Quick answer
Price a heat pump install from your true job cost, not from what you think the customer wants to hear. For a typical 9kW air source retrofit in 2026, that means roughly £6,500 in materials, £1,800 in fully loaded labour and overheads, and a 15 to 20 percent margin on top. The Boiler Upgrade Scheme is now a mandatory upfront discount the customer sees on your quote. It does not change what you charge. Build a three-tier quote, hold your margin, and stop competing on a single price line.
Table of contents
- Why heat pump pricing is breaking installers in 2026
- The true cost of a 9kW air source install, line by line
- Setting your labour rate properly
- Material and trade pricing that actually moves the needle
- How to handle the BUS grant in your quote
- The three-tier quote that captures more margin
- The 0% VAT trap that wipes out flat-rate scheme profit
- Software that makes heat pump pricing faster
- What the community is saying
- Recommended videos
- Frequently asked questions
- My verdict
Why heat pump pricing is breaking installers in 2026
I have spent twenty years on the tools, and I can tell you that heat pumps are not boilers. The mistake I see most often is heating engineers quoting them like boilers. Look at the equipment, add a day of labour, knock together a number, and send it. Then the job overruns by two days, the cylinder changes mid-install, and the margin disappears before the commissioning report is signed off.
The market is moving fast. Over 250,000 heat pumps had been installed in the UK by August 2024, a 45 percent jump on the year before. The first quarter of 2025 alone delivered over 15,000 installs, with 5,605 in March, according to MCS data. Demand is real. The Future Homes Standard is going to push it harder still. But demand without pricing discipline is how good firms go bust.
The other half of the problem is the grant. The Boiler Upgrade Scheme pays £7,500 today and rises to £9,000 in summer 2026. Customers see that number first and assume your fee should be £8,000 because that gets them to a £500 contribution. That is not how this works. Your fee is your fee. The grant is the customer's discount, not yours.
The true cost of a 9kW air source install, line by line
Here is what a typical 9kW air source retrofit actually costs you in 2026. Run the same exercise on every job, even the ones that look easy.
| Cost line | Item | Typical UK 2026 cost |
|---|---|---|
| Materials | 9kW heat pump unit (trade) | £3,500–£4,500 |
| Unvented hot water cylinder (200L) | £650–£1,200 | |
| Buffer tank or volumiser (where required) | £280–£450 | |
| Controls, programmer, pipework, fittings | £500–£750 | |
| Radiator upgrades (typical retrofit, two or three rads) | £400–£900 | |
| Electrical materials and isolator | £150–£250 | |
| Labour | Installation (3 days, fully loaded) | £1,050–£1,350 |
| Electrician (half-day, dedicated circuit) | £220–£280 | |
| Survey, heat-loss calc, MCS design (4–5 hours) | £180–£240 | |
| Commissioning and handover | £90–£150 | |
| Overheads | MCS admin, DNO notification, paperwork | £110–£160 |
| Travel, parking, consumables | £60–£120 | |
| Total job cost (typical mid-point) | £8,200–£8,500 | |
Total job cost lands around £8,300 in the middle of the market. That is the floor. Below that, you are subsidising the customer. Above that, you have a margin to play with.
Setting your labour rate properly
The national average day rate for a heating engineer in 2026 is around £259. The range runs from £199 in Pembrokeshire to £480 in central London, according to TradeDayRates. Heat pump trained engineers are commanding £7,000 to £10,000 more annually than standard gas engineers because the skill gap is real and the work is more complex.
Day rate is not the same as labour cost. Day rate is what you charge the customer. Labour cost is what the job costs your business once you include PAYE, employer NI, holiday pay, pension, fuel, van running costs, insurance, tools, training, and the time the engineer is not on a paying job. A £400 day rate translates to roughly £45 to £50 per hour fully loaded once you spread those costs across genuinely chargeable time. Use that figure for your costing, not the headline day rate.
The London exception is real. If you operate inside the M25, you are not charging £400 a day for a heat pump install. You are charging £550 to £650 and the customer expects it. Match your rate to your geography, not the national average.
Material and trade pricing that actually moves the needle
The four brands that dominate UK MCS-eligible installs are Mitsubishi (Ecodan), Vaillant (aroTHERM Plus), Daikin (Altherma), and Samsung. Trade pricing in 2026 lands roughly here:
- Mitsubishi Ecodan: from around £3,500 (6kW) up to £5,200 (14kW) trade. Strong on part-load modulation, good for new builds with underfloor heating.
- Vaillant aroTHERM Plus: from around £3,990 (3.5kW) up to £6,770 (12kW) trade. Class-leading on R290 refrigerant and retrofit compatibility.
- Daikin Altherma: from around £3,800 (6kW) up to £5,800 (12kW) trade. Wide installer base, reliable parts supply.
- Samsung EHS: typically the most aggressive on price, often £2,800 to £4,500 trade depending on output. Useful when the customer is price-driven.
Tie your kit to your customer profile. Premium properties pay for Vaillant or Mitsubishi without flinching. Budget-conscious retrofits in standard semis will accept Samsung if you frame it correctly. Mixing brands across your jobs without a clear rationale is how stock holding costs creep up.
The other materials line that catches installers out is the cylinder. A combi-boiler-to-heat-pump retrofit needs a new unvented cylinder almost every time. That is £650 to £1,200 of kit and half a day of fitting. Quote for it from the survey, not after the job has started.
How to handle the BUS grant in your quote
The Boiler Upgrade Scheme pays £7,500 per qualifying air source or ground source install today. From summer 2026, that rises to £9,000. From April 2026, Ofgem mandated that the discount appears upfront on the quote and invoice, not as a rebate the customer claims back. That changes the conversation but not your fee.
Here is the line item structure I recommend:
- Installation total (gross): your full fee, £9,500 in the example above.
- Less: Boiler Upgrade Scheme grant: -£7,500.
- Customer contribution: £2,000.
- VAT: £0 under the zero rate for energy saving materials.
- Total payable by customer: £2,000.
The customer sees their out-of-pocket cost clearly. You also protect your gross fee from being negotiated down. The grant is not your price ceiling. It is a discount applied to a price you set independently.
The three-tier quote that captures more margin
The single-price quote is a losing strategy. The customer has no anchor, so they price-shop against three other quotes and choose the cheapest. The three-tier quote gives them a choice within your range, and the choice they make is usually not the bottom tier.
| Tier | What it includes | Gross fee | Customer pays after grant |
|---|---|---|---|
| Standard | Heat pump, cylinder, basic controls, install, commissioning, 1-year warranty top-up | £9,500 | £2,000 |
| Complete | All of Standard, plus smart controls (weather compensation), 3-year service plan, OpenTherm integration | £10,800 | £3,300 |
| Premium | All of Complete, plus extended manufacturer warranty (7 years), priority callout, 5-year service plan | £12,500 | £5,000 |
Customers who would have haggled you down from £9,500 to £8,800 on the single-price quote will pay £10,800 for the Complete tier because they feel they are buying a level of service, not a commodity. In my experience, around 55 to 60 percent of customers pick the middle tier. Around 20 percent go Premium. Only 20 to 25 percent take Standard.
The middle tier is where your margin lives. Build it carefully. The added items in the Complete tier should cost you roughly £400 to £500 in real terms (controls module, basic service plan provisioning) but deliver £1,300 of additional revenue. That is a 70-plus percent margin on the upgrade.
The 0% VAT trap that wipes out flat-rate scheme profit
Heat pump installs sit under the 0% VAT rate for energy saving materials, which runs until at least March 2027. That is good news for the customer. It is a trap if you are on the VAT flat-rate scheme.
Under flat-rate, you pay HMRC a fixed percentage of your turnover and keep the difference between that and the standard rate you would otherwise charge. The problem with zero-rated work is that you collect 0 percent VAT from the customer but still owe HMRC a percentage of your turnover. On a £9,500 heat pump invoice at a 9.5 percent flat rate, you owe HMRC £902 of VAT on income you never charged. That comes straight out of your margin.
Speak to a P&H specialist accountant who actually understands heat pump work. The general high-street firm will not catch this until the year-end accounts, by which point the money is gone.
Software that makes heat pump pricing faster
Pricing a heat pump install in a spreadsheet is faster than pen and paper, but it is not where the market is going. There are three categories of software worth knowing in 2026.
Design and heat-loss calculation: Heatpunk from Midsummer is the de facto free tool for room-by-room heat loss to MCS standards. Heat Engineer from heat-engineer.com is the paid alternative, more polished for commercial work. Either will feed into your quote.
Quoting and job management: Payaca is now the most heat-pump-specific UK option, with Heatpunk integration, BUS V5 grant tracking, and MCS-compliant quote templates built in. Tradify, Commusoft, and Fergus all do general job-management with quoting modules. They work fine for heat pumps, but you will build the templates yourself.
AI-assisted quoting: The newer wave is using AI to turn a survey photo into a draft quote. We covered this in our guide on AI quoting from job photos, and the same approach works for heat pump pre-quotes. It does not replace the proper survey, but it gets a credible number in front of the customer faster.
If you are managing more than two or three live heat pump jobs at any time, you need software. Spreadsheets break down at that volume. The pricing question and the workflow question are the same question. Our complete guide to AI tools for tradespeople covers the wider stack worth running alongside your job-management software.
What the community is saying
Recommended videos
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Heat Geek's Zero Disrupt: How to Slash Heat Pump Cost & Chaos
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Frequently asked questions
15 to 20 percent net is the realistic floor for a well-run heat pump install. Below 15 percent and a single bad week of weather or a cylinder spec change can flip the job to a loss. Above 20 percent and you are pricing yourself out of the market unless you have a clear premium positioning. Aim for 18 percent and stick to it.
No. The customer's contribution drops by £1,500 automatically when the grant goes up. That is the customer's saving, not the start of a negotiation about your fee. The same logic that protects your margin today still applies when the grant changes.
For a standard retrofit, plan on three to five hours for the survey and heat loss calculation on site, then another two to three hours back at the office for the design, MCS paperwork, and quote build. So roughly a day of one person's time. If you are quoting more than four jobs a week, that is half your week gone on quoting. Software that pulls heat loss into the quote is no longer optional.
Ten to twenty percent at booking is the industry norm. RECC requires deposit protection insurance for any deposit over £100, so factor that into your terms. A common structure is 10 percent at order, 40 percent at material delivery, 50 percent on commissioning. Cash flow on heat pump work is genuinely difficult between commissioning and BUS payment receipt, so do not underestimate the deposit.
If you are doing more than five or six heat pumps a year, almost certainly yes. The flat-rate scheme penalises you on zero-rated turnover. Speak to a P&H specialist accountant before the next install. The numbers are usually clear once someone runs them properly.
Include them in the design, not as an after-survey upsell. Customers hate finding out at the end of the install that two radiators need changing. Build the radiator upgrades into the Standard tier price from the start. If the heat loss calculation says they are needed, they are not optional, and the customer needs to see that on the first quote.
My verdict
I have watched too many good engineers undercharge for heat pump work because they were nervous about the customer reaction to the headline number. Stop being nervous. The work is genuinely more complex than a boiler swap, the regulatory load is real, and customers who want a cheap heat pump install are usually not customers you want to take on anyway. Price it from your true cost. Build a three-tier quote. Hold your fee against the grant. Switch off the flat-rate scheme if you are on it. The work is there, the demand is rising, and there is no shortage of customers who will pay properly for the job done well. The shortage is of installers who will price properly. Be one of them.
