Most roofing contractors price jobs using “the square method” they learned 20 years ago—then wonder why their margins are all over the place.
Here’s the problem: pricing by the square works for estimating, but it doesn’t account for job complexity, overhead, or the true cost of your labor. Two 30-square jobs can have completely different profit outcomes.
This guide will show you how to build a pricing system that delivers consistent, predictable profit margins—whether you’re doing insurance restoration, retail replacements, or commercial work.
The True Cost of a Roofing Job
Before you can price profitably, you need to understand your actual costs. Most roofers underestimate these significantly.
Material Costs
Materials are the easy part—but watch for hidden costs:
| Category | Typical Cost Range |
|---|---|
| Shingles (architectural) | $90-150/square |
| Underlayment | $15-30/square |
| Starter & ridge | $20-35/square |
| Flashing & vents | $50-200/job |
| Decking (if needed) | $75-100/square |
| Nails & fasteners | $8-15/square |
| Debris removal | $150-400/job |
Material markup: Most profitable roofing companies mark up materials 25-35%. This covers:
- Delivery and handling time
- Waste factor (typically 10-15%)
- Price fluctuation risk
- Inventory carrying costs
A job that needs $3,000 in materials should generate $3,750-4,050 in material revenue.
Labor Costs
This is where most roofers lose money. Your labor cost isn’t just what you pay crews.
Loaded labor rate calculation:
Base hourly wage: $25/hour
+ Workers' comp (15-30%): $5/hour
+ Payroll taxes (7.65%): $2/hour
+ Benefits (if offered): $3/hour
+ Training & downtime: $2/hour
= Loaded rate: $37/hour
For subcontractors, your “labor cost” is whatever you’re paying per square—but you still need to factor in your own supervision, callbacks, and warranty risk.
Overhead Allocation
Your overhead doesn’t disappear just because you’re busy. Every job needs to carry its share:
Monthly overhead examples:
- Office rent/utilities: $1,500
- Insurance (liability + commercial auto): $2,000
- Equipment payments/maintenance: $800
- Marketing: $1,500
- Admin/office staff: $3,500
- Owner salary draw: $8,000
- Software/technology: $400
Total: $17,700/month
If you complete 15 jobs per month, each job needs to absorb $1,180 in overhead—before you make any profit.
Building Your Pricing Formula
Here’s a systematic approach to pricing any roofing job:
Step 1: Calculate Base Cost
Materials (with 10% waste factor) +
Labor (loaded rate × estimated hours) +
Equipment/rental costs +
Permit fees +
Disposal costs
= Base Job Cost
Step 2: Add Overhead
Base Job Cost + Overhead Allocation = Break-Even Cost
Step 3: Apply Profit Margin
Break-Even Cost ÷ (1 - Target Profit Margin) = Selling Price
Example calculation:
- Materials: $4,500
- Labor (48 crew hours × $37): $1,776
- Equipment: $200
- Disposal: $350
- Permit: $150
- Base Cost: $6,976
- Overhead allocation: $1,180
- Break-Even: $8,156
- Target margin: 25%
- Selling Price: $8,156 ÷ 0.75 = $10,875
Pricing by Job Type
Different job types demand different pricing approaches.
Insurance Restoration Work
Insurance jobs follow O&P (overhead and profit) guidelines—typically 10% overhead + 10% profit on top of Xactimate pricing.
Key considerations:
- Supplementing adds 15-30% to initial estimates (if you know what you’re doing)
- Payment terms affect real margin (waiting 60+ days costs money)
- Depreciation collection success varies
- Marketing cost per lead is low (storm is your marketing)
Target margins: 20-35% after all supplements
Retail Replacements
Direct-to-consumer jobs without insurance—your highest potential margins but also highest sales cost.
Key considerations:
- Marketing cost per lead: $150-400
- Sales close rate: 25-40% (good salespeople)
- Customer expects financing options
- Referrals reduce acquisition cost significantly
Target margins: 30-45% (to cover sales/marketing costs)
Commercial Work
Typically lower margins, higher volume, steadier revenue.
Key considerations:
- Bid accuracy is critical (mistakes hurt more)
- Payment terms often net 30-60
- Bonding requirements tie up capital
- Maintenance agreements add recurring revenue
Target margins: 15-25% (volume makes up for lower margin)
Repairs
Small jobs with high overhead per dollar of revenue.
Key considerations:
- Minimum charge must cover truck roll + 2 hours labor
- Material pickup time often equals install time
- Callbacks on repairs kill profitability
- Repair customers become replacement customers
Minimum charge: $350-500 regardless of job size Target margins on repairs: 35-50%
Complexity Adjustments
Not every roof is the same. Here’s how to adjust for complexity:
Pitch Adjustments
| Pitch | Labor Multiplier |
|---|---|
| 4/12 - 6/12 | 1.0x (base) |
| 7/12 - 9/12 | 1.15-1.25x |
| 10/12 - 12/12 | 1.35-1.50x |
| 12/12+ | 1.60-2.0x |
Complexity Factors
Add percentage adjustments for:
- Multiple roof levels: +10-15%
- Limited access: +10-20%
- Extensive flashing work: +10-15%
- Cut-up roofs (many facets): +15-25%
- Occupied commercial properties: +10-15%
- Historic or specialty requirements: +20-30%
Storm Season Pricing
During hail season, you have pricing power—use it strategically:
Good approach:
- Raise prices 10-15% during peak storm season
- Be selective about which jobs you take
- Focus on supplementing for full value
Bad approach:
- Lowball to get volume, then cut corners
- Take every job that calls
- Skip supplements to close faster
The contractors who make money in storm season are methodical, not frantic.
Common Pricing Mistakes
Mistake 1: Ignoring True Labor Cost
You’re paying crews $200/square, so you think labor costs $200/square. But what about:
- Drive time to the job
- Material load time
- Crew supervision
- Callbacks and punch list items
- Paid time off / downtime
Real labor cost is 20-30% higher than payroll.
Mistake 2: Forgetting Overhead on Small Jobs
A $2,000 repair still needs to cover its share of your office, insurance, and truck. Pricing small jobs at “time + materials” loses money every time.
Mistake 3: Not Pricing for Seasonality
If you do 60% of your annual revenue in 4 months, those jobs need to carry overhead for the slower months too. Price storm season work to carry you through winter.
Mistake 4: Racing to the Bottom on Bids
The contractors who win every bid are usually pricing wrong. If you’re closing more than 40% of retail leads, you’re probably leaving money on the table.
Know Your Numbers
The best pricing strategy fails without accurate job costing. After every job, you should know:
- Actual material cost vs. estimated
- Actual labor hours vs. estimated
- Any unexpected costs (decking, flashing, etc.)
- Final profit margin on that specific job
Track this for 10-20 jobs and patterns emerge. You’ll find which job types are most profitable, which crews are most efficient, and where your estimates are off.
What Good Looks Like
Profitable roofing companies typically see:
| Metric | Target Range |
|---|---|
| Gross margin (before overhead) | 40-50% |
| Net profit margin | 15-25% |
| Labor cost as % of revenue | 25-35% |
| Material cost as % of revenue | 30-40% |
| Overhead as % of revenue | 15-20% |
| Close rate (retail) | 30-40% |
If your numbers are significantly off from these benchmarks, there’s opportunity to improve.
Getting Help
If calculating job costs and setting prices feels overwhelming, you’re not alone. Most roofing contractors are great at roofing—not accounting.
Consider:
- Our profit margin calculator helps you model different pricing scenarios
- A fractional COO can set up job costing systems that run automatically
- Monthly financial reviews catch pricing problems before they compound
The difference between a struggling roofing company and a thriving one often comes down to pricing discipline. Get this right, and everything else gets easier.
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