Increased material prices, labor shortages and rising labor and overhead costs are among the top concerns for roofing contractors heading into 2025, according to a new survey from ServiceTitan.

The software platform company released its second annual Exterior Service Report, which surveyed more than 1,000 contractors around the United States, primarily in the roofing industry, as well as gutters, siding and windows. ServiceTitan limited its survey to those reporting more than $1 million in annual revenue.

According to the survey, contractors in 2025 are focusing on revenue growth, with 76% listing it as their top priority. Another 50% said they’re looking to increase margins, while 48% said they want to improve cash flow.

However, contractors expect to face headwinds in the form of rising costs for materials and labor. Of those surveyed, 64% listed increased material prices as the top risk to their business. This is followed by a labor shortage at 58%. Just over half (53%) said labor/overhead costs will hamper their business.

“Economic uncertainty continues to test the agility of the exterior services industry, while reaffirming its resilience,” said Chris Petros, general manager of residential at ServiceTitan. “Businesses wanting to improve revenue growth and profitability in this environment can’t assume what's worked in the past will carry their business forward; instead, they need to equip themselves with the tools necessary to handle whatever new challenges emerge.”

The survey was conducted from Jan. 3 to 22, 2025, well before the economic chaos that unfolded earlier this month with President Donald Trump implementing and subsequently pausing tariff increases on U.S. trading partners.

Addressing the Issues

While three-fourths of those surveyed said they’re looking to grow revenue, they aren’t as optimistic about it happening this year. Just over half (56%) said they expect revenue growth in 2025, while 36% said revenue will likely remain the same.

“Increasing revenue, while a popular growth strategy in roofing, isn’t always the best option when it requires increasing headcount. We are starting to see a shift toward a profit-focused approach over sheer volume,” said Sue Drummond, roofing industry advisor at ServiceTitan.

The strategies to improve revenue and margins are varied. For better margins, 62% of contractors are pursuing optimizing overhead costs to increase per-job profits. Another 56% are looking to optimize labor costs while 37% are turning to improving marketing efficiencies to bolster their numbers.

Contractors are divided on whether to increase prices. About 35% said they won’t increase pricing whatsoever, while 31% said they’ll increase prices by 4% to 5%.

Others are seeking to diversify in the hopes of creating new revenue sources. Around 40% said they’re branching out into siding, while 22% are exploring the insurance side of roofing. Just under a quarter (23%) are looking into metal roofing, while both doors and solar were at 11% each.

In terms of operations, 35% said they plan on expanding into the commercial sector, while 21% are looking to open a new location. Just 6% are interested in acquiring another business.

Only 15% are looking to implement good-better-best options for customers, the survey shows, while 14% are focused on offering financing to customers.

Factoring in Private Equity 

Thanks to private equity’s continued interest in roofing, the focus in the industry is accelerating in terms of adopting scalable best practices, using technology and measuring KPIs. As a result, many contractors are looking to increase margins. According to the survey, they are focused on costs rather than internal operations.

“Private equity has the ability to create a firestorm of growth within the industry by implementing some basic systems and processes,” said Michael Ippoliti, roofing industry advisor at ServiceTitan.

The survey shows that only 9% view private equity as an opportunity. The report indicates contractors are more likely to attract private equity by generating $10 to $15 million in annual revenue while operating across multiple locations.

Private equity also seeks out companies that have their data and accounting organized. About 20% of respondents said reporting and analytics are important for their company.

“Roofers have to track everything now in order to stay competitive, and that’s because of the private equity money,” said Drummond.

Turning to Technology

To reduce costs, contractors are also seeking to make their inventory management more efficient (21%) and adopt technology.

Of those surveyed, 31% said they’re looking to modernize or digitize the customer experience. Similarly, 52% said that a key opportunity is customizing and personalizing the customer experience, followed by digital transformation and online presence, which 42% noted as an opportunity for the next two years.

About 18% of contractors said they are turning to technology as a solution to increase profits per job. To get results, 37% of respondents identified “comprehensive features tailored to the industry” as a key consideration, the highest rate in the survey.

Automation capabilities (36%) and ease of use for the team (32%) were the next-most-valued aspects of software by contractors in the survey. Integrations with other software made the list for 20% of contractors.

"Real-time insights to help spot issues and opportunities, tools that allow for business changes to be implemented seamlessly and at scale, and a continued focus on a customer-first approach, should work in concert to give businesses a competitive advantage and drive continued improvement in business outcomes,” said Petros.