What is the profit margin of a home renovation business? Below is a clear, numbers-first FAQ for new home renovation owners in October 2025, based on current industry benchmarks.
Home renovation businesses typically bill $10,000 to $100,000+ per project and land 5–10% net profit after all costs. Cash flow is steadier with many smaller jobs and disciplined cost control.
Gross margins usually sit around 24–25%, with kitchens and bathrooms at the higher end and roofing/exteriors at the lower end. Profitability hinges on tight labor scheduling, realistic material markups, and overhead under control.
If you want to dig deeper and learn more, you can download our business plan for a home renovation company. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our home renovation financial forecast.
Most home renovation firms generate $400,000 to $2,000,000+ in annual revenue, run at ~24–25% gross margin, and finish with 5–10% net profit when overhead is contained. Margins improve significantly once revenue passes $1–2 million due to purchasing power and overhead dilution.
Kitchens and bathrooms drive higher average tickets and margins, while roofing and basic finishes are more price-competitive. Consistent lead flow, precise estimating, and disciplined job costing protect profits.
| Metric | Typical Range | What It Means for Profit |
|---|---|---|
| Revenue per project | $10k–$100k+ | Higher-ticket projects (kitchens, full-home) lift gross dollars but increase scheduling and cash-flow risk. |
| Revenue per year | $400k–$2M+ | Scale above $1–2M often unlocks better buying terms and steadier subcontractor capacity. |
| Gross margin | ~24–25% | Covers labor, subs, and materials; must also pay overhead before net profit remains. |
| Net profit margin | 5–10% (can reach 12–18%) | Depends on mix (kitchen/bath higher), overhead control, and change-order discipline. |
| Labor share of cost | 30–50% of project | Optimized scheduling and scope clarity prevent margin erosion. |
| Materials share of cost | 25–45% of project | Use markups (10–20%) and escalation clauses to protect margins from price swings. |
| Overhead | ~5–10% of revenue | Rent, insurance, marketing, admin; lower overhead directly raises net margin. |
What revenue can a home renovation business make per project, week, month, and year?
Most home renovation projects bill between $10,000 and $100,000+ each, adding up to $400,000 to $2,000,000+ per year.
Weekly revenue ranges from $2,000 to $25,000 depending on project size and throughput; monthly totals land between $10,000 and $100,000. Annual revenue for owner-operators typically sits at $400,000–$1,000,000, while larger firms can exceed $2,000,000.
Revenue dispersion increases with a few large jobs, while a queue of smaller jobs creates steadier cash inflows and faster billing cycles.
Target a balanced mix: a reliable base of smaller finish jobs plus 1–2 higher-ticket kitchens/baths per month stabilizes both cash flow and profit.
You’ll find detailed market insights in our home renovation business plan, updated every quarter.
How many projects can you complete per day, week, month, and year—and how does this affect consistency?
Home renovation businesses usually complete 1–3 projects per week, translating to 4–12 per month and 40–50+ per year.
Daily completion rates are near zero because projects span days to weeks; consistency improves when you stagger start dates and maintain a pipeline of small jobs. A diversified job mix reduces idle time between milestones and inspections.
Lock in predictable lead sources so one delayed large job does not stall the entire month’s cash receipts.
Use rolling schedules with overlapping crews to minimize dead days and protect weekly billing targets.
What services and products drive revenue in home renovation?
Kitchen and bathroom remodels are the biggest revenue drivers, with full-home projects contributing the highest absolute dollars.
Flooring, drywall, and painting provide frequent, smaller tickets that smooth revenue across weeks; change orders and upgrades lift margins without adding heavy logistics. Upsells like custom cabinetry, smart home features, and efficiency improvements expand average project value.
Maintain a catalog of standardized “good-better-best” upgrade options that can be priced and approved quickly.
This is one of the strategies explained in our home renovation business plan.
How much does labor cost per project, day, week, month, and year—and how does this impact margins?
Labor typically accounts for 30–50% of a home renovation project’s cost, ranging from ~$3,000 on small jobs to $50,000+ on major renovations.
Per worker, daily labor runs ~$200–$700; per crew or project manager, weekly labor commonly totals $1,000–$3,500. Annual labor for a mid-size firm often reaches $150,000–$600,000+, which directly sets the ceiling for gross margin.
Underbid labor and your gross margin collapses; overbid and you lose deals—measure actual hours by task and update your estimating templates monthly.
Adopt job-costing software and track variance vs. estimate weekly to fix slippage early.
What are material costs per unit, per project, and at scale—and how do price swings affect profit?
Materials usually represent 25–45% of a home renovation project, or roughly $2,500–$45,000 per job depending on scope.
Most firms apply a 10–20% materials markup; bulk purchasing and negotiated terms reduce unit prices at scale. Commodity volatility (lumber, copper, drywall, flooring) can erase profits unless bids include escalation clauses and time-limited pricing.
Build supplier relationships that lock in tiers and rebates; refresh price lists before every estimate batch.
We cover this exact topic in the home renovation business plan.
What are the fixed overhead expenses (monthly and yearly)?
Typical overhead in home renovation runs ~5–10% of annual revenue.
Monthly ranges: rent $1,000–$5,000, utilities $500–$1,500, insurance $500–$2,000, licensing $250–$1,000, and marketing $500–$5,000 depending on scale and growth goals. Yearly, this totals roughly $20,000–$150,000+.
Keep overhead lean and variable where possible; rising overhead directly compresses net margins even when gross margins are stable.
Review marketing ROI quarterly and renegotiate insurance and telecom annually to protect profit.
How much revenue goes to subcontractors, suppliers, and other partners?
Expect 25–45% of project costs to go to subcontractors and 25–40% to suppliers, with 5–15% for permitting and design partners.
Labor-intensive scopes (tile, electrical, plumbing) lean higher on subcontractor percentages; material-heavy scopes (flooring, cabinetry) lift supplier shares. Full-service packages bundle these costs but should preserve a consistent gross margin target by scope.
Create scope-specific target cost ratios so estimators can see when a bid is off the rails before submission.
It’s a key part of what we outline in the home renovation business plan.
What is the gross margin by service (kitchens, bathrooms, flooring, roofing)?
Gross margin in home renovation averages ~24–25%, with service-specific variation.
Kitchens typically deliver ~20–28%, bathrooms ~18–25%, flooring/painting ~15–22%, and roofing ~10–18% due to price competition and weather risk. Aim higher margins on complex, design-led scopes that reward coordination skill.
Continuously measure margin by service line and steer sales toward the strongest performers.
Get expert guidance and actionable steps inside our home renovation business plan.
What does a margin percentage mean in practice (e.g., from $100, $1,000, $10,000 revenue)?
At a 25% gross margin, $100 of revenue leaves $25 after direct costs; at $1,000 it leaves $250; at $10,000 it leaves $2,500.
After overhead and admin, net margins of 5–10% mean $10,000 of revenue produces $500–$1,000 net profit. This translation clarifies why accurate estimating and controlled overhead are critical.
Use this math in sales conversations to explain price discipline and avoid unprofitable discounts.
Standardize a quoting sheet that shows gross and net impact of every change order.
At what scale do economies of scale improve profit margins?
Margins in home renovation tend to improve once annual revenue passes $1–2 million.
Scale unlocks bulk discounts, steadier subcontractor access, and more efficient utilization of project managers and equipment. Larger firms often realize gross margins up to ~28% versus 18–22% for small operators.
Build toward scale with repeatable scopes and vendor programs rather than adding overhead prematurely.
Stage growth targets (e.g., $750k → $1.5M → $2.5M) with procurement milestones at each step.
What strategies reliably reduce costs and lift margins without lowering quality?
- Negotiate tiered pricing and rebates with core suppliers; renew agreements every 6–12 months.
- Schedule labor tightly with two-week lookaheads to eliminate idle time between trades.
- Use fixed-price contracts with time-limited material quotes and escalation clauses.
- Standardize high-margin upgrades (cabinetry inserts, lighting packages, water-saving fixtures).
- Adopt project management and job-costing software to catch variance early.
What is the typical net profit margin—and how does it vary by service, project size, and annual revenue?
Net profit in home renovation usually lands at 5–10% of revenue, with well-run, specialized firms reaching 12–18%.
Kitchen and bath work tends toward the higher end due to design value and change-order opportunity; exterior/roofing often runs lower given commodity pricing and weather risk. As revenue rises and overhead is diluted, net margin generally improves.
Track net by service line and job size; reprice or retire consistently underperforming scopes.
This is one of the many elements we break down in the home renovation business plan.
Detailed revenue benchmarks by timeframe (table)
Here is a compact view of revenue expectations for home renovation by timeframe.
Use these bands to set monthly quotas and decide your mix of small vs. large jobs.
| Timeframe | Typical Revenue (USD) | Notes for Home Renovation Owners |
|---|---|---|
| Per project | $10,000–$100,000+ | Small finishes at the low end; full kitchens, baths, and whole-home at the high end. |
| Per week | $2,000–$25,000 | Driven by stage-of-work mix; inspections and lead times create weekly swings. |
| Per month | $10,000–$100,000 | Smoother with multiple smaller jobs in parallel; bill promptly at milestones. |
| Per year (solo) | $400,000–$1,000,000 | Owner-led firms with a small crew/sub bench. |
| Per year (growing) | $1,000,000–$2,000,000 | More predictable cash flow; start to access better supplier terms. |
| Per year (established) | $2,000,000+ | Scale supports 25%+ gross margins with strong controls and vendor programs. |
| Cash-flow tip | — | Balance 1–2 high-ticket remodels with frequent small finish jobs each month. |
Throughput: projects completed by timeframe (table)
Completion cadence in home renovation is about orchestration across trades.
Use these norms to plan crews and smooth billings.
| Timeframe | Typical Completions | Cash-Flow and Scheduling Impact |
|---|---|---|
| Per day | 0–0.2 | Projects span days/weeks; focus on daily progress and inspections. |
| Per week | 1–3 | Stagger starts to avoid bottlenecks; keep subs booked in advance. |
| Per month | 4–12 | Mix small jobs with 1–2 large remodels to stabilize invoices. |
| Per year | 40–50+ | More small jobs means steadier receipts; fewer large jobs means lumpier cash. |
| Inspection windows | — | Build float for permits and city timelines to avoid idle labor. |
| Change orders | — | Capture promptly; they are profitable but can delay schedule if unmanaged. |
| Crew utilization | — | Weekly lookaheads keep utilization high and protect margins. |
Service mix and revenue contribution (table)
Kitchens and baths carry higher tickets and solid margins, while finishes smooth weekly cash flow.
Use this mix to set sales targets and assign specialist subs.
| Service Category | Typical Ticket | Contribution & Margin Notes |
|---|---|---|
| Kitchen remodels | ~$38,000 | Top revenue driver; design complexity supports 20–28% gross margin. |
| Bathroom upgrades | ~$18,000 | Strong demand; 18–25% margins with efficient plumbing/tile subs. |
| Basement/full-home | $70,000+ | Largest absolute dollars; schedule risk requires disciplined PM. |
| Flooring/drywall/paint | ~$7,000 | High frequency; 15–22% margins; helps smooth monthly billing. |
| Roofing | Wide | Price-competitive; 10–18% margins; weather and lead times matter. |
| Change orders | Varies | High incremental margin; standardize options and approvals. |
| Smart/energy upgrades | Varies | Profitable add-ons; pair with kitchens/baths to raise tickets. |
Gross margin by service (table)
Margins vary by complexity and competition in home renovation.
Set service-specific targets and review job-cost reports monthly.
| Service | Gross Margin % | Operational Implications |
|---|---|---|
| Kitchen remodels | 20–28% | Design-led; profit depends on cabinetry, counters, and coordination. |
| Bathroom upgrades | 18–25% | Plumbing/tile efficiency is critical; control lead times on fixtures. |
| Flooring/painting | 15–22% | Standardize crews and finishes to keep setup time low. |
| Roofing | 10–18% | Bid with material volatility in mind; weather buffers reduce slippage. |
| Whole-home | Varies (18–26%) | High absolute gross profit; requires strong PM to avoid delays. |
| Change orders | High incremental | Fast approvals and clear pricing capture value without heavy overhead. |
| Smart/energy add-ons | Above average | Bundle into core scopes to raise margin without extra mobilizations. |
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.
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Sources
- Dojo Business — Home Renovation Profitability
- Sheets Market — Home Renovation Revenues & Costs (2025)
- BuildBook — Million-Dollar Remodeler
- Billdr — Contractor Earnings
- Fortune Business Insights — Home Renovation Market
- Grand View Research — Residential Remodeling
- Leap — Average Remodeling Margins
- InvoiceFly — Home Renovation Business
- GoDuo — Average Profit Margin for Remodeling
- TBRC — Home Improvement Services Report
-Home Renovation Business Plan: Step-by-Step Guide
-How Much Does It Cost to Start a Remodeling Business?
-Home Renovation: Customer Segments That Buy
-Hidden Costs in Home Renovation: What to Expect
-Estimating Labor Costs in Home Renovation
-How to Predict Profit Margins in Home Renovation
-Break-Even Analysis for Renovation Contractors
-Pricing Strategies for Home Renovation Services
-Key Statistics: Remodeling Industry
-Is a Home Renovation Business Profitable?