What are the Most Profitable Home Service Businesses?

There are significant trends within the home services industry including the rise of a new type of homeowner with a broad demand for smart homes and green home services. There are also increasing uses of technology to improve customer experience which coincides with the renewed focus on cultivating exceptional customer service. These four trends highlight something that all business owners and operators need to know-What are the most profitable home service businesses?

The answer to this question is nuanced because the long term profitability and growth of home services businesses is aided by nimble and savvy leadership. As you operate your own business, new business ideas and trends will mesh with your unique skills. The melding of paying attention to market trends and improving internal processes and structures leads to higher profits and more importantly better profit margins.

As the home service industry is rapidly changing and growing, there is a greater importance than ever to use data and strategy to guide new business ideas. At Valve+Meter, our team provides data driven performance marketing to help increase the profitability of your home service business. This includes a wide range of services including website design, paid advertising, search engine optimization, outbound marketing, and a full suite of other services. The key to greater profits is leaning into expertise and staying ahead of competitors.

The profitability of each home service business will range largely based on the size of the individual business, the marketplace, and the seasonality of the business. For example, pet sitting requires virtually no training, tools, or startup capital. The barrier to entry is extremely low. Since pet owners supply all food and essentials, the only investment is marketing and effort. However, services like pet sitting are niche, small, and can be impacted by the overall health of the economy.

For this article, Valve+Meter considered the size of the home service market, the forecasted growth of each, and the stability of the market. The long term profitability of the following home service businesses are robust.

1. Plumbing: The plumbing market is estimated to be worth $130 billion in the United States. This includes businesses that install, maintain, and repair residential plumbing systems. As an essential need for all homes, this industry is a stalwart for steady profitability. This market is expected to grow at a compound annual growth rate (CAGR) of 4.5% from 2022 to 2028.
2. Electricians: The electrical market is estimated to be worth $120 billion in the United States. This includes businesses that install wiring, appliances, and optional electrical accessories like smart home devices, solar panels, and home backup generators. This market is expected to grow at a CAGR of 4.2% from 2022 to 2028. This growth may accelerate in sectors like EV charging installations and alternative energy methods that are being adopted at an accelerated rate.
3. HVAC: The HVAC market is estimated to be worth $110 billion in the United States. Heating and cooling is an essential need for homes. This market is expected to grow at a CAGR of 4.0% from 2022 to 2028. The growth is due in part to aging housing stock, renewable energy appliances like heat pumps and geothermal, and also by alternative accessories including air quality systems and solar HVAC.
4. Home remodeling: The home remodeling market is estimated to be worth $400 billion in the United States. The popularity of home improvement shows across television, streaming and social media platforms lead interest in this industry. This market is expected to grow at a CAGR of 5.0% from 2022 to 2028. Interior design business, home removal business, and renovations are extremely popular as high interest rates and limited housing options dissuade homeowners from moving. Converting and reinventing living space has also become a valuable service as remote work has become extremely common since the global pandemic.
5. Landscaping: The landscaping market is estimated to be worth $100 billion in the United States. This market is expected to grow at a CAGR of 4.5% from 2022 to 2028. Like home remodeling, landscaping has grown in profitability since the beginning of the pandemic. Homeowners have rediscovered back-yarding with the demand for plants, gardens, outdoor kitchens, hardscapes, patios, and other outdoor fixtures driving profits.

These businesses are all in high demand and require specialized skills. As a result, they can charge high rates for their services. Other home services include pest control, home cleaning, and home health care. Solar energy and roofing are growing home service industries. There are also emerging trends and data that indicates how these businesses and other home service business ideas can reach greater profitability.

The first step to generating greater profits is identifying the most commonly requested home services. One home service business cannot set the trend so you must study the home service market and listen to experts. This is very important if you are your own boss. Understanding how these four trends affect your specific market is important to creating strategy.

• The rise of the millennial homeowner: Millennials are now the largest generation in the United States, and they are increasingly buying homes. The buying habits, preferences, and priorities of these homeowners are distinct from prior generations. First, these homeowners are more likely to use online marketplaces to find and hire home service providers. Digital marketing can be far more effective to reach this generation. Second, on demand service is the expectation for these homeowners. There is a renewed demand for speedy responses for your own home service businesses. Third, these homeowners are more likely to prioritize and pay for sustainable and eco-friendly home services.
  • Keys to profitability in millennial homeowners:
    • Adopt online marketing include websites, social media and search engine optimization.
    • Respond quickly to all leads to prevent losing sales to more responsive competitors.
    • Offer ec0-friendly services at a great margin.
• The growth of the smart home market: Nearly every appliance in the home fits into the internet of things. The smart home market is now expected from garage door installation to doorbells. Homeowners no longer see the smart home as an option but rather an essential need for new equipment. Offering smart home technology in your home services sales presentations can capture greater revenue and higher margins. Secondly, the best home service businesses are leaning hard into installation, maintenance, and repair of smart homes. Smart home devices include appliances, lighting, thermostats, entertainment devices, and security systems. These systems are more sensitive and complex than prior models. Many home service businesses will be late to adopt these technologies especially maintenance and repairs.
  • Keys to profitability in smart home market:
    • Offer high quality smart home equipment with higher revenue opportunities.
    • Create ongoing services for smart homes by equipping your team with training and certifications.
    • Utilize the convenience of smart home equipment to distinguish higher margin equipment from lower cost services.
• Green home services: Homeowners are becoming more concerned about the environment and their home’s carbon footprint. Environmentally friendly house cleaning, carpet cleaning, lawn maintenance, and other home services appeal to these homeowners. Appliances with greater efficiency are prized. If these products run via renewable energy, there is a greater chance of upselling homeowners. Once a niche service, green home services are now sought after by many new homeowners.
  • Keys to profitability in green home services:
    • Digital marketing can help your business stand out from competitors.
    • The most successful business will continue to offer high quality services and products but add options for green home.
    • Many homeowners are happy to pay for certified services and equipment.
• Integration of technology to improve home services experience: Another trend that can help to increase the profitability of your home service business is adopting the latest technology. Technology is being used to improve the home services experience in a number of ways. For example, home service providers are using mobile apps to schedule appointments, communicate with customers, and provide feedback. On demand home services that respond first are more likely to be hired. After your services are complete, technology can aid in faster bill payment, simplified bookkeeping and more accurate CRM. All of these factors help your home service business become more profitable.
  • Keys to profitability in home services technology:
    • Technology including online scheduling is in demand.
    • Tracking personnel in the field can improve customer experience and efficiency.
    • SMS texting, ACH bill pay, and the use of API can help fulfill demand, increase profit margins, and reduce processing time.
• Customer Service: The home services market is changing. Demand has increased and so has competition. Tech giants are entering the home services industry in the same way they entered retail, grocery shopping, and entertainment. This disruption has created a renewed focus on the quality of customer service provided to homeowners. Your own home service business can earn greater respect, more repeat business, and strong referrals by focusing on customer solutions. While large businesses will be driven by efficiency and the total number of services performed, small businesses understand the long term strategy of the home service industry.
  • Keys to profitability through customer service:
    • Friendly, responsive, and caring home service businesses are in demand.
    • Homeowners reward home services with personalized care and local representatives.
    • In today’s competitive market, customer service is more important than ever.

Beyond these trends, the home services industry is growing in general. This means that new opportunities are available to current business owners and entrepreneurs considering ownership in the market. There are a number of highly profitable home service businesses.

Expanding into the most profitable markets can be a great business move. Greater profits help you grow faster. Let’s first consider the most profitable home service business ideas and then examine how to increase profit margins in these and other businesses.

Valve+Meter is a comprehensive marketing firm. Our team has extensive experience using data to help home service business owners increase profits and retain exceptional quality. Increasing your profits is far more than just charging more for your services and cutting costs.

There are a few steps that every home business can consider to improve profitability. It is important to note that there is variance between one home service business and the next. These are basic tools to generate deeper research and analysis.

1. Research target market: Take control of your own business by studying the marketplace in your local area. Analyze your customer relationship management (CRM), heat maps, and other data to determine your best opportunities for sales opportunities.
2. Increase productivity: Use data to improve sales processes, deficiencies in operations, and marketing strategies. In performance marketing, Valve+Meter uses data to determine the return on marketing spend. This is extremely helpful in finding the most room for improvement throughout the business. Increasing profitability by investing in training of employees, investing in new equipment and technologies, and streamlining your operations can increase profits without reducing services or staff.
3. Embrace new opportunities and bundle services: The most successful business never rests. For example, you could offer complete home solutions of essential home services including plumbing, electrical, and HVAC services. Busy homeowners love one call solutions. You can also find business ideas in emerging trends as examined earlier in this article.
4. Provide excellent customer service: This old idea is the newest business idea. As the workforce has become segmented, the ability to provide a curated and personalized experience can increase loyalty and referrals. Putting your customers’ needs ahead of your immediate rewards will pay off in the long term.
5. Market your business online: There are a number of free and low-cost ways to market your home services business online. This can help you reach a wider audience and get more customers. The next generation of homeowners lives on the internet and marketing practices are capable of reaching these young homeowners.
6. Partner with other businesses: Creating a strong network of local peers can help you reach a wider audience and get more customers. These partners help to strengthen the local marketplace and referrals can increase profits.