7 Ways to increase construction business profits

TLDR

Construction business growth does not automatically lead to higher profits. Improving margins, tracking labor and overhead, increasing productivity, and using better estimating software like Bolster can significantly increase profitability without increasing workload.

Why growing construction businesses often struggle with profits

Starting a construction business requires long hours, discipline, and constant problem solving. When growth happens, many contractors assume profits will rise naturally. In reality, growth often exposes outdated pricing strategies, inefficient processes, and under tracked costs.

As businesses scale, competing on price becomes harder to sustain. Labor, overhead, and material costs change over time, and without adjusting your approach, profits can quietly disappear. The good news is that small, strategic changes can dramatically improve profitability.

1. Increase your margins

Increasing margins is one of the fastest ways to improve construction business profits. While raising prices can feel uncomfortable, even a modest margin increase can have a major impact on your bottom line.

Higher margins mean you earn more per job without increasing workload. When pricing reflects your true costs and value, your business becomes easier to sustain and grow.

2. Double check your labor and overhead costs

Labor and overhead costs should be recalculated at least once a year. Even if nothing appears to have changed, verifying your numbers ensures every job covers its true cost.

Split direct labor costs from overhead costs since they change independently. Calculate total monthly labor costs during a busy period, including wages, benefits, and workers compensation. Do the same for overhead expenses like rent, admin wages, insurance, and utilities.

Convert those totals into daily and hourly rates so your estimates reflect real operating costs instead of assumptions.

3. Add another crew when demand allows

If demand is strong, adding another crew can significantly increase profits. While labor costs rise, overhead usually does not increase at the same rate.

This means each additional crew spreads fixed overhead costs more efficiently. When priced correctly, every extra hour worked by a new crew contributes more profit than earlier stages of your business.

4. Negotiate better material pricing

If you are paying close to retail pricing for materials, you are likely leaving money on the table. Going directly to suppliers and negotiating better rates can reduce costs immediately.

Many suppliers offer volume based discounts. As your workload increases, your purchasing power improves, which can lead to even better pricing over time. You can maintain current job pricing while increasing backend profit through smarter buying.

5. Streamline operations with better systems

Manual processes cost time and money. Digitizing operations can improve efficiency across your business.

Providing site supervisors with tablets for on site documentation reduces paperwork and admin time. Modern accounting tools allow receipt capture, automatic bank syncing, and faster reconciliation. Online payment options speed up cash flow and reduce admin work.

Investing in construction estimating software is especially impactful. Accurate estimates produced faster improve close rates and reduce costly mistakes.

6. Increase productivity across crews

Small productivity gains add up quickly in construction. Spending time on site can help identify inefficiencies that are costing time and money.

Ways to increase productivity include:

• Setting production targets and rewarding performance
• Replacing worn or outdated tools
• Using labor saving equipment
• Assigning general laborers to support skilled trades
• Subcontracting non core tasks to specialists

Reducing project duration without sacrificing quality directly increases profitability.

7. Change the type of jobs you pursue

If low value jobs are limiting profit, shifting focus may be necessary. Doing the same type of work for higher end residential, commercial, or municipal clients can significantly improve margins.

Diversify your client base to avoid dependency on a single customer. Steady, higher value work provides better cash flow and long term stability.

How Bolster helps construction businesses increase profits

Bolster was built to help contractors run more profitable businesses. It speeds up estimating without sacrificing accuracy and creates professional, interactive quotes that improve close rates.

Bolster also simplifies invoicing, change orders, and integrations with accounting systems. This reduces admin time, minimizes errors, and improves cash flow.

By combining accurate estimates, clear pricing, and efficient workflows, Bolster helps contractors make better decisions and keep more of what they earn.