You can’t teach new tricks to an old ad guy. Or can you?
I spend most of my time inside Google Ads accounts, building lead pipelines for remodeling contractors. I think about cost per lead, conversion rates, and pipeline velocity. Profit margins on the contracting side aren’t usually my lane.
But when the NAHB Remodelers’ Cost of Doing Business Study dropped this month showing 6.3% average net profit margins for remodelers in 2024, the highest since 1996, I couldn’t stop reading. Because the data explains something I’ve seen in my own work for the last year.
The remodelers who get the best results from their marketing all have something in common: their operations are tight. And now NAHB just published the proof.
If you run a remodeling business and you’ve been focused on top-line growth, this data might shift your priorities. Here are three things I’m now telling every contractor I work with, plus one piece of common advice I’ve officially stopped giving.
Hint: The advice I dropped is the one that sounds the most obvious.
Why This Data Should Change How You Think About Growth
I work with remodeling contractors at every stage. Some are doing $500K a year. Some are north of $3 million. The ones who scale profitably all share the same characteristic: they know their numbers cold.
One contractor I started working with last year was generating strong lead volume through Google Ads, but his close rate was sitting around 18%. When we dug in, the issue traced back to scoping. His estimates were coming in late, missing details, and losing trust before the consultation even happened. He tightened his estimating process, got his close rate up to 31%, and his revenue grew without spending a single extra dollar on ads.
The NAHB data tells the same story at scale. The remodelers posting record margins got there through operational tightening, and the results compound.
1. Push Your Trade Costs Below 30% of Revenue
This is the single most important number in the entire NAHB study.
Trade contractor costs dropped from 36% of revenue in 2021 to 30% in 2024. That six-point shift is the primary driver of the margin improvement industry-wide.
Gross profit hit 29.9%, up five full points from the 24.9% record low in 2021.
The remodelers in this study got there by scoping tighter, managing subs more carefully, and keeping change orders under control.
If you want to know where your margin stands, pull your trade costs as a share of revenue for the last 12 months. Above 30%? That’s your biggest lever right now.
2. Build Systems During the Hard Times and Keep Them
The 2020-2022 supply chain chaos was brutal. Material costs went sideways, subs were impossible to lock down, and every timeline blew up.
The remodelers now posting record margins built systems during that period. Tighter estimating. Better project management. More structured sub agreements. When things stabilized, they kept the discipline in place.
Average business revenue in the study was $2.7 million. Total assets rose 34% compared to 2021. Equity share of balance sheets went from 33% in 2015 to 50% in 2024.
The gap between disciplined operators and everyone else keeps growing. And the contractors on the right side of that gap built their systems when conditions forced them to.
3. Fix Your Margins Before You Scale Your Marketing
When your business keeps 6% of every dollar instead of 3%, your tolerance for investing in lead generation changes completely.
A remodeler doing $2.7 million at a 3% margin keeps $81,000 a year. At 6.3%, that same revenue produces $170,100. The second remodeler can comfortably invest $3,000 to $5,000 per month in digital marketing and know the cost per lead pencils out.
If you’ve been hesitant to invest in consistent lead generation, check your margins first. The remodelers in this study locked down their operations before they scaled. That’s the order that works.
Bonus: I’ve Stopped Telling Contractors to “Just Raise Your Prices”
Every time a profit margin study comes out, the first take is always “charge more.” I used to echo that advice. I’ve stopped.
The NAHB data made it clear. The biggest single lever was a six-point reduction in trade contractor costs. Pricing didn’t drive the improvement. Cost control did.
If you raise your prices 10% and your trade costs are still sitting at 36% of revenue, you’re working with the same margins on a slightly bigger number. The leaks don’t go away just because the bucket is larger.
I’ve shifted my advice. When a contractor tells me they want better margins, the first conversation is about scoping, sub management, and estimating accuracy. Not pricing.
Then, once the operations are locked in, we focus on building a pipeline of leads that close at a healthy rate.
The contractors who pair operational discipline with consistent marketing are building real equity in their businesses. The NAHB data confirms that at scale. And it’s changed how I advise every remodeler I work with.
What’s the first number you’re going to check in your business this week? Let me know in the comments.
Source: NAHB Remodelers’ Cost of Doing Business Study 2026 (FY2024 financials, nationwide survey of professional residential remodelers)