Remodeling Firms Nearly Doubled Since 2000. Here's How the Top Performers Are Pulling Away

The homeowner told you your competition came in lower. You dropped your price on the next bid. And the one after that.

The pressure to cut prices isn’t coming from one tough competitor or one bad quarter. There were 69,000 remodeling firms in the U.S. in 2000 and 128,000 at the start of 2025. The pool of companies bidding against you has nearly doubled in a generation, and it’s not going to reverse.

What separates contractors right now is how they respond. Most reach for the price. A smaller group changes what the quote covers, what the homeowner understands before they sign, and what happens after the job closes.

Frank Gaborik owns Danika Plumbing & Electric in Everett, Washington, north of Seattle. He took the company over in 2017, built out a commercial license, and added residential electrical work this February. When asked what decides which contractor a homeowner hires, he puts price near the bottom of the list.

“It’s very little about price,” he says. “It’s more about whether or not you as a contractor are going to go into someone’s home and explain to the customer in very plain language what the options are, what the reality of their scope of work is.”

The contractors holding their prices quote differently, answer the phone faster, and name problems they aren’t charging for. Here’s how each one works on a job.

What a discount actually costs you

Gaborik’s answer when asked about the biggest mistake contractors make: “They try to compete on price. That’s the mistake.”

In the most recent Houzz survey, 42% of construction firms adjusted pricing or ran promotions to secure projects, while 60% improved client communication. That 42% is the group losing money, because the cut comes entirely out of profit while every cost stays exactly where it was.

Here’s what a discount actually costs. The average residential remodeler nets 6.3%, the highest margin the industry has posted since 1996. Cut your price 10% on a job at that margin and you finish roughly 3.7 points below break-even and pay for the privilege of doing the work.

The discount doesn’t even work the way contractors expect. People read price as information about quality, so a lower number can actually push a homeowner away from you. Gaborik puts it simply: when you put two options in front of someone, like two cups of coffee, and one costs $2 and the other costs $10, nobody thinks the cheap one is a deal. “Your brain tells you, what’s wrong with the $2 coffee?”

Your price still has to be credible. A quote needs to sit in the range a homeowner recognizes. But once it does, price alone isn’t deciding anything. What you communicate around the number is what closes the job.

What homeowners are actually paying for

Homeowners rarely renovate new houses. Most bids land on a 25- or 40-year-old system, so the job carries risks that have nothing to do with labor hours or material cost. Those risks are the product.

“They’re not just paying for your work product. They’re paying for their time that that work product takes,” Gaborik says. “They’re paying for the frustration if you tell them it’s three months and it ends up being 10. They’re paying for the inspector who tells you to change everything.”

Most estimates list fixtures and labor. They don’t say anything about schedule certainty, the permit path, code exposure on adjacent work you didn’t quote, inspector risk, or how much of the house is unusable and for how long. Those are what homeowners actually care about. A quote that covers those things is a different document from one that just prices the installation.

Gaborik describes a customer with a two-inch supply line to the street, too small to add a dishwasher and a washing machine. Every contractor who looked at it told him no.

“The difference between us was, we said ‘there’s multiple ways to tackle this,'” Gaborik says. “One of them is let’s talk to the city and see if they’re willing to let your 38-year-old cast iron piping stay rather than digging up your whole driveway.” He won that job because he knew the city had discretion and was willing to go ask.

Your move: Add three lines to your next estimate: expected timeline, permit and inspection path, and known conditions that could change scope. A homeowner can’t compare those across bids if you don’t include them.

Answer the phone faster than your competition

Contractors already rank communication above pricing tactics. In the Houzz survey, 60% of construction firms cited it as their top competitive response. But saying you prioritize communication and actually executing on it are two different things. More than half of residential contractors now respond to a new lead within the first hour. For those who don’t, the lead is gone before anyone quotes it.

Gaborik has a simple test for whether your communication is actually working. “If you’re doing it right, the homeowner’s telling you to stop calling them,” he says. “If you’re doing it wrong, they’re calling you and asking you where you’re at.”

The bar is lower than most contractors assume. Gaborik credits a share of his commercial work to the fact that his shop answers the phone. Once the job starts, three touches keep the customer confident: a confirmation the day before with a window and a name, an end-of-day note on any multi-day job, and a call the moment something changes rather than once you have a solution.

Reviews work the same way. “When you have a review that says, ‘Travis came out, he explained everything to me, we thought we had a bigger problem than we did, but he walked us through it and explained what to do next,’ that resonates differently than ‘they came out and did a good job and showed up on time,'” Gaborik says.

Your move: When you request a review, ask the customer to describe the problem you solved instead of rating the experience. Those reviews pre-sell to the homeowners who read them.

Give homeowners options, not a single number

This is the clearest place contractors leave money on the table. Contractors who put optional line items in front of a homeowner see upsell rates between 25% and 50%, but only 16% offer multiple options at different price points. Five out of six contractors hand over a single number and hope it lands.

Offering options also pays off beyond the current job. Customer retention now outranks new customer acquisition as a priority, 53% to 31%, and a repeat customer costs nothing to acquire and arrives already trusting your number.

Gaborik describes what a good tech does when they show up to replace a single toilet. “Mr. Customer, this is a 20-year-old toilet. You have three of them. Let’s talk about what that looks like,” he says.

The customer almost always declines, and that’s the point. “That customer may never ever change those other toilets,” Gaborik says. “But the person that they’re going to buy from is the person that took the time to say, hey listen, there’s other things here.”

Naming a problem isn’t the same as selling one. The observation costs two minutes and no credibility because you’re not quoting it. When the thing you flagged fails in three years, you’re the contractor who saw it coming.

Your move: If you notice a condition that needs attention while you’re on a job, mention it to the homeowner and note it in your follow-up.

Have financing ready before the emergency

A homeowner calls about one problem, but the house needs a bigger fix. They budgeted for the symptom. You’re quoting the cause.

“Sometimes we’ll get people that are just like, I got a $2,000 problem,” Gaborik says. “And it turns out, we’ve got a $2,000 problem with a $20,000 fix, but here’s an option.”

Having the option ready matters more than whether anyone uses it, because without it, the homeowner defaults to patching the symptom and you lose the full job. A credit card or a home equity line takes time the person with a failed water heater doesn’t have.

If you offer financing through Acorn Finance, homeowners compare real loan offers in minutes, which turns a $20,000 repair into a monthly number instead of a reason to patch the symptom.

Your move: Set up a financing option before your next emergency call, not after. The customer with a burst line has no time to shop lenders.

Your action plan

Catching up to the contractors ahead of you takes three moves, in this order.

This week: Run the discount math on your own margin. Add expected timeline, permit path, and known conditions to your estimate template.

This month: Build a multi-option version of your three most common jobs. Change your review request to ask what problem you solved, and train your crews to name one unquoted condition on every job.

This quarter: Set up financing through Acorn Finance, and go back through your lost bids to find out who won them.

The bottom line

The work hasn’t disappeared. NAHB’s Remodeling Market Index held at 61 in the second quarter of 2026, with more remodelers reporting good conditions than poor. But twice as many companies are bidding on it, and the ones pulling ahead are doing it by helping homeowners understand what they’re paying for before they sign.

Ready to stop losing jobs to a number instead of a competitor? With Acorn Finance, your customers compare loan offers from multiple lenders in minutes, so a $20,000 repair becomes a monthly payment they can say yes to. You get paid upfront and in full. Learn how contractor financing works.