flexiblefullpage - default
interstitial1 - interstitial
Currently Reading

What Profit Margin Should Specialty Contractors Aim For?

billboard -

What Profit Margin Should Specialty Contractors Aim For?

The problem with hoping to break even with a meager profit percentage is that it sets precedence. There’s no goal in mind, so there will be no goal to drive a team toward.

By Caroline Broderick December 2, 2021
Profit Margin
Profit Margin
This article first appeared in the Nov/Dec 2021 issue of Pro Remodeler.

Smaller home improvement companies can often fall victim to an incorrect mindset: A goal to break even with (hopefully) a chunk of cash at the end of the month. That cash would then likely be used for operating expenses, and then the cycle restarts. MarketSharp Founder and Director of Business Development Tim Musch says this outlook immediately sets remodelers up to lose.

The problem with hoping to break even with a meager profit percentage is that it sets precedence. There’s no goal in mind, so there will be no goal to drive a team toward. “You can’t look at it that way,” says Musch. “You got to begin with the end in mind in your business, in all aspects, and that starts by knowing what you want profitability-wise out of your business.”

Musch says a solid share to strive for would be between 15% and 20% net profit for specialty home improvement professionals—and once trouble spots are identified within your processes, it’s an obtainable profit margin.

Data from the National Association of Home Builders’ Remodelers’ Cost of Doing Business Study, 2020 Edition, which analyzed data from the 2018 fiscal year, found remodelers averaging a net profit of just 5.2%. Musch says the two key factors that help remodelers achieve this goal are keeping marketing costs in check and ensuring your prices support the goal.

RELATED: Praying or Playing for Profit?

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.

    This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Related Stories

Indicators of a Softening Market and How to Prepare

Market conditions could be changing, but don't panic. Richardson shares ways to stay on top of market conditions and how to prepare for any potential softening down the road.

Estimating Three Ways

Three remodelers reveal how they estimate a project

Grow Your Business Through Collaboration with Remodeling Peers

Remodeling Mastery Forums offers a unique business opportuniy for remodelers

Why We Hired an In-House Estimator

Bringing an estimator into your remodeling company creates sweeping benefits.

5 Tips on Setting up a Collection System

Construction lawyer Thomas Croessmann walks contractors through 5 tips on setting up a system for collecting payments from clients.

Remodeling Market Predictions: 2022

A Pro Remodeler Thought Leader reveals what he sees happening in 2022

Should Remodelers Worry About a Homeowner's FICO Score?

Do FICO scores tell a homeowner's entire financial story? James Waite of Hearth weighs in on what home improvement pros should focus on when…

West Shore Home Implements $15 Minimum Wage

Home improvement juggernaut West Shore Home's new company-wide base wage doubles the legal minimum in nearly every state it operates

New Year, New PPP

Experts explain details of the second draw for the Paycheck Protection Program and answer lingering questions about taxability

Design-Motivated Kitchen Upgrades: Who's Buying?

JBREC's latest Kitchen Trends Report gives an inside look into who's most willing to replace kitchen elements for design purposes

boombox1 -
native1 -

More in Category

native2 -
halfpage1 -