On average, sales among private roof contractors have increased 14 percent during the 12 months ending May 1.Meanwhile, the average profit margin for roofing contractors was 6 percent for the 12 months ending May 1.I can't speak for commercials, but on residential roofs, you should be able to average 30 to 35% gross profit (profit is defined as the difference between the total dollar amount of labor minus labor and materials) quite easily. A well-managed company that has decent quality control and control of its costs should do between 35 and 40%. A major company must make a gross profit of 40 to 45%. There are some who even manage to do it a little better.
For readers, their primary concern is the profitability of residential roofing contractors. But it's never that simple. Each contractor is different in the way it exists as a legal entity, how much is paid to the owner as compensation, and how the company is organized or structured. All of these questions have a major impact on a residential roofing contractor's ability to generate a net profit of more than 14% per year.
For those readers who are homeowners wondering how much their local roofer earns from their roof, they may believe that 14% is excessive. The simple truth is that it is NOT. Gaining 14% compared to the contractor's risk of callback, leak damage and jobsite injuries is acceptable. Given the nature of what it entails and the risks, 14% is really low.
A roofing company makes approximately 20% to 40% gross profit. The number of service-focused companies is likely to be higher, while new construction companies and large commercial companies may show lower numbers. Service-oriented companies may have a larger number, while new construction companies and large commercial enterprises may have fewer numbers. On average, indirect costs account for 20-40% of total revenues.
The recently completed 2004 NRCA Management Performance and Finance Survey provides a comprehensive set of benchmarks on the financial performance of roofing contractors Registration fees, roofer salaries, material costs, transportation costs and premiums professional liability insurance are included in this figure. With tariffs on steel and aluminum imports, roofing contractors are likely to face higher inflation this year for their supplies of roof tiles and gutter material. When you have a roofing company, be sure to establish a standard form of all the activities that should be performed in your business. In the same vein, the salary you will pay your roofers should also be planned and standardized.
Roofing contractors fail for a variety of reasons, the most common of which is that they don't understand your numbers and don't keep a record of your expenses. The key for roofing contractors is to find ways to change the traditional mode of operation so that additional sales do not require additional employees. Under what is commonly called the Strategic Benefit Model, roof contracting companies in the Mid-Atlantic seem to be doing something right. The National Roofing Contractors Association has called the chronic shortage of skilled workers the main constraint on roofing employers' ability to grow their businesses.
As residential areas will have small or medium-sized buildings, the coverage of them with roofs is also lower. Three-quarters of residential roofers and nearly 90 percent of commercial roofing contractors surveyed said they are seeing increased labor costs. A typical small roofing contractor will have a couple of teams working on several projects and they often upload jobs. Construction and roofing industry experts expect that the main factors that could cloud the outlook are rising material costs and continued labor shortages, but demand has been strong enough lately to.