The Economics of a $20,000 Remodeling Job
If you know your true cost per booked job, every marketing argument gets shorter.
Five numbers decide whether your marketing is profitable. Most owners can name two of them.
Work backwards, always
Start at the job, not the channel. A $20,000 remodel at a 35 percent gross margin contributes $7,000. That contribution is the entire budget universe for acquiring the job, and everything upstream has to fit inside it.
If your target is to spend no more than 10 percent of contribution on acquisition, you can afford $700 per booked job. Every question about channels, agencies and lead prices is now answerable.
The five numbers
Job value, gross margin, close rate, estimate rate and inquiry rate. That is the whole model. Everything else is diagnostic detail for the people running the channels.
A worked example
- 011,000 inquiries per year at $57 each = $57,000 spend
- 0230% qualify = 300 qualified opportunities
- 0326% of those receive an estimate = 78 estimates
- 0436% close = 28 jobs
- 0528 jobs × $20,000 = $560,000 revenue, at $2,036 cost per booked job
Where the model breaks in real life
In that example, cost per booked job is nearly three times the $700 ceiling. Owners usually respond by demanding cheaper leads, which is the least effective lever available.
Move the close rate from 36 to 45 percent and cost per job drops to roughly $1,630 with no additional spend. Move the estimate rate from 26 to 34 percent and it drops further. The conversion steps are where the leverage lives, because they multiply.
Cheaper traffic is the weakest lever in the model. Conversion is the strongest.
Margin, not revenue, decides the budget
Two service lines with identical revenue can have wildly different contribution. Budget should follow margin and capacity, which is why a single blended marketing number tends to fund the wrong work.
Split the model by service line. It is common to find that the line everybody talks about is subsidizing the line that actually pays the bills.
Capacity is part of the arithmetic
A model that produces more booked jobs than crews can deliver does not produce revenue; it produces cancellations, slipped schedules and bad reviews that cost you for years.
Set the pipeline target against crew capacity for the coming quarter, and treat the excess as a hiring signal rather than a marketing win.
The short version
- Budget from contribution margin per job, not a percentage of revenue
- Five numbers — job value, margin, close, estimate and inquiry rates — run the model
- Conversion improvements beat cheaper traffic, because they multiply
- Model by service line; blended numbers fund the wrong work
- Cap the pipeline target at crew capacity
Wonder what your marketing looks like under the microscope?