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

TABLE OF CONTENTS

6-A.1 DETAILED WHOLESALER COST DATA ........................................................6-A-1

6-A.2 DETAILED MECHANICAL CONTRACTOR DATA........................................6-A-2

6-A.3 DETAILED GENERAL CONTRACTOR COST DATA.....................................6-A-3

6-A.4 ESTIMATION OF CONTRACTOR MARK-UP VARIATION ..........................6-A-4

6-A.5 STATE SALES TAX RATES...............................................................................6-A-7

LIST OF TABLES

Table 6-A.1.1 Disaggregated Costs and Expenses for Wholesalers.................................6-A-1

Table 6-A.2.1 Mechanical Contractor Expenses and Markups Used To Scale the 

Incremental Markups.................................................................................6-A-3

Table 6-A.3.1 General Contractor Expenses and Markups...............................................6-A-4

Table 6-A.4.1 Mechanical Contractor Baseline Markups by State, 2007.........................6-A-4

Table 6-A.4.2 Residential General Contractor Baseline Markups by State, 2007............6-A-6

Table 6-A.5.1 State Sales Tax Rates (Percent) .................................................................6-A-7
6-A-1

APPENDIX 6-A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

6-A.1 DETAILED WHOLESALER COST DATA

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

International (HARDI), Table 6.5.1 of chapter 6 shows wholesaler revenues and costs in 

aggregated form. Table 6-A.1.1 below provides the complete breakdown of costs and expenses. 

The column labeled “Scaling” in Table 6-A.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 6, section 6.5, only those expenses that scale 

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

equipment costs.

Table 6-A.1.1 Disaggregated Costs and Expenses for Wholesalers

Item

Percent of Revenue

% Scaling

Cost of Goods Sold 73.4

Gross Margin 26.6

Payroll Expenses 16.1 Baseline

Executive Salaries & Bonuses 1.7

Branch Manager Salaries and Commissions 1.4

Sales Executive Salaries & Commissions 0.5

Outside Sales Salaries & Commissions 2.2

Inside/Counter Sales/Wages 2.9

Purchasing Salaries/Wages 0.5

Credit Salaries/Wages 0.2

IT Salaries/Wages 0.2

Warehouse Salaries/Wages 1.5

Accounting 0.5

Delivery Salaries/Wages 0.9

All Other Salaries/Wages & Bonuses 0.9

Payroll Taxes 1.1

Group Insurance 1.2

Benefit Plans 0.4

Occupancy Expenses 3.8 Baseline

Utilities: Heat, Light, Power, Water 0.4

Telephone 0.3

Building Repairs & Maintenance 0.2

Rent or Ownership in Real Estate 2.9
6-A-2

Other Operating Expenses 5.4 Baseline & Incremental

Advertising & Promotion 0.7

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 2.0

Total Operating Expenses 25.3

Operating Profit 1.3 Baseline & Incremental

Other Income 0.5

Interest Expense 0.6

Other Non-operating Expenses 0.0

Profit Before Taxes 1.2

Source: Heating, Air-conditioning & Refrigeration Distributors International. 2010. 2010 Profit Report (2009 Data).

Note: The wholesaler costs and expenses are percentage values as opposed to the per-dollar of sales revenue values shown in Table 6.5.1.

6-A.2 DETAILED MECHANICAL CONTRACTOR DATA

Tables 6.5.2, 6.5.3, and 6.5.4 of chapter 6 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). The ACCA report did not provide a 

more disaggregate tabulation of these costs and expenses. As in section 6-A.1, 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 6-A.2.1 by both dollar value and percentage terms from the 2007 Census of 

Business. As the ACCA data were used to calculate the baseline markup, in Table 6-A.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.
6-A-3

Table 6-A.2.1 Mechanical Contractor Expenses and Markups Used To Scale the 

Incremental Markups

Item

Dollar Value

$

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. This is in 

contrast to the cost per dollar of sales revenue values shown in Table 6.5.5.

6-A.3 DETAILED GENERAL CONTRACTOR COST DATA

Based on U.S. Department of Census data, Table 6.5.6 of chapter 6, section 6.5, General 

Contractor Expenses and Markups shows general contractor revenues and costs in aggregated 

form. Table 6-A.3.1 below shows the complete breakdown of costs and expenses provided by the 

U.S. Department of Census. The column labeled “Scaling” in Table 6-A.3.1 indicates which 

expenses DOE assumed to scale with only the baseline markup and which scaled with both the 

baseline and incremental markups. As described in chapter 6, section 6.5, only those expenses 

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

change in equipment costs.
6-A-4

Table 6-A.3.1 General Contractor Expenses and Markups

Item

Dollar Value

$

Percentage

% Scaling

Total Cost of Equipment Sales $238,431,389 67.55% Baseline

Cost of materials, components, and supplies $126,764,975 35.91%

Payroll, construction workers $16,629,321 4.71%

Cost of construction work subcontracted out to 

others $90,956,668 25.77%

Cost of selected power, fuels, and lubricants $4,080,425 1.16%

Gross Margin $114,558,247 32.45%

Payroll Expenses $28,307,699 8.02% Baseline

Fringe benefits, all employees $7,464,670 2.11%

Payroll, other employees $20,843,029 5.90%

Occupancy Expenses $3,558,796 1.01% Baseline

Rent, Communications, maintenance, and utilities $3,558,796 1.01%

Other Operating Expenses $10,969,511 3.11% Baseline & 

Depreciation charges during year $3,300,086 0.93% Incremental

Computing, Accounting Services, Advertising, 

Insurance, and other $7,669,425 2.17%

Net Profit Before Income Taxes

$71,722,241 20.32%

Baseline & 

Incremental

Source: U.S. Census Bureau. 2007. Residential Building Construction. Sector 23: 236115 through 236118. 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. This is in contrast 

to the cost per dollar of sales revenue values shown in Table 6.5.6.

6-A.4 ESTIMATION OF CONTRACTOR MARK-UP VARIATION

Table 6-A.4.1 Mechanical Contractor Baseline Markups by State, 2007

State

Number 

of Firms

Value of 

Construction 

($000)

Cost of 

Subcontract 

Work 

($000)

Cost of 

Materials 

($000)

Construction 

Payroll 

($000)

Baseline 

Markup

Relative 

Markup

Alabama 1,425 2,010,305 113,782 876,341 411,100 1.435 0.972

Alaska 229 583,171 52,245 171,575 120,909 1.692 1.146

Arizona 1,510 3,522,116 179,103 1,508,903 638,469 1.514 1.025

Arkansas 1,045 1,065,754 68,417 461,924 213,054 1.434 0.971

California 7,272 16,726,969 1,070,065 6,330,469 3,464,667 1.539 1.043

Colorado 2,015 3,056,988 261,734 1,195,057 627,663 1.467 0.993

Connecticut 1,321 1,704,668 145,740 628,720 361,411 1.501 1.016

Delaware 306 481,900 D D 163,343 1.421 0.962

District of 

Columbia 22 34,600 D D 50,439 1.458 0.988

Florida 5,069 9,061,426 783,859 3,736,811 1,733,721 1.449 0.981

Georgia 2,534 4,700,799 365,010 2,224,110 740,722 1.412 0.956

Hawaii 280 800,221 46,753 270,723 137,646 1.758 1.191

Idaho 594 900,698 62,252 387,181 167,732 1.459 0.988

Illinois 3,848 7,641,642 602,251 2,833,489 1,622,307 1.511 1.023

Indiana 1,867 4,002,323 431,558 1,319,523 854,157 1.536 1.040

Iowa 1,066 1,868,483 144,869 801,239 359,775 1.431 0.969
6-A-5

Kansas 966 1,395,359 106,307 580,764 279,636 1.443 0.978

Kentucky 1,219 1,747,925 128,902 674,500 353,958 1.510 1.023

Louisiana 1,469 1,997,044 162,063 776,784 378,582 1.516 1.027

Maine 458 580,816 46,692 234,993 113,162 1.471 0.996

Maryland 2,024 5,329,135 698,381 2,009,957 1,031,222 1.425 0.965

Massachusetts 2,520 4,099,301 488,098 1,475,525 817,754 1.474 0.998

Michigan 3,051 4,420,638 604,850 1,569,113 841,985 1.466 0.993

Minnesota 1,635 3,402,921 386,669 1,230,126 698,535 1.470 0.995

Mississippi 655 1,025,452 76,709 449,851 189,011 1.433 0.970

Missouri 1,816 3,335,124 345,285 1,319,142 689,171 1.417 0.960

Montana 432 483,578 42,988 216,792 85,678 1.400 0.948

Nebraska 683 1,004,296 94,170 455,264 205,904 1.330 0.900

Nevada 498 2,327,842 121,091 988,605 490,859 1.454 0.985

New 

Hampshire 531 620,761 39,784 D 128,512 1.472 0.997

New Jersey 3,551 5,062,336 496,174 1,825,407 1,015,432 1.517 1.027

New Mexico 599 891,914 67,987 356,961 170,711 1.497 1.014

New York 5,750 10,364,779 1,219,468 3,568,182 1,972,687 1.533 1.038

North 

Carolina 2,978 5,111,396 341,129 2,288,841 1,001,832 1.407 0.953

North Dakota 272 360,683 36,037 148,617 70,403 1.414 0.958

Ohio 3,514 5,618,591 568,837 2,115,568 1,125,401 1.475 0.999

Oklahoma 1,158 1,352,943 94,153 581,079 249,032 1.464 0.991

Oregon 1,031 1,893,678 124,070 701,468 412,418 1.530 1.036

Pennsylvania 3,653 6,487,476 579,901 2,628,602 1,370,864 1.417 0.959

Rhode Island 397 631,202 56,234 229,692 124,727 1.537 1.041

South 

Carolina 1,472 1,991,303 126,123 847,690 352,877 1.501 1.016

South Dakota 337 386,186 11,037 158,375 69,605 1.616 1.094

Tennessee 1,370 2,595,613 189,293 1,159,952 484,997 1.415 0.958

Texas 5,653 10,810,308 823,920 4,605,624 2,102,520 1.435 0.972

Utah 892 1,746,398 146,052 769,140 319,812 1.414 0.958

Vermont 282 294,806 21,021 D 63,015 1.472 0.997

Virginia 2,547 4,623,151 347,055 1,791,740 960,534 1.492 1.010

Washington 1,602 4,111,543 370,741 1,546,819 816,533 1.504 1.018

West Virginia 416 655,100 D D 90,660 1.464 0.991

Wisconsin 1,839 2,926,545 234,962 1,125,779 662,893 1.446 0.979

Wyoming 262 289,391 14,391 128,922 54,792 1.461 0.989

Average Baseline Markup 1.477 1.000

Standard Deviation 0.070

Relative Standard Deviation 0.048

Sources: U.S. Bureau of the Census. American Factfinder. 2007Economic Census. Sector 23: Construction: Geographic Area Series: 

Detailed Statistics for Establishments: 2007 

http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=EC0723A1&-NAICS2007=238220&-_lang=en and

Notes: The Census Bureau withheld data for some states.

Markups may vary across states for several reasons, including differences in firm size.
6-A-6

Table 6-A.4.2 Residential General Contractor Baseline Markups by State, 2007

State

Number of 

Firms, 

Residential

Value of 

Residential 

Construction 

($000)

Selected 

Costs

($000)

Constructio

n Payroll 

($000

Baseline 

Markup

Relative 

Markup

Alabama 1,975 4,232,349 2,937,940 168,368 1.363 0.959

Alaska 312 598,572 272,679 50,218 1.854 1.304

Arizona 3,366 14,743,264 8,138,562 498,165 1.707 1.201

Arkansas 759 821,493 602,802 35,744 1.287 0.905

California 18,237 49,325,592 25,973,474 2,754,369 1.717 1.208

Colorado 3,958 9,711,667 6,140,677 337,541 1.499 1.055

Connecticut 1,974 2,835,015 1,729,432 185,274 1.481 1.042

Delaware 466 912,121 666,813 47,796 1.276 0.898

District of 

Columbia 26 177,004 106,465 9,080 1.532 1.078

Florida 10,235 33,290,091 20,629,967 1,150,208 1.528 1.075

Georgia 4,969 12,492,752 8,283,184 462,484 1.428 1.005

Hawaii 745 2,739,122 1,770,826 162,317 1.417 0.997

Idaho 1,931 2,565,176 1,866,965 147,557 1.273 0.896

Illinois 7,858 13,035,923 7,540,218 665,887 1.589 1.118

Indiana 3,585 4,637,976 3,155,692 262,884 1.357 0.955

Iowa 1,730 1,846,602 1,335,620 113,494 1.274 0.897

Kansas 1,587 1,940,745 1,353,689 89,576 1.345 0.946

Kentucky 1,684 3,074,656 2,100,782 143,501 1.370 0.964

Louisiana 1,726 2,429,529 1,529,246 121,638 1.472 1.035

Maine 1,110 821,980 546,252 84,141 1.304 0.917

Maryland 3,218 6,616,960 4,298,968 336,749 1.427 1.004

Massachusetts 4,660 7,693,991 5,284,435 444,332 1.343 0.945

Michigan 5,635 5,383,752 3,089,572 412,225 1.537 1.082

Minnesota 3,860 5,558,816 3,560,245 287,434 1.445 1.016

Mississippi 1,031 1,241,083 867,886 71,806 1.321 0.929

Missouri 3,422 4,754,552 3,214,028 374,666 1.325 0.932

Montana 1,213 1,148,453 817,204 102,002 1.249 0.879

Nebraska 195 577,746 412,693 12,129 1.360 0.957

Nevada 939 6,697,489 3,794,858 231,253 1.664 1.170

New Hampshire 392 292,227 194,288 34,566 1.277 0.898

New Jersey 5,250 8,492,015 5,206,027 443,591 1.503 1.058

New Mexico 1,039 2,236,262 1,305,159 89,914 1.603 1.128

New York 11,726 16,958,113 11,115,052 1,061,785 1.393 0.980

North Carolina 6,485 16,254,736 11,083,422 496,473 1.404 0.988

North Dakota 1.275 0.897

Ohio 4,834 6,788,825 4,506,240 377,222 1.390 0.978

Oklahoma 827 1,419,859 1,028,092 47,494 1.320 0.929

Oregon 3,644 5,519,819 3,737,882 281,811 1.373 0.966

Pennsylvania 6,822 9,971,624 6,719,524 603,875 1.362 0.958

Rhode Island 495 309,403 166,033 39,350 1.506 1.060

South Carolina 2,031 5,921,453 4,198,716 151,489 1.361 0.958

South Dakota 408 297,424 204,826 24,013 1.300 0.914

Tennessee 2,309 5,243,037 3,638,717 236,257 1.353 0.952

Texas 7,150 32,123,700 20,634,533 794,570 1.499 1.055
6-A-7

Utah 2,116 4,201,276 2,923,141 172,073 1.357 0.955

Vermont 831 527,837 324,634 63,271 1.361 0.957

Virginia 5,951 12,761,751 8,153,795 646,085 1.450 1.020

Washington 6,225 11,158,559 6,683,774 677,723 1.516 1.067

West Virginia 594 348,291 192,200 33,300 1.545 1.087

Wisconsin 3,447 3,820,533 2,596,589 254,332 1.340 0.943

Wyoming 551 524,809 361,510 56,705 1.255 0.883

Average Baseline Markup 1.421 1.000

Standard Deviation 0.132

Relative Standard Deviation 0.093

Sources: U.S. Bureau of the Census, American Factfinder. 2007 Economic Census. Sector 23: Subsectors 236115 (residential single-family), 

236116 (residential multifamily), 236117 (operative builders), and 236118 (residential remodelers). Sector 23: EC0723A1: Construction: 

Geographic Area Series: Detailed Statistics for Establishments: 2007.Notes: The Census Bureau withheld data for some states.

Markups may vary across states for several reasons, including differences in firm size.

Due to sample size and/or magnitude of reporting error relative to the mean, disaggregated information not provided for all of the Subcontract, 

Materials, and Fuels fields. In these cases, the state markup ratio is calculated as an average of neighboring states.

6-A.5 STATE SALES TAX RATES

Table 6-A.5.1 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 8.25 Kentucky 6.00 North Dakota 5.80

Alaska 1.40 Louisiana 8.75 Ohio 6.80

Arizona 8.15 Maine 5.00 Oklahoma 8.15

Arkansas 8.20 Maryland 6.00 Oregon --

California 9.15 Massachusetts 6.25 Pennsylvania 6.40

Colorado 6.35 Michigan 6.00 Rhode Island 7.00

Connecticut 6.00 Minnesota 7.20 South Carolina 7.05

Delaware -- Mississippi 7.00 South Dakota 5.50

Dist. of Columbia 6.00 Missouri 7.35 Tennessee 9.40

Florida 6.70 Montana -- Texas 8.05

Georgia 6.90 Nebraska 6.00 Utah 6.70

Hawaii 4.40 Nevada 7.85 Vermont 6.05

Idaho 6.05 New Hampshire -- Virginia 5.00

Illinois 8.20 New Jersey 6.95 Washington 8.75

Indiana 7.00 New Mexico 6.55 West Virginia 6.00

Iowa 6.85 New York 8.45 Wisconsin 5.45

Kansas 8.05 North Carolina 7.80 Wyoming 5.15

Source: The Sales Tax Clearinghouse at https://thestc.com/STRates.stm (Assessed on July 19, 2010)