I speak to dozens of roofers a week, and there’s one thing that some roofers understand really well, but others don’t:
When I speak on the phone with a roofer, I ask a lot of questions so that I can learn about his business.
But there’s one question that trips up certain roofers and not others. And the roofers it trips up are always the ones whose businesses are struggling the most.
Here’s the question:
What is the average profit per roof replacement?
The guys who don’t know usually say something like…
“Well I don’t know… All roofs are different… Some cost 6500. Some cost 18 thousand… It depends…”
The thing is, it doesn’t depend…
That’s precisely what the word “average” means.
Here’s how you figure it out:
Go through your paperwork or contracts or whatever and see how much you charged for the past 20 roofs you did. For each one, jot down about how much profit you made on each one. So, one of them might have been a 1000 dollar profit. Another might have been a 4 thousand dollar profit. Another might have been a 2 thousand dollar profit. You get the idea.
Once you’ve jotted down the profit for each roof, add that up. Then divide that number by 20 (or however many you actually did).
That’s your average profit.
That means that more than likely a new roofing job will make you that amount of money in profit. Some more, some less. But over time, that will be the average.
Why is this number important?
First of all, you need to know if you’re actually making money.
Getting 10k for a roof that cost you 9800 to do between labor, materials, etc… is not going to result in a healthy business.
Not only does it leave you next to nothing for groceries, but it also leaves you nothing for any sort of marketing and advertising.
You need to be making at least a 30% margin. For roofers that means your average profit is usually around 2500-4k per roof give or take.
So, let’s call it 3000 in profit per roof for the sake of this explanation.
That means if you do two roof replacements per month, you make 6k a month in profit, or 72k per year.
72k per year ain’t bad. But if you’re doing two roofs a month and you feel like you’re making more like 40 a year or less.. well, something is wrong. You are likely not making the profit you should be making.
But let’s say you are…
6k a month in profits.
Now, you have ambition… You want to make this year better than the last. You want to live bigger and more comfortably.
How many roofs do you want to do? 4? 8?
How would that change your life?
And finally, what will it take to achieve that?
Should you advertise? How will you know it’s worth it or even working?
Well, if you know how much profit you make per roof, then there are some other really important numbers that you can figure out if you begin advertising properly:
Your cost per lead, and your cost per acquisition or new paying customer.
If you know exactly how much it costs to get a lead, then you should be able to figure out how much it costs to get a new paying customer. All you have to do is do something similar to what you just did to figure out the average profit per roof replacement.
Once you start getting leads, maybe once you’ve gotten 30 or so, all you have to do is look back at how many of them you closed into paying customers. Take that number and divide it into the total cost for all the leads you got.
For instance, if over the course of a month you spend 1500 dollars on ad spend getting leads, and you closed 8 of them into paying customers, and your average paying customer is worth 3k in profit, you’ve made 24k in profit MINUS the 1500 you spent to get the leads. So, you’ve made 22,500.
That’s an amazing return on investment. You invested 1500 and that 1500 grew into 24,000. That’s a life-changing thing. Now, you could hire an extra crew, an office manager, etc… Double your ad spend and double your revenue and profits. That’s how people scale a business.
That’s the math that the successful roofers know like the back of their hands.
If this resonates with you, let’s talk about how you can use this math to your advantage and finally legitimize your business. Once these numbers are lined up, advertising works. Scaling works. Life totally changes.
Let’s talk: https://get.minyona.com/roofingleads2020