How to size the HVAC market in a Canadian city before you launch

Why a method beats a headline number

A precise-sounding market value is almost always hiding an assumption, and that hidden assumption is usually the one that decides whether your branch survives. Reports that quote a city's "HVAC market" in millions of dollars rarely say how many replacements they assumed or what share a newcomer could take.

A method you run yourself has three advantages. You can see each input. You can change the ones you disagree with and watch the answer move. And you can show your partners or your bank exactly how you reached your decision. If someone challenges the estimate, you can point to the line they disagree with.

Step 1: count the households you can actually serve

Use occupied private dwellings, not population, and only for the areas your techs can reach in a reasonable time. Population overstates demand because furnaces and heat pumps belong to homes, not people.

The 2021 Census gives occupied private dwelling counts for every municipality. Pull them for the city and for any neighbouring municipalities inside your realistic drive time. Leave out the far edges of the metro for now; you can add them in year two.

A note on apartments: in high-rise buildings, heating and cooling are often central systems run by building management, which is a commercial sale with a different buyer. If your target city has a high share of tall apartment buildings, consider counting only ground-oriented homes (detached, semi-detached and row houses) for the residential estimate. The Census profile for many cities breaks dwellings down by type.

Step 2: apply the heating-fuel mix

The fuel mix tells you what you will mostly be selling. Statistics Canada Table 38-10-0286-01 reports, by province, the share of households using each energy type for their primary heating system. The latest reference year is 2023.

The differences between provinces are large. As of that survey, natural gas was the primary heating energy for about 76% of Alberta households and 75% in Saskatchewan, while in Quebec electricity covered about 70%. In Nova Scotia, heat pumps were the primary system for about a quarter of households and oil for 28%. A furnace-replacement business plan that works in Calgary may need a completely different service mix in Halifax.

The shares are percentages of all households, and some households report heat included in rent or no primary system, so the shares don't add up to 100%. Apply them to your household count and note that the result is an approximation for a city.

Step 3: choose a replacement assumption

This is the most important judgment in the whole sheet, so model it at three levels rather than one. Public data doesn't tell you how many systems in a given city are replaced each year. You have to choose a rate based on your experience of equipment life in your current market.

A practical way to frame it is "one in N homes per year". If you believe a typical system lasts 15 to 20 years, one in 15, one in 18 and one in 22 are reasonable low, middle and high bounds to test. Older housing stock, harsher winters and many systems installed at the same time can push the real number either way.

Don't forget that replacement is only part of the revenue. Repairs, maintenance plans and add-ons such as humidifiers, air cleaners and water heaters often matter more to a young branch's cash flow than the big installs.

Step 4: estimate a newcomer's share

Assume you will win a small share in year one and test what happens if it is half that. The established companies in the city have reviews, referrals, builder relationships and years of map history. A new entrant starts at zero.

For each fuel segment, set a year-one share and a year-two share. Be especially conservative in segments where you have no local track record. If you have never sold oil-to-heat-pump conversions, for example, your share of that segment in a new city is likely to be lower than your share of gas furnace replacements.

Step 5: turn jobs into money and compare with launch cost

Multiply jobs by your average ticket and gross margin, then subtract the cost of winning them. That gives you a contribution figure you can compare with the fixed costs of the branch.

A worked example using real census and fuel data

Winnipeg had 300,431 occupied private dwellings in the 2021 Census, according to Statistics Canada. In Manitoba, about 52% of households used natural gas and 33% electricity for their primary heating system in 2023. Applying the provincial shares to the city as an approximation:

That is roughly $673,500 in year-one replacement revenue before service and maintenance work, at a 0.5% share. If you halve the share, it halves. If you use one in 22 instead of one in 18, it falls by about a fifth. If a third of those homes are apartments with central systems, the residential numbers shrink further.

Now subtract acquisition cost. If each sold replacement costs $900 in marketing, 71 jobs cost about $63,900. With a 35% gross margin, $673,500 in revenue gives about $235,700 in gross margin, leaving about $171,800 to cover a technician, a vehicle, insurance and any location. That is the figure to compare with your fixed costs, month by month, to find the break-even point. These numbers are for illustration only; your own tickets, margins and costs will differ.

Common mistakes

• Using population instead of households. It inflates demand by more than double in most cities.
• Applying a national fuel mix. Canada's provinces heat in very different ways.
• Assuming the whole metro is your market. Drive time decides your real service area.
• Forgetting apartments with central systems. They are a different, commercial sale.
• Single-point estimates. Always model low, middle and high replacement rates.
• Counting on a rebate. Energy programs change often. As of October 2026, several federal programs have closed and a new national heat pump rebate has been announced but is not yet open, according to the federal announcement. Check the administrator before relying on any program.

What to do with the result

If the middle case shows the branch covering its fixed costs within a period your cash can support, the city is worth a launch plan. If only the high case works, look for a smaller first service area, a higher-value service mix or a nearer city. Our launch sequence guide covers what happens next, and the city selection guide helps compare more than one option. If you'd rather have the sheet built for you, the market sizing service does exactly this for a named city.