How Much Do Roofing Company Owners Make?

Why the revenue mix decides the income

Roofing is four businesses sharing a name, a licence, and a set of ladders. Which one dominates a company's revenue tells you most of what you need to know about both the earnings and whether they repeat.

Retail residential replacement is the core of most sellable roofing companies. Homeowner pays, job runs $9,000 to $28,000, gross margin sits at 30–40%, and the whole model turns on marketing efficiency. The number that matters is not revenue but cost per sold job: total marketing and sales cost divided by jobs closed. Companies with a referral and past-customer base run $700–$1,200; companies buying shared leads run $2,000–$3,000 and keep a fraction of the margin they think they are earning.

Insurance and storm work is the category's great distortion. After a hail or wind event, a market's replacement demand can triple for twelve to twenty-four months. Companies that ride that wave post extraordinary P&Ls, and many are listed for sale on exactly those numbers. The revenue does not decay gracefully — when the claim deadlines pass it simply ends. Value the retail, service, and builder revenue that would exist in a normal year at a full multiple, and treat storm revenue as a windfall.

New construction and builder work is steadier in volume and thinner in margin, typically 18–28% gross. It bids annually against other roofers on price, pays on builder terms of 45 to 90 days, and concentrates revenue into a handful of accounts. A roofing company at 60% builder work has a working capital problem and a customer concentration problem at the same time.

Commercial service and maintenance — repairs, coatings, inspection contracts on flat roofs — is the most valuable revenue in the category and the rarest. It recurs, it carries 45–55% gross margin, it is scheduled rather than sold, and it feeds the replacement pipeline because the service tech is standing on the roof that will need replacing in three years. A company with $400,000 of contracted commercial maintenance is worth a materially higher multiple than one with $400,000 more in replacement revenue.

Earnings by mix and size

Bands below assume a stabilized business in a normal (non-storm) year, with market-rate sales and production management already deducted where the owner does not personally hold those roles.

• Owner-operator, one crew, $400K–$800K revenue. SDE of $70,000–$150,000, and the owner sells every job, orders every load of shingles, and is on some roofs. You are buying a licence, a truck, and a reputation; expect 1.5 to 2.5× SDE and understand the pipeline leaves with the seller.
• Retail replacement, $1.5M–$3M revenue. SDE of $180,000–$420,000. Two to four crews, one or two salespeople, a production coordinator. The most common sellable listing in the category and the one where a sales commission is most often missing from the P&L.
• Retail plus commercial service, $2M–$5M revenue. SDE of $280,000–$650,000, and the best risk-adjusted format. Contracted maintenance covers overhead through slow months and generates replacement leads at near-zero acquisition cost.
• Commercial-led, $3M–$8M revenue. SDE or adjusted EBITDA of $350,000–$900,000. Valued on EBITDA with a full management team costed in. Longer sales cycles, bonding requirements on larger jobs, and slower payment, but written contracts and large repeat accounts.
• Builder-led, $1.5M–$4M revenue. SDE of $120,000–$330,000 — visibly lower per dollar of revenue than retail at the same size. Thin margins and 60-day receivables mean this format needs real working capital, which the buyer supplies on day one.
• Storm-driven, any size. Do not band it. Ask for six years of revenue by market and by stream. If two of the last six years account for more than half of cumulative revenue, you are being shown a weather event, not a business.

The cost structure

As a share of gross revenue, a stabilized retail replacement roofing company runs roughly:

• Materials: 28–36%. Shingles, underlayment, flashing, and disposal. Manufacturer rebate programs and volume tiers move this line by two to four points, and those agreements do not always survive a change of ownership — confirm in writing.
• Installation labor or subcontracted crews: 22–32%. Most residential roofers sub the install to crews paid by the square. That keeps the cost variable, but it also means the crews are not yours and can be poached by the competitor down the street. In-house W-2 crews cost more and are worth more at sale.
• Sales commission: 6–10% of job value. The line most often absent from an owner-sold company's P&L. If the seller closes every job personally, deduct a real commission or a $75,000–$110,000 sales manager wage before you value anything.
• Marketing and lead acquisition: 4–12%. The widest-variance line and the one that decides whether the business compounds. Ask for spend by channel and jobs sold by channel, and compute cost per sold job for each.
• Workers' compensation and general liability: 4–9%. Roofing carries among the highest comp classification rates of any trade, and the experience modifier follows the operator. Get your own quote and the loss runs during diligence — do not assume the seller's rate.
• Vehicles, equipment, and fuel: 3–6%. Trucks, dump trailers, and conveyors. Lighter than most trades, which is part of why roofing is capital-efficient relative to HVAC or plumbing.
• Warranty reserve: 1–3%. Rarely on the P&L and always a real cost. Workmanship warranties of five to ten years transfer with the business in practice even when the contract is ambiguous. Request the open warranty list and any active claims or complaints.
• Office, software, and admin: 5–9%. CRM and estimating software, permit runners, and the person who schedules crews and chases the insurance adjuster.

Worked example: a $2.4M retail replacement company

Three subcontracted install crews, two salespeople, one production coordinator, one office administrator. Revenue $2.4 million — $1.9 million retail residential replacement, $340,000 builder work, $160,000 repairs and service. No storm event in the trailing three years, which is why this one is worth modelling.

Materials run $758,000 at 31.6%. Subcontracted install labor $624,000 at 26%. Sales commission $180,000 at 7.5%. Marketing $192,000 at 8%. Workers' compensation and general liability $144,000. Vehicles, equipment, and fuel $106,000. Office, software, and admin $170,000, including the coordinator and administrator. Total $2,174,000, leaving about $226,000.

The owner takes a $95,000 draw and runs roughly $14,000 of truck and phone through the business, both of which add back. But the owner also personally manages production and handles every escalated claim, so a $85,000 production-manager wage stays in. SDE lands near $250,000. At a 3.0× multiple — supportable given no storm dependency, in-place salespeople, and a real service line — that indicates a price around $750,000.

The lever here is cost per sold job, and it is computable from data the seller already has. At $192,000 of marketing across 143 sold jobs, this company is paying $1,343 to sell a roof. Break that out by channel and the picture usually splits sharply: past-customer and referral work often lands under $400 while purchased shared leads run past $2,400. If half the purchased-lead spend were redirected into a past-customer and neighbourhood-canvass program at the referral channel's efficiency, the same $192,000 would plausibly buy 165–175 jobs rather than 143. At this company's average job value and gross margin that is roughly $95,000–$130,000 of additional gross profit on unchanged spend, most of which falls to SDE and near $300,000 of enterprise value at the same multiple. Ask for spend and sold jobs by channel before you offer; a seller who cannot produce it has never known which half of the marketing works.

The earnings claims to discount

Roofing diligence is about separating durable demand from weather, and finding the sales and warranty costs the P&L has been absorbing invisibly.

• A storm year presented as the run rate. The most expensive mistake in this category. Get six years of revenue by market and stream, and value the non-storm baseline.
• The owner sells every job without a commission. Deduct 6–10% of job value or a $75,000–$110,000 sales manager wage. The pipeline is a person here more than in almost any other trade.
• Subcontracted crews assumed to be captive. Sub crews work for whoever schedules them. Meet the crew leads, ask how long they have run with the company, and find out whether any are tied by anything other than habit.
• Crews paid as 1099 when they function as employees. This understates labor and workers' compensation and hands you a reclassification liability. Reprice at true W-2 cost including comp at roofing classification rates.
• No warranty reserve. Workmanship warranties outlive the seller's ownership. Request the open warranty list, active claims, and any litigation, and hold back against them.
• Manufacturer certifications assumed to transfer. Contractor certifications and the rebate tier that comes with them are often granted to a company under conditions that a change of control triggers. Get the manufacturer's written position before closing, not the seller's.
• The contractor licence held personally by the seller. In most states the qualifying individual is a person, not the entity. Confirm what transfers, what you must obtain, and how long the licensing board takes — this alone can gate a closing by months.
• Builder concentration. One production builder at 30% of revenue that rebids annually is a risk to price explicitly, usually with a holdback tied to renewal.
• Work in progress and deposits at closing. Roofing carries real unbilled WIP and customer deposits on unstarted jobs. Agree in writing who owns which job and who funds the materials on them, or you will fund someone else's completed work.

Reconcile every revenue claim to the estimating and CRM 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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