Commercial Roofing Net Profit Margin: Business Tactics for Roofers

Commercial roofing is one of the most profitable types of roofing, with conservative figures between 20% to 40%. However, most roofing contractors don't know how to calculate their commercial roofing net profit or make their business profitable. We're here to help roofing companies and contractors like you.

We'll look at commercial roofing net profit and how you can manage it in the roofing industry. We'll look at the general profit margin and ways to earn honest money while providing valuable roofing services. 

What is Commercial Roofing Net Profit?

Commercial roofing net profit refers to the total profit you receive after paying for overhead expenses, labor, roofing material, and other miscellaneous costs. The net proofing for commercial roofing can change based on the varying prices of roofing materials, seasonal labor costs, and other material costs.

How Do You Calculate Commercial Roofing Net Profit?

Here's a simplified breakdown of calculating the net profit:

Net Profit = Total Revenue - Total Expenses

In this case

Total Revenue = Income from Projects + Commission

And

Total Expenses = Labor Costs Per Roof + Acquisition of Roofing Material + Tool and Inventory Costs

This is the simplest way to calculate the net profit for any roofing project. You'll need to keep tabs on these costs through receipts to make accurate calculations. Alternatively, you can use roofing CRM software to track costs and income.

What is the Average Commercial Roofing Net Profit Margin?

The average profit margin for roofing companies is 20% to 40%, and commercial roofing profit margins might have 10% more profits. Commercial roofing net profit margins are slightly more profitable because of quality costs and professional contracts.

Residential contracts are mostly with individual homeowners, who have limited budgets. Commercial property owners have greater budgets with more extensive projects. Naturally, commercial roofing projects have a healthy profit margin compared to residential projects.

How Much Do Commercial Roofing Contractors Make?

Commercial roofing contractors make more than $80,000 per year. Settled commercial roofing company owners can make around $200,000 per year. These profits and income vary significantly based on regional demand, client relationships, and brand visibility.

These profits dwindle for roofers, who make an average of $50,030 per year. Skilled roofers can make more than $70,000 per year, which is more than the average salary of a U.S citizen. Profit margins in the roofing industry vary significantly, which means there are no fixed annual income valuations.

How Do Commercial Roofing Businesses Manage Net Profit Margin?

Roofing businesses and contractors manage their net profit margin through cost management and streamlined workflow. You can manage costs by acquiring materials through discounts or wholesale purchases. Wholesale purchases for things like shingles can decrease your upfront costs significantly.

Another factor that you should consider is workflow and day-to-day costs. A good workflow where each member of the crew knows their role can decrease wasted time. It leads to quicker completion dates, more efficient work, and lower costs.

Furthermore, the quicker completion dates allow you to take more projects per month. Naturally, it translates to more net profit and profits for every worker. 

FAQs on Commercial Roofing Net Profit

How do I market my roofing business?

You can market your roofing business through traditional means like cards and flyers. A better way to market a roofing business is through referral bonuses, where you pay a percentage fee for every successful client. You can launch these offers through local adjoining businesses like plumbing, interior, or construction companies. 

What is the difference between net profit and gross profit?

Gross profit refers to the total income from a project, which includes the cost of goods, overhead expenses, labor, and other costs. Net profit is the total profit after removing costs of goods, labor, and other materials. Net profit is the factor that affects your profitability. 

Why is commercial roofing important?

Commercial roofing is important because it ensures a business's compliance with the local building standards. It maintains the integrity of local businesses and ensures roofs are up to standard and secure. Commercial roofing is important for the structural integrity, safety, and operations of local businesses.

Which license do you need for commercial roofing in Illinois?

You need an Unlimited License for commercial roofing in Illinois. According to the Illinois Roofing Industry Licensing Act, you will need to pass an examination for the Unlimited License. This license allows you to work on commercial, industrial, and residential roofing projects. 

Bottom Line on Commercial Roofing Net Profit

The average commercial roofing net profit margin is between 20% to 40%. This net profit is calculated after adding all the income flows for a project and subtracting the sum of labor, roofing materials, and overhead costs. In short, it's calculated after subtracting all expenses for a project from the gross profit margin.

Companies can increase their net profit margin by streamlining workflow and reducing material acquisition costs. An easy way to streamline workflow is by hiring trained workers and assigning roles based on their specialities. You can reduce the cost of acquisition by buying materials from a trusted wholesaler.

Managing a business and making it profitable isn't an easy thing to do for novice contractors. You have to understand business ethics and management to make the right decisions for your business. You can learn about these concepts by joining our roofing classes today.