Is Water Restoration a Profitable Business?

May 15

Short answer: yes—if it's run with tight financial visibility and strategic decision-making.

Water restoration is one of the most consistently in-demand services in the home services industry. Whether it's due to broken pipes, storm damage, or appliance failure, the need for mitigation and cleanup isn't seasonal—and that means reliable revenue potential. But profit doesn't automatically follow revenue. To run a profitable restoration company, you need a clear handle on costs, efficient labor, and strong cash flow management.

What Drives Profit in Water Restoration?

Let’s break it down:

1. Job Volume and Average Job Size

You can’t fix what doesn’t get called in. High-performing companies track both number of jobs and average revenue per job—then focus marketing and referral efforts on raising both.

Benchmark: In our Kiwi Cash Flow benchmarking group, top-performing companies report $5,500–$8,700 average revenue per job with consistent pipeline volume.

2. Cost of Goods Sold (COGS)

This includes materials, subcontractors, and equipment costs. Profitability starts with keeping these costs aligned with job revenue.

Target: COGS should generally stay under 40% of revenue. If you're higher, it's time to evaluate vendor pricing, material waste, or scope creep.

3. Labor Efficiency

Labor is often your second-largest expense. Crews that are underutilized or not billed accurately to jobs can quietly kill profits.

Target: Labor should stay around 30% of revenue or lower. High labor percentages often point to inefficiencies or underpricing. (This is included in your Cost Of Goods Sold total.)

4. Overhead Control

Rent, insurance, marketing, software, and truck expenses fall here. These are necessary costs—but without regular review, they bloat over time.

Target: Keep overhead to 40% of revenue or less to protect your margins.

5. Net Profit

After paying for materials, labor, and overhead, what's left is your profit. For a healthy water restoration business, this should be at least 15%–20% of total revenue.

The Profit Is There—But You Have to Measure It

If you're not tracking your financials closely, it’s easy to look busy without being profitable. That’s where strategic financial management makes the difference. Companies that review job profitability, watch their KPIs, and forecast cash flow stay ahead of the curve—and out of the red.

Curious if your restoration business is as profitable as it could be?
We help contractors track the numbers that matter most—without the financial fog.

👉 Click here to schedule a call and let’s walk through your numbers together.

Michele Gray