For plumbing business owners, improving business profitability and increasing profit margins can be challenging. So often, plumbing businesses work tirelessly only to realize they’re bringing home a minimal net profit. In some cases, plumbing contractors are losing money. This is a vulnerable spot to be in, considering the operating expenses associated with the profession.
Whether you’re running a small business or a commercial plumbing operation, there are effective strategies to boost your business’s cash flow. Find out where to start with increasing profitability in your plumbing company.
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Scheduling Optimization
Scheduling is crucial to operating a successful plumbing business. Without the correct technology, achieving an optimized system is incredibly difficult and potentially costing your business money.
Field service management (FSM) software streamlines the scheduling process for plumbing businesses by assigning jobs based on capability, availability, and priority. The scheduling software displays a detailed summary of the technician’s assignment, enabling them to work more efficiently and be available for new plumbing jobs. Optimizing workflows often means more billable hours, which translates into increased profitability.
Additionally, automated scheduling software eliminates the need for contractors to hire more personnel for admin tasks. Contractors can focus on hiring new plumbers to increase the number of jobs they can handle. In turn, revenue increases.
Digital Invoicing
Plumbing businesses that haven’t already done so should adopt a software solution that automates invoicing. Without the need for paper-based forms, this indispensable tool saves time by eliminating filing, scanning, printing, and other time-consuming process that delay invoice generation.
Plumbing companies that choose to implement digital invoicing software into their operations experience several benefits, including:
Customer Convenience
In addition to providing convenience for the company, digital invoicing also offers convenience for customers. It gives customers the ability to pay for their services online. Customers can complete online payments with their credit card, debit card, or other acceptable payment options. Not only does digital invoicing get plumbing businesses paid faster, but it also helps improve the overall customer experience.
Detailed Record Keeping
Digital invoicing is great for accurate record-keeping. The software can itemize services and keep track of bills that have been paid in full, as well as any outstanding balances. These capabilities make it much easier for plumbing businesses to manage their books and ensure that every service is paid for.
Professional Appearance
Potential customers want to work with a professional plumbing business. By adopting invoicing software, your business can create and send professional-looking invoices to your customers. Doing so establishes you as a reputable company, which is advantageous for attracting new customers and establishing loyalty among existing customers.
Reward Top Earners
Increase profit margins by incentivizing your plumbing professionals. Incentives can help motivate employees to complete more work in less time, which can increase profitability. Additionally, incentives can foster a better company culture and a positive work environment, which often increases productivity further.
Plumbing management software identifies top earners using a wide range of metrics. Plumbing managers and business owners can see how many jobs a service rep completed, the average time spent per job, and the revenue earned per individual technician. The software provides unbiased transparency and eliminates the concerns of favoritism among workers.
Monitor Overhead Costs
You can’t increase your profit margins without monitoring your overhead expenses. Staying on top of materials costs, rent, employee hourly rates, transportation expenses, and the other financial elements of running a plumbing business is vital to earning the highest gross profit.
Plumbing software offers a detailed look into the inner workings of your business. For instance, you can review day-to-day expenditures. This valuable insight helps you understand where the money is going and how to create solutions in a budget-friendly way.
Strengthen Professional Partnerships
Developing and maintaining partnerships with vendors is a key strategy for plumbing businesses wishing to increase profitability. An established and healthy relationship with a vendor is more likely to create an opportunity for discounts in dealings. Even the smallest of rebates earned can have a significant impact on a company’s bottom line.
Fair pricing is a key aspect of strengthening long-term strategic partners. Once relationships are solidified, plumbing firms need to maintain trading agreements to claim supplier rebates.
Marketing Strategies
Marketing is crucial for plumbing businesses to increase their profitability because it can generate new customers by enhancing brand awareness. The most successful marketing strategies use a combination of proven tactics, including:
- Using search engine optimization (SEO) to appear higher on a search engine’s results pages
- Distributing emails or newsletters to customers to highlight deals or other promotions
- Building an active voice on social media channels to communicate with your customer base
- Developing an optimized and informative website for homeowners and property managers to learn more about your business
- Creating digital advertisements that showcase services and other offerings
These tactics are great for nurturing your existing clientele while also catering to potential customers. Plumbing operations can ensure growth and plumbing business profitability by gaining new clients and retaining their business.
Expand Offerings
If your business only deals in a specialized service, you’re limiting your growth. Adding more services to your portfolio of offerings will generate more streams of income. For example, if your company currently only offers water heater maintenance, consider expanding to faucet inspections or emergency plumbing services. Making your business a one-stop solution for plumbing needs will drive profits and increase revenue.
Enhance Plumbing Business Profitability with Sera
The plumbing industry is often crowded, with many providers fighting over the same clientele. Plumbing companies must utilize available resources to increase their value and improve their opportunities for higher profits.
Sera provides plumbing businesses, and other home service businesses like HVAC companies and electricians, with software solutions that build their bottom lines. By effortlessly identifying pricing and efficiency gaps, business owners and managers can save time and money by reducing redundant tasks, all while increasing functionality and efficiency across the business.
Our plumbing software was developed from years of plumbing experience and expertise. It’s designed specifically for achieving plumbing business profitability. To learn more, schedule a demo today.
Improving Plumbing Business Profitability FAQs
What is a good net profit margin for a plumbing business?
A good net profit margin for a plumbing business should be between 10% and 20%, with 20% considered ideal. Many businesses, however, operate at lower margins, sometimes as low as 2% to 3%. In these instances, business efficiency should be prioritized to improve profitability.
What gross profit margin should a plumbing company aim for?
Plumbing companies should target a gross profit margin of 60% to 62% across their services to achieve a desirable net profit margin of 17% to 20%. For more information on calculating gross profit margins, check out our Profit Margin Calculator.
What steps should plumbing businesses take to assess their annual revenue and profit margins?
Businesses should conduct an annual review of their operational and financial KPIs, set revenue and profit goals, and determine lead requirements to meet those targets. It is equally important to analyze current business practices to determine tactical ways to increase efficiency, whether through cost savings or customer growth.
How should plumbing businesses track their KPIs effectively?
Ongoing tracking of KPIs can be facilitated through daily and monthly reports, using centralized software like Sera to easily access and analyze relevant data.
What best practices can plumbing businesses implement to optimize efficiency and empower their teams?
Implementing best practices involves streamlining operations, establishing clear performance goals, and leveraging technology like field service management software to enhance team capabilities and operational efficiency.
