Is a roofing business profitable?
How much profit do roofing companies make?
How much do roofing companies make per roof?
These are common questions if you want to start and run your own roofing company.
So here’s a guide to tell you about the roofing business’s profitability and how you can scale that up to continually grow the business.
Food, water, and shelter are the three basic needs of life. As a result, it’s generally wise to invest your money into businesses that can provide at least one of these necessities.
This is why, when looking at the overall economic performance in the past years, the roofing industry tends to perform well even during economic hardships — precisely because it satisfies the need for shelter.
Roofing is a profitable business. It is a $56.7 billion industry in the United States alone.
Between 2017 and 2022, the industry grew at an average rate of 2.2% each year.
And with the rising home demand and an increasingly competitive real estate market, it is expected that it will continue to grow in the coming years.
According to Roofr, the average roofing contractor in the United States earns $84,856 annually.
Approximately 23% of the roofing businesses earn a maximum of $50,000 annually, 40% earn $50k to $100k annually, and 24% can make $100k to $200k.
However, keep in mind that although roofing is a profitable industry, it is not guaranteed that all roofing businesses will succeed.
In fact, the roofing industry has a failure rate of more than 50%, as 90% of the contractors never make it over the $3 million mark.
Before we dive into how much roofing companies make per roof — or how much a roofing company makes per house — let us first discuss the factors that shape the profitability of the roofing business.
Here are some of them:
When it comes to profitability, the sources from which you acquire contracts are essential — whether residential or commercial.
Residential contracts are more common but are less profitable compared to commercial contracts.
Residential areas will have less scope of work since it only covers small or medium-sized structures, even if the labor charges are paid by contract.
As a result, less profit is made by covering a smaller area with a roof.
On the other hand, commercial contracts will cover larger buildings and have greater coverage dimensions. As a result, the income and profit will be significantly higher.
If you own a roofing company, ensure your operations and systems are standardized, including the salary you pay roofers.
Remember that the roofer’s wage plays a considerable part in determining the roofing business profit margin. The more you pay, the less money you have in profits.
So before you hire a roofer, research their market pay scale. Determine the labor charges while keeping specific conditions and labor policies in mind.
Pro-tip: consult an accountant or labor expert to guide you.
Regarding direct expenses, the cost of the materials and supplies will also make a significant difference in the profits you make.
It is well-known that when the quantity of purchased products grows, the cost decreases.
You can take advantage of this by purchasing the necessary roofing materials and supplies in bulk to enjoy discounts and rebates.
When you can lower the cost of the materials and supplies purchased, you can also boost your roofing business’ profits.
Customers are the primary determining factor of whether the roofing business will be profitable.
The more customers you have, the more work and projects involved, which also means more profit.
So make sure that you’re pricing is fair and reasonable to attract and retain customers but also competitive enough to make the business profitable.
When you set your pricing per roofing contract, you can use a roofing template to determine how much the fair price is.
But you need to also account for the target net profit margin.
The roofing business profit margin pertains to the net income of profit generated as a percentage of revenue.
It is the measure of profitability and is ultimately decided and set by the owner of the roofing business.
Some businesses want to make $1,000/contract in profit, while others want to make as much as $10,000.
Both are equally right in their own context depending on the type of roofing job, the scope of work, its complexity, and who the customer is.
However, keep in mind that if you want to stay ahead of the competition and build a loyal base of customers, your pricing should:
Along with planning, data is also essential. Measure and analyze your business financials regularly to figure out its profitability.
Knowing this can help you make smarter decisions in running your roofing business.
Put your customers as your primary focus. Adopt a pricing strategy that will help you gain loyal customers.
Loyal customers will always stick to the company they trust, despite any price increase.
Generally, it’s a good business practice to never rely on a single customer base.
Offer more services to diversify your customers.
For instance, you can offer residential and commercial roofing services. Hence, when one sector slows down, the other industry picks up the slack.
Experienced roofers are more efficient since they already have the skills and training required.
However, drive, resilience, focus, and willingness to continually learn are also paramount and should be considered.
How much roofing companies make per roof is significantly impacted by marketing.
It’s all about how you sell your products and services.
You can use a more traditional approach or lean into technology to streamline your operations and reach more audiences.
Pro-tip: Consult an expert on scaling up your roofing company and its profitability.
Business 411 developed an all-in-one approach to building scalable and profitable businesses.
From branding to marketing and consulting, we can help you create sustainable strategies so you can grow your roofing business.