What goes into the cost of a roof?
Start with the measured squares from your takeoff or measurement report. Then list four cost groups: materials, crew labor, disposal and permits. Materials include shingles, underlayment, ice barrier, drip edge, starter, ridge cap, vents, nails and flashing. Labor is the loaded crew cost per square, including payroll taxes and insurance, not just the wage.
Add anything specific to the job: decking replacement priced per sheet, steep-slope or two-story charges, extra layers of tear-off and skylight or chimney flashing.
How do you set the price from your costs?
Overhead, sales cost and net profit all have to come out of the gap between cost and price. Pick a target gross margin that covers them, then divide direct cost by (1 - margin). This is margin pricing. A flat markup of the same percent leaves you with less than you planned, as the markup and margin guide explains.
The 40 percent margin below is an example, not a recommendation. Use the margin your own books say you need.
What does a worked example look like?
1418 Ridge Rd measures 16.1 squares. Prices below are example numbers. Use your own supplier and crew costs.
Shingles: 55 bundles x $38 = $2,090. Underlayment, ice barrier, drip edge, starter, ridge cap, vents and nails: $1,690. Materials total: $3,780.
Crew labor: 16.1 squares x $140 = $2,254. Dumpster and disposal: $450. Permit: $150.
Direct cost: $3,780 + $2,254 + $450 + $150 = $6,634.
Price at a 40 percent margin: $6,634 / 0.60 = $11,056.67, rounded to $11,057. Gross profit is $11,057 - $6,634 = $4,423. That is 40 percent of the price and a 66.7 percent markup on cost. Per square, the price is $11,057 / 16.1 = $686.77.
How do you handle surprises like rotted decking?
Put a line in the proposal for decking replacement at a stated price per sheet, billed only if it is found. Homeowners accept a clear unit price much more easily than a surprise change order. Photograph every replaced sheet and attach the photos to the job.
How often should you update your numbers?
Re-price materials from a current supplier quote on every estimate, because bundle and accessory prices move. Compare your estimated labor and disposal cost to actuals after each job and adjust the per-square figure. If you offer several options, price each one separately, as described in the good, better, best guide.
Step by step
- Measure the squares. Use a footprint calculation for a budget number and a measurement report before you fix the price.
- Price the materials. Build the material list from current supplier prices, including waste.
- Add labor, disposal and permits. Use your loaded crew cost per square, the actual dumpster cost and the permit fee for the address.
- Apply your target margin. Divide direct cost by (1 - margin) to get the price.
- State the exclusions. List decking, rotted fascia and similar items with a unit price so they are not a surprise.
Running a roofing company? See how Sunwell handles roofing jobs from first call to paid.
Sources: Vertigraph: How to Calculate Roofing Squares (waste and bundles); Groundplan: Markup vs Margin (price from target margin)