How Much Do Plumbing Business Owners Make?

Why the revenue mix decides the income

Plumbing is four businesses that share a licence and a warehouse of fittings. Which one dominates the revenue tells you most of what you need to know about the earnings and whether a lender will fund the purchase.

Residential service and repair is the profitable core. Water heaters, leaks, fixture replacement, repipes, and emergency calls. Gross margin runs 55–70% because the customer buys a technician's time and judgement rather than materials, and demand is non-deferrable — a failed water heater gets replaced this week regardless of the economy. This is the revenue that earns the multiple, and it is the revenue a lender understands.

Drain and sewer is the highest-margin line in the trade and the most equipment-dependent. Hydro-jetting, camera inspection, and trenchless liner work carry excellent tickets, but a jetter and camera rig represent real capital and the liner work requires specific training. A company with an established sewer line has a genuine moat in its market; a company that subs it out is capturing a referral fee.

New construction and remodel plumbing is volume at thin margin — typically 20–30% gross and 4–9% net. It bids annually against other plumbers on price, pays on builder terms of 45 to 90 days, and concentrates revenue into a few general contractors. A plumbing company at 60% new construction has a working capital problem and a customer concentration problem simultaneously, and it will be valued accordingly.

Commercial service and backflow sits between the two. Scheduled backflow testing, grease interceptor service, and facility maintenance contracts recur annually, are booked rather than sold, and produce a compliance-driven customer list that renews itself. A company with 400 backflow devices under annual test has a real recurring asset that most listings do not price separately — ask for the device count.

Earnings by mix and size

Bands below assume a stabilized customer base with a market-rate service manager and dispatcher already deducted where the owner does not personally hold those roles.

• Owner-operator, one truck, $200K–$400K revenue. SDE of $70,000–$130,000, and the owner is in the crawlspace. You are buying a licence, a truck, and a phone number; expect 1 to 2× SDE and understand the customer relationships are personal.
• Two-to-three trucks, service-led, $500K–$1M revenue. SDE of $95,000–$210,000. The owner still dispatches, sells the large jobs, and covers a truck when someone is out. The most common listing in the category and the one where a dispatcher and service manager wage are most often missing.
• Residential service, five to nine trucks, $1.2M–$2.5M revenue. SDE of $190,000–$450,000. The best risk-adjusted format in the trade: non-deferrable demand, high gross margin, a dispatcher and manager in place, and enough scale that no single technician's departure is existential.
• Service plus drain and sewer, $1.5M–$3M revenue. SDE of $280,000–$600,000. Sewer work lifts the blended ticket materially. Confirm the jetter, camera, and liner equipment is owned and in condition, and that at least two technicians can run it — not just the owner.
• Commercial service and backflow, $1M–$4M revenue. SDE or adjusted EBITDA of $180,000–$700,000. Slower payment and annual bidding, offset by written contracts, compliance-driven recurrence, and large repeat accounts.
• New construction led, $1.5M–$4M revenue. SDE of $110,000–$300,000 — visibly lower per dollar of revenue than service at the same size. Needs real working capital, which the buyer funds on day one, and it trades at the bottom of the multiple range.

The cost structure

As a share of gross revenue, a stabilized residential service plumbing company runs roughly:

• Technician wages, payroll taxes, and workers' comp: 28–38%. Licensed journeyman and master plumbers are the binding constraint on growth in most markets, and their wages have moved faster than ticket prices in recent years. Check what the company pays against local market rate — underpaid technicians are a repricing event waiting for you.
• Materials and parts: 14–22% on service, 45–60% on new construction. This is the line that makes blended margin misleading. Ask for gross margin by revenue stream, not company-wide.
• Vehicles, fuel, and truck stock: 6–10%. Service vans, the inventory riding in them, and fuel. Truck stock is real working capital that is easy to miss in an asset purchase — agree explicitly whether it is included in the price.
• Marketing and lead generation: 4–9%. Local search, service directories, and past-customer reactivation. Companies with a decades-old customer database and strong review profile sit at the low end; companies buying every call sit at the high end and keep less of each job.
• Dispatch, CSR, and office: 6–10%. The dispatcher is the highest-leverage non-billable role in a plumbing company. A good one raises revenue per truck by double digits, and if the owner is doing it, that wage must be deducted before you value anything.
• Insurance and bonding: 3–6%. General liability, commercial auto on a van fleet, and where applicable a contractor bond. Water damage claims make plumbing liability coverage more expensive than the hour count would suggest.
• Licensing, permits, and continuing education: 0.5–2%. Master plumber licence renewal, backflow certifications, and per-permit fees. Confirm which licences attach to a person rather than the entity.
• Callback and warranty rework: 1–3%. Rarely a line item, always a real cost, and the best single proxy for technical quality. Ask for the callback rate; above 5% of jobs indicates a training problem you inherit.

Worked example: a $1.6M residential service company

Five service trucks, six technicians, one dispatcher, one office administrator. Revenue $1.6 million — $1.05 million residential service and repair, $310,000 drain and sewer, $240,000 remodel and small commercial. Average residential ticket $685; revenue per truck $320,000.

Technician wages with payroll taxes and workers' compensation come to $528,000 at 33%. Materials and parts $304,000 at 19% blended. Vehicles, fuel, and truck stock $128,000. Marketing $104,000 at 6.5%. Dispatch, CSR, and office $136,000. Insurance $72,000, licensing and permits $19,000, callbacks and warranty rework $26,000. Total $1,317,000, leaving about $283,000.

The owner takes a $110,000 draw and runs roughly $13,000 of truck and phone through the business, both of which add back. But the owner also dispatches every morning, quotes every repipe, and is the licensed master plumber of record, so a $95,000 service-manager wage stays in. SDE lands near $311,000. At a 3.2× multiple — supportable given the service mix, an in-place dispatcher, and a real sewer line — that indicates a price around $995,000, subject to the licence question below.

The lever here is revenue per truck, and it is measurable before you buy. At $320,000 per truck this company sits below the $380,000–$420,000 that a well-dispatched residential service truck reaches, and the gap is almost always drive time and unsold recommendations rather than effort. Two changes account for most of it: geographic zoning of the dispatch board, and a written process for presenting the repair-versus-replace option on water heaters over ten years old. Moving the fleet from $320,000 to $375,000 per truck is $275,000 of additional revenue on the same six technicians and the same five vans. At 60% service gross margin and near-zero incremental fixed cost, that is roughly $150,000 of gross profit, most of which falls to SDE — and close to $480,000 of enterprise value at the same multiple. Ask the seller for revenue per truck by month before you offer; one who has never tracked it is selling you the upside without knowing it exists.

The earnings claims to discount

Plumbing diligence is about separating the service business from the construction business, and finding out who actually holds the licence.

• The master plumber licence held by the seller personally. The most common deal-killer in this trade. In most states the qualifying individual is a person, and if that person is the seller, the business cannot legally operate the day they leave. Establish before you offer whether you will hold the licence, hire a qualifier, or retain the seller under a written agreement — and confirm the licensing board's position in writing rather than the seller's.
• Blended gross margin across service and construction. A company at 40% blended margin might be 62% service and 24% construction. Value the streams separately; only one of them earns a service multiple.
• The owner dispatches and sells without a wage. Deduct a $75,000–$110,000 service manager wage plus a dispatcher if the owner covers both. This is the most frequently missing cost in the category.
• Technician count that does not match the payroll register. Reconcile the trucks and the technicians against the payroll and the state licence lookup. Unlicensed technicians performing licensed work is a liability you inherit.
• Key technicians assumed to stay. In a market short of licensed plumbers, two departures can take a third of capacity. Meet them, learn what they are paid relative to market, and budget retention agreements into the purchase price.
• Truck stock and inventory unpriced. Five fully stocked service vans can hold $40,000–$70,000 of parts. Establish in writing whether it is included, and count it at closing.
• Deferred van replacement. Service vehicles wear on miles. Get model year, mileage, and remaining loan balance for each, and budget replacement on that rather than the seller's optimism — a P&L can look strong for two years purely by not replacing anything.
• Builder or GC concentration. One general contractor at 25% of revenue that rebids annually should be priced explicitly, usually with a holdback tied to renewal.
• Callbacks buried in labor. Rework does not appear as a line and shows up as technician hours. Ask for the callback rate and read recent reviews for the patterns that produce it.

Reconcile every revenue claim to the field service management system, then to bank deposits, then to three years of filed tax returns. Our due diligence checklist sets out which documents to request in what order, how to verify business financials covers the reconciliation itself, and red flags when buying a business lists the patterns that should end a conversation.

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