Plumber: average revenue, profit and margins

This article was written by our expert who is surveying the industry and constantly updating the business plan for a plumber.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the plumbing services market.

What is the typical annual revenue for plumbing businesses of different sizes?

Small plumbing businesses typically generate between $180,000 and $600,000 in annual revenue, while medium-sized companies earn $600,000 to $1.8 million, and large firms exceed $1.8 million, often reaching $6 million or more.

The size of your plumbing business directly impacts your revenue potential. Small operations with one to three plumbers handle mostly residential service calls and emergency repairs, which limits their capacity but keeps overhead low. Medium-sized companies with four to ten plumbers can take on both residential and small commercial projects, allowing them to diversify their revenue streams and achieve higher annual earnings.

Large plumbing firms with more than ten plumbers often secure commercial contracts, new construction projects, and maintenance agreements that generate consistent, high-value revenue. These businesses invest in fleet vehicles, specialized equipment, and administrative staff to support their operations. The revenue gap between small and large companies reflects differences in service capacity, customer base, and the ability to handle complex projects simultaneously.

Your location also plays a significant role in determining revenue potential. Plumbing businesses in urban areas with higher costs of living can charge premium rates, while those in rural or less affluent regions may need to keep prices competitive to attract customers.

What net profit margin should a plumbing business aim for?

Net profit margins in the plumbing industry typically range from 10% to 25%, with the healthiest and most efficient businesses targeting 15% to 20%.

Your net profit margin is what remains after all expenses—labor, materials, vehicles, insurance, marketing, and overhead—are deducted from your revenue. A 10% margin is common for newer or less efficient plumbing businesses that are still optimizing their operations. As you streamline scheduling, reduce waste, and improve pricing strategies, you can push your margin closer to 15% or even 20%.

Businesses that exceed 20% net profit margins usually have strong operational systems in place, loyal customer bases that reduce marketing costs, and higher-margin services like emergency calls or maintenance contracts. They also benefit from economies of scale, such as bulk purchasing of materials and efficient route planning for service calls.

Achieving a healthy net profit margin requires constant attention to cost control, pricing accuracy, and workforce productivity. Even small inefficiencies—like excessive fuel costs, overstaffing, or underpricing jobs—can erode your margins quickly in this competitive industry.

You'll find detailed market insights in our plumber business plan, updated every quarter.

What gross margin can plumbing businesses expect on their services?

Gross margins on plumbing services average 55% to 65% for residential work and 50% to 60% for commercial projects, with emergency services reaching 60% to 70% and maintenance contracts achieving 70% to 80%.

Gross margin represents the difference between what you charge for a job and the direct costs—primarily labor and materials—required to complete it. Residential plumbing jobs typically have higher gross margins because homeowners are less price-sensitive during emergencies and value convenience and speed. Commercial projects often involve competitive bidding and larger volumes of materials, which can compress margins but offer predictable, recurring revenue.

Emergency plumbing services command premium pricing because customers need immediate help, often outside regular business hours. This allows you to charge higher rates while your direct costs remain relatively stable. Maintenance contracts offer the highest gross margins because they involve predictable, routine work that requires less time and fewer materials per visit, and customers prepay for these services.

Managing your gross margin means pricing jobs accurately, minimizing material waste, and ensuring your plumbers work efficiently. Overestimating or underestimating material costs can quickly turn a profitable job into a break-even or losing one.

How much revenue does each plumber or employee typically generate?

Each plumber or employee in a plumbing business typically generates between $150,000 and $250,000 in annual revenue, depending on the efficiency of operations, local market rates, and the complexity of services offered.

Revenue per plumber is a critical metric for understanding your business's productivity. A plumber generating $150,000 annually is likely working in a region with lower service rates, handling simpler jobs, or experiencing downtime due to inefficient scheduling. In contrast, a plumber generating $250,000 or more is likely in a high-demand market, working on complex projects, or benefiting from optimized routing and scheduling systems that maximize billable hours.

The type of services your plumbers provide also affects this metric. Emergency repairs, commercial installations, and specialized work like gas line repairs or backflow prevention generate higher revenue per job compared to routine maintenance or small residential fixes. Investing in training and certifications can help your team handle higher-value work.

Tracking revenue per employee helps you identify underperforming areas in your business, whether it's inefficient scheduling, poor pricing, or lack of demand for certain services. This metric also guides hiring decisions—adding a new plumber makes sense only if you have enough demand to keep them productive.

What percentage of revenue comes from residential versus commercial clients?

In small plumbing companies, residential work typically accounts for about 70% of total revenue, while in large-scale firms, commercial projects make up roughly 60% of revenue.

The revenue split between residential and commercial clients depends heavily on the size and focus of your plumbing business. Small operations with limited staff and equipment naturally gravitate toward residential customers because these jobs are smaller, more frequent, and require less upfront capital. Homeowners need emergency repairs, routine maintenance, and small installation projects that a one- or two-person crew can handle efficiently.

As your business grows and you add more plumbers, vehicles, and specialized equipment, you can pursue commercial contracts. These include office buildings, retail spaces, restaurants, and new construction projects. Commercial work offers larger job values and longer-term contracts, but it also involves more complex bidding processes, stricter timelines, and often lower margins due to competitive pricing.

Emergency services typically represent 20% to 30% of revenue across all company sizes. These calls—burst pipes, clogged drains, water heater failures—are higher-margin because customers are willing to pay premium rates for immediate assistance. Balancing your revenue mix between residential, commercial, and emergency work helps stabilize cash flow and reduces dependency on any single customer segment.

What hourly rates or service fees do plumbers typically charge?

Plumbers in the U.S. typically charge between $45 and $200 per hour, with most homeowners paying around $90 per hour, while emergency or specialized services can reach $150 to $300 per hour.

This is one of the strategies explained in our plumber business plan.

What is the typical cost structure for plumbing businesses?

Labor costs represent the largest expense for plumbing businesses at 30% to 40% of revenue, followed by materials at 10% to 20%, vehicles at 8% to 12%, insurance at 4% to 8%, and marketing at 2% to 8%.

Understanding your cost structure is essential for pricing jobs correctly and maintaining profitability. Labor is always the biggest line item because skilled plumbers command competitive wages, and you also need to cover payroll taxes, workers' compensation, and benefits. Materials and supplies vary based on the types of jobs you handle—commercial projects require more inventory, while residential service calls may involve smaller, more frequent material purchases.

Vehicle costs include purchasing or leasing work trucks, fuel, maintenance, insurance, and equipment like pipe cutters, drain snakes, and inspection cameras. These expenses add up quickly, especially if your service area is large or fuel prices rise. Insurance and licensing costs cover general liability, professional liability, commercial auto insurance, and any required state or local licenses, all of which are non-negotiable for operating legally and protecting your business.

Marketing and advertising expenses—ranging from online ads to vehicle wraps to website maintenance—are critical for attracting new customers but must be balanced against the revenue they generate. Office or shop rental, utilities, accounting software, and other overhead costs typically consume another 6% to 10% of revenue. Miscellaneous expenses like tools, uniforms, and technology round out the cost structure at around 5% to 10%.

How much of revenue is spent on labor versus materials and overhead?

Labor costs typically consume 30% to 40% of total revenue in a plumbing business, materials account for 10% to 20%, and overhead and vehicle costs together absorb 15% to 25%.

Labor is the largest expense because plumbing is a skilled trade that requires trained, licensed professionals. Your labor costs include not just hourly wages or salaries but also payroll taxes, workers' compensation insurance, health benefits, and paid time off. The more efficient your scheduling and routing, the more billable hours each plumber can deliver, which improves your labor cost ratio.

Material costs vary significantly depending on the type of work you do. Service and repair jobs use less material per job compared to installations or remodels, which require larger quantities of pipes, fittings, fixtures, and specialty items. Buying materials in bulk, negotiating with suppliers, and minimizing waste are key strategies for keeping this expense under control.

Overhead includes everything else—vehicle expenses, insurance, marketing, office rent, utilities, and administrative salaries. These costs are relatively fixed in the short term, meaning they don't fluctuate much with the number of jobs you complete. Managing overhead effectively requires tracking every expense and finding opportunities to reduce waste without compromising service quality.

What is the average customer acquisition cost and how does it impact profitability?

The average customer acquisition cost for a plumbing business ranges from $60 to $250 per new client, depending on market competition and the effectiveness of local advertising efforts.

Customer acquisition cost (CAC) measures how much you spend on marketing and sales to gain one new customer. In less competitive or rural markets, you might acquire customers for $60 to $100 through local online directories, word-of-mouth referrals, and vehicle branding. In highly competitive urban markets, where you're bidding on Google Ads or running targeted social media campaigns, your CAC can easily reach $150 to $250 or more per new customer.

CAC directly impacts profitability because it reduces the net margin on each customer's first job. If your average job value is $300 and your CAC is $150, you're left with much less profit on that initial transaction. However, if that customer becomes a repeat client or refers others, the lifetime value (LTV) of that customer increases significantly, making the initial CAC worthwhile.

Balancing CAC with customer retention strategies—like follow-up maintenance reminders, loyalty programs, and excellent service—is critical for long-term profitability. Businesses that rely too heavily on paid advertising without building repeat business will struggle to maintain healthy margins over time.

We cover this exact topic in the plumber business plan.

What are the industry benchmarks for annual revenue and profit growth?

Plumbing businesses typically achieve annual revenue growth of 4% to 8%, while profit growth rates tend to mirror or slightly lag revenue gains, especially in mature markets.

Revenue growth in the plumbing industry is driven by factors like population growth, housing starts, aging infrastructure, and increased demand for repair and maintenance services. A 4% to 8% annual growth rate is healthy and sustainable, reflecting steady demand without overextending your resources or taking on unprofitable jobs just to boost top-line numbers.

Profit growth often lags revenue growth slightly because expanding your business requires upfront investments in vehicles, equipment, labor, and marketing. For example, hiring a new plumber might increase your revenue by 10%, but the associated costs—salary, training, vehicle, insurance—might limit profit growth to 6% or 7% in the first year.

Tracking both revenue and profit growth helps you understand whether your expansion efforts are sustainable or if you're simply growing revenue without improving profitability. Businesses in mature markets where competition is high may see slower growth rates, while those in rapidly developing areas or those adding new service lines can experience growth above 10% annually.

How do seasonal trends influence revenue fluctuations for plumbing companies?

Plumbing businesses experience revenue spikes during winter months due to frozen pipes and after major storms due to flooding and water damage, while summer months may see slower demand for emergency services.

• Winter: Cold weather causes pipes to freeze and burst, leading to a surge in emergency service calls. Homeowners and businesses need immediate repairs, which allows plumbing companies to charge premium rates for urgent work.
• Spring: Spring storms and heavy rainfall can lead to flooding, sewer backups, and drainage issues. This season also marks the start of home improvement projects, increasing demand for installations and remodels.
• Summer: Demand for emergency repairs typically slows in warmer months, but routine maintenance, outdoor plumbing installations, and commercial projects remain steady. This is a good time to focus on scheduled work and maintenance contracts.
• Fall: Homeowners prepare for winter by servicing water heaters, checking for leaks, and ensuring their plumbing systems are in good condition. Commercial clients may also schedule preventive maintenance before the busy holiday season.
• Year-Round: Emergency services remain a constant revenue driver regardless of season. Unexpected issues like clogged drains, broken water heaters, and leaking pipes occur year-round and provide consistent cash flow.

What external factors most impact average margins in the plumbing industry?

Profit margins in the plumbing industry are most heavily influenced by regulation, material costs, labor costs, competition, and economic cycles.

Regulation affects margins through licensing requirements, permit fees, and compliance costs. States and municipalities mandate specific certifications for plumbers, and businesses must invest in ongoing training and insurance to meet these standards. Stricter regulations can raise your operating costs, but they also limit competition by creating barriers to entry for unqualified operators.

Material costs have risen approximately 7% year-over-year, driven by inflation, supply chain disruptions, and increased demand for construction materials. Higher costs for pipes, fittings, fixtures, and specialty items directly reduce your gross margins unless you adjust your pricing accordingly. Building strong relationships with suppliers and purchasing materials in bulk can help mitigate these increases.

Labor costs have increased roughly 4% annually since 2019, reflecting wage inflation and the shortage of skilled tradespeople. To attract and retain quality plumbers, you must offer competitive wages and benefits, which squeezes margins unless you can pass these costs on to customers through higher service rates.

Competition varies by market but is intense in most urban areas. Price-sensitive customers—especially in residential work—may choose the lowest bidder, forcing you to keep rates competitive even when costs are rising. Differentiating your business through quality, reliability, and customer service helps you maintain pricing power.

Economic cycles also play a role. During construction booms, demand for commercial plumbing services rises, and businesses can command higher rates. In downturns, both residential and commercial customers become more price-conscious, and demand for discretionary projects like remodels or upgrades declines, putting pressure on margins.

Conclusion

The plumbing industry offers strong revenue and profit potential for entrepreneurs who understand the financial fundamentals and manage their operations efficiently.

Annual revenue varies widely based on business size, ranging from $180,000 for small operations to over $6 million for large firms. Net profit margins typically fall between 10% and 25%, with the healthiest businesses achieving 15% to 20% by controlling costs, pricing accurately, and optimizing workforce productivity. Gross margins on services average 55% to 65% for residential work and 50% to 60% for commercial projects, with emergency services and maintenance contracts delivering even higher returns.

Labor represents the largest expense at 30% to 40% of revenue, followed by materials, vehicles, insurance, and marketing. Each plumber should generate $150,000 to $250,000 annually, and maintaining this productivity requires efficient scheduling, proper training, and access to the right tools and equipment. The revenue mix between residential and commercial clients, along with emergency services, shapes your cash flow and profitability.

Customer acquisition costs, seasonal demand fluctuations, and external factors like material costs and competition all impact your bottom line. Building a profitable plumbing business requires constant attention to these variables, strategic pricing, and a focus on delivering excellent service that generates repeat business and referrals.

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.

Sources

1. Dojo Business - Average Profit Margin for Plumbing Company
2. GoDuo - What's a Good Profit Margin for a Plumbing Business
3. ServiceTitan - Plumbing Business Profitability
4. Modernize - Plumber Cost Per Hour
5. Business Plan Templates - Plumber Running Costs
6. Finturf - Plumbing Industry Trends
7. ServiceChannel - Facilities Spend Index
8. ServiceTitan - Plumbing Industry Statistics