This article was written by our expert who is surveying the industry and constantly updating the business plan for a plumber.
Plumbing businesses typically achieve net profit margins between 10% and 25%, with emergency services reaching the higher end of this range.
Understanding these margins is essential for new plumbing entrepreneurs to set realistic expectations and build sustainable operations. Revenue varies dramatically by company size, with small operations generating $180,000-$600,000 annually while large companies can exceed $6 million per year.
If you want to dig deeper and learn more, you can download our business plan for a plumber. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our plumber financial forecast.
Plumbing companies achieve varying profit margins based on their size, service focus, and operational efficiency.
Small plumbing businesses typically operate with 10-15% net margins, while larger companies with optimized operations can reach 15-25% margins.
| Company Size | Annual Revenue | Net Profit Margin | Primary Service Focus |
|---|---|---|---|
| Small (1-5 employees) | $180,000 - $600,000 | 10% - 15% | Residential repairs, drain cleaning |
| Medium (6-20 employees) | $600,000 - $1,800,000 | 12% - 18% | Mixed residential/commercial |
| Large (20+ employees) | $1,800,000 - $6,000,000+ | 15% - 25% | Commercial projects, maintenance contracts |
| Emergency Services | Varies by size | 15% - 25% | After-hours emergency calls |
| Maintenance Contracts | Varies by size | 20% - 30% | Recurring service agreements |
| Installation Work | Varies by size | 10% - 15% | New construction, major replacements |
| Commercial Projects | Varies by size | 12% - 18% | Office buildings, industrial facilities |
What are the typical monthly and yearly revenues for small, medium, and large plumbing companies?
Small plumbing companies with 1-5 employees typically generate between $15,000 and $50,000 monthly, translating to annual revenues of $180,000 to $600,000.
Medium-sized plumbing businesses employing 6-20 workers achieve monthly revenues ranging from $50,000 to $150,000, resulting in annual revenues between $600,000 and $1.8 million. These companies benefit from economies of scale while maintaining manageable operational complexity.
Large plumbing companies with 20 or more employees generate monthly revenues from $150,000 to $500,000 or more, leading to annual revenues between $1.8 million and $6 million. The revenue distribution varies significantly by service type, with residential work comprising 70% of small company revenue, while large companies focus more heavily on commercial projects at 40% of their revenue mix.
Emergency services typically represent 20-30% of total revenue across all company sizes, commanding premium pricing due to their urgent nature and after-hours scheduling requirements.
How many service calls do plumbing companies handle daily and what's the revenue per call?
Small plumbing companies typically handle 2-5 service calls per day, generating $150-$500 per call depending on the complexity and type of service provided.
Medium-sized operations manage 5-15 calls daily with revenue per call ranging from $200-$800, reflecting their ability to handle more complex jobs and maintain multiple crews simultaneously. Large plumbing companies process 15-30+ calls per day, earning $300-$1,200+ per call as they focus on higher-value commercial work and complex installations.
The revenue per call varies significantly based on service type, with basic drain cleaning generating $100-$300, leak repairs bringing in $200-$600, and major installations like water heater replacements commanding $800-$3,000. Emergency calls typically carry a 20-30% premium over standard rates due to their urgent nature and inconvenient timing.
Weekly call volume ranges from 10-25 for small companies, 25-75 for medium companies, and 75-150+ for large operations, with seasonal variations affecting demand patterns throughout the year.
What does a plumbing company charge for different services?
Plumbing service pricing varies widely based on complexity, with drain cleaning typically costing customers $100-$300 per job.
| Service Type | Price Range | Details and Factors |
|---|---|---|
| Drain Cleaning | $100 - $300 | Basic clogs cost less, while severe blockages requiring specialized equipment command higher prices |
| Pipe Repair | $200 - $600 | Simple patches are cheaper, extensive repairs or hard-to-reach locations increase costs significantly |
| Water Heater Installation | $800 - $3,000 | Standard tank units are less expensive, while tankless and high-efficiency models command premium pricing |
| Emergency Response | 20-30% premium | After-hours, weekend, and holiday calls carry significant surcharges above standard rates |
| Pipe Installation | $1,000 - $5,000 | New construction and major replacements vary by linear footage, material type, and accessibility |
| Maintenance Contracts | $200 - $800/year | Annual agreements for regular inspections and preventive maintenance, varies by property size |
| Commercial Projects | $5,000 - $20,000+ | Large-scale installations in office buildings and industrial facilities require specialized expertise |
What are the average costs of goods sold for plumbing jobs?
Materials typically represent 20-30% of total job revenue for most plumbing services, with a standard drain cleaning job requiring $50-$150 in materials and supplies.
Subcontractor costs add another 10-15% to project expenses when specialized work like trenching or concrete cutting is required. For example, a major pipe replacement project might require hiring excavation specialists, adding $500-$2,000 to the total job cost depending on complexity and duration.
Monthly consumable expenses for plumbing companies range from $500-$2,000, covering essential supplies like sealants, fittings, flux, and cleaning materials that are used across multiple jobs. These indirect material costs must be factored into overall pricing strategies to maintain healthy margins.
Material costs vary significantly by job type, with emergency repairs typically having lower material percentages due to premium labor rates, while installation work carries higher material costs as a percentage of total revenue due to the substantial equipment and fixture requirements.
What are the monthly operating expenses for plumbing companies?
Small plumbing companies face monthly operating expenses ranging from $12,000 to $35,000, with labor representing the largest expense category.
| Expense Category | Small Company | Medium Company | Large Company |
|---|---|---|---|
| Plumber Wages | $8,000 - $25,000 | $25,000 - $80,000 | $80,000 - $250,000+ |
| Administrative Staff | $2,000 - $5,000 | $5,000 - $15,000 | $15,000 - $50,000 |
| Vehicle Costs | $500 - $1,500 | $1,500 - $5,000 | $5,000 - $15,000 |
| Insurance | $300 - $1,000 | $1,000 - $3,000 | $3,000 - $10,000 |
| Software & Tools | $100 - $500 | $500 - $2,000 | $2,000 - $5,000 |
| Rent & Utilities | $1,000 - $3,000 | $3,000 - $8,000 | $8,000 - $20,000 |
| Total Monthly | $12,000 - $35,000 | $35,000 - $113,000 | $113,000 - $350,000+ |
You'll find detailed market insights in our plumber business plan, updated every quarter.
What are the typical gross margins for different plumbing services?
Residential plumbing services typically achieve gross margins of 55-65%, while commercial work generates slightly lower margins at 50-60% due to competitive bidding and material-intensive projects.
Emergency services command the highest margins at 60-70% because customers prioritize immediate service over price comparison, allowing plumbers to charge premium rates for after-hours and urgent calls. The higher margins reflect both the inconvenience premium and the operational efficiency of emergency work.
Maintenance contracts offer exceptional profitability with gross margins of 70-80%, as they involve predictable, routine work with lower material costs and reduced travel time between jobs. These recurring revenue streams provide stable cash flow and help smooth seasonal variations in demand.
Installation work typically yields the lowest gross margins at 50-60% due to high material costs and competitive pricing pressure, but generates higher absolute dollar amounts per job, making it valuable for cash flow and business growth.
How do profit margins change as plumbing businesses scale?
Small plumbing companies typically operate with net profit margins of 10-15%, while medium-sized businesses achieve 12-18% margins through improved operational efficiency and economies of scale.
Large plumbing companies can reach net margins of 15-25% by leveraging bulk purchasing power, optimized routing systems, and specialized teams for different service types. The scaling advantages include negotiated discounts on materials, reduced administrative overhead per job, and the ability to maintain multiple revenue streams simultaneously.
However, scaling introduces new cost burdens including management complexity, training expenses, and higher insurance premiums that can offset some efficiency gains. Companies must invest in systems, supervision, and quality control to maintain service standards across multiple crews and locations.
The transition from one-truck operations to multi-crew businesses requires significant investment in management infrastructure, with many companies experiencing temporary margin compression during rapid growth phases before achieving optimized operations at larger scale.
What are typical labor costs in the plumbing industry?
Licensed plumbers typically earn $25-$50 per hour, translating to annual salaries of $50,000-$100,000 depending on experience level and geographic location.
Apprentice plumbers start at $15-$25 per hour with annual earnings of $30,000-$50,000, while administrative staff costs range from $18-$30 per hour or $35,000-$60,000 annually. These wage ranges reflect regional variations and company size differences across the industry.
Labor costs per job vary significantly based on complexity, with simple drain cleaning requiring 1-2 hours of work, while major installations may demand 8-16 hours or multiple days. Emergency calls often include overtime premiums that can increase labor costs by 50-100% compared to regular hours.
Total monthly labor expenses typically represent 40-60% of a plumbing company's operating costs, making workforce management and productivity optimization critical factors in maintaining profitable operations across different service categories.
What are the main fixed versus variable costs in plumbing businesses?
Fixed costs in plumbing businesses include rent and utilities, insurance and licensing fees, salaried labor, software subscriptions, and equipment depreciation that remain constant regardless of job volume.
Variable costs fluctuate with business activity and include materials and supplies, fuel and vehicle maintenance, subcontractor fees, overtime pay, and marketing and advertising expenses. These costs directly correlate with the number and complexity of jobs completed each month.
The balance between fixed and variable costs significantly influences profit margins, as companies with higher fixed cost structures require consistent job volume to maintain profitability, while businesses with more variable cost structures can better weather seasonal fluctuations and economic downturns.
Successful plumbing companies typically maintain fixed costs at 30-40% of total expenses, allowing sufficient flexibility to adjust variable spending based on market conditions while preserving core operational capabilities during slower periods.
What constitutes a healthy net profit margin for plumbing companies?
A healthy net profit margin for plumbing companies ranges from 15-20%, with margins below 10% indicating operational inefficiencies or pricing problems.
For a small plumbing company generating $300,000 annually, a 15% net margin translates to $45,000 in net profit, while a medium-sized company earning $1.2 million would achieve $180,000-$240,000 in net profit at 15-20% margins. Large companies with $3 million in revenue could generate $450,000-$600,000 in annual net profit.
Monthly net profit targets should align with these annual goals, with small companies aiming for $3,000-$5,000 monthly, medium companies targeting $15,000-$20,000, and large operations achieving $35,000-$50,000 or more in monthly net profit to ensure sustainable operations and growth funding.
Margins above 25% may indicate underpricing in the market or exceptional operational efficiency, while consistent margins below 10% suggest the need for cost reduction, pricing increases, or operational improvements to ensure long-term business viability.
What strategies can plumbing companies use to improve their margins?
Upselling maintenance contracts provides the highest margin improvement opportunity, as these agreements generate 70-80% gross margins compared to 50-60% for repair work.
- Implement dynamic pricing strategies by charging 20-30% premiums for emergency and after-hours work, capitalizing on customer urgency and limited competition during off-hours
- Invest in automated scheduling software to reduce idle time by 15-20% through optimized routing and improved crew utilization throughout the day
- Reduce callback rates through enhanced training and quality control, as callbacks typically cost 5-10% of total revenue in lost productivity and customer satisfaction
- Negotiate bulk purchasing agreements with suppliers to reduce material costs by 10-15%, particularly beneficial for companies completing 50+ jobs monthly
- Develop specialized service offerings like hydro-jetting or video inspections that command premium pricing due to specialized equipment and expertise requirements
This is one of the strategies explained in our plumber business plan.
How is a 20% profit margin calculated and what does it mean?
A 20% profit margin is calculated by dividing net profit by total revenue and multiplying by 100, representing the percentage of each dollar earned that remains as profit after all expenses.
For example, a plumbing company generating $1 million in annual revenue with $200,000 in net profit achieves a 20% margin ($200,000 Ă· $1,000,000 Ă— 100 = 20%). This calculation provides a standardized measure for comparing profitability across different company sizes and market conditions.
A 20% margin indicates exceptional operational efficiency and pricing power, reflecting strong cost controls, effective pricing strategies, and optimized business processes. Companies achieving this level typically have established customer bases, efficient operations, and premium service positioning in their markets.
This margin level provides substantial financial cushion for equipment replacement, business expansion, economic downturns, and unexpected expenses while generating sufficient return on investment to justify the risks and capital requirements of operating a plumbing business.
It's a key part of what we outline in the plumber business plan.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
Understanding plumbing business profitability requires careful analysis of revenue streams, cost structures, and operational efficiency across different service categories.
Successful plumbing entrepreneurs focus on optimizing margins through strategic pricing, operational improvements, and service diversification while maintaining high-quality customer service standards.
Sources
- Reddit - Average Plumbing Service Technician Company
- FieldPulse - Plumbing Business Owner Salary Profits and Revenue
- BookCleanGo - Plumbing Statistics
- HouseCall Pro - Plumbing Business Profitability
- PlumbSmart - How Much is a Plumber Service Call
- HomeGuide - Plumber Cost
- ServiceTitan - Plumbing Business Profitability
- Van Marcke Plumbing Supply - What is a Good Profit Margin for Plumbing
- PayScale - Apprentice Plumber Hourly Rate
- FinModelsLab - Plumber Operating Costs