SummitPentagon Premier Roofing Business Plan — Service Mix and the Commercial Question

Replacement, repair and light commercial compared on margin, cycle and risk, and when commercial work is worth taking on.

Service Mix and the Commercial Question

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Figure 11. Revenue by line against net margin. Commercial enters in Year 3 and lifts blended gross margin.

Line	Gross margin, Year 5	Share of Year 5 revenue	Role
Residential replacement	34.6%	78.6%	The volume base. Intensely competitive on price, which is why margin comes from job costing rather than from quoting high
Repairs	40.0%	8.6%	Higher percentage margin because of minimum charges. A $500 minimum repair might cost $150 in materials and labor. Also the cheapest route to a future replacement customer
Commercial	37.2%	12.8%	Higher margin, less price-sensitive, steadier maintenance revenue — but longer sales cycles and more capital. Entered deliberately in Year 3, not Year 1

$’000	Year 1	Year 2	Year 3	Year 4	Year 5
Residential replacement	482	1,465	2,487	3,665	5,049
Repairs	53	160	272	400	552
Commercial	—	—	201	472	823
Total revenue	535	1,625	2,960	4,538	6,424
Blended gross margin	31.8%	32.8%	33.8%	34.6%	35.4%

Commercial roofing typically carries gross margins of 35 to 40 per cent against roughly 30 to 33 per cent for residential replacement, and the 2026 industry commentary is consistent that contractors who have been primarily residential should be building commercial capability now. This plan does so from Year 3, once the residential operation is generating cash and can absorb a longer sales cycle.

Repairs deserve more respect than they usually get. They carry the best percentage margin in the business at 40.0 per cent, they are quoted and completed in days rather than weeks, and every repair customer is a replacement customer in two to seven years at zero acquisition cost. At $552,000 in Year 5 the line contributes $221,000 of gross profit — more than the entire commercial line — on jobs nobody else wants to bid.

The commercial line is a capability decision before it is a revenue decision

Commercial roofing is not residential roofing at larger scale. It uses different systems — TPO, modified bitumen, single-ply membranes rather than asphalt shingle — with different equipment, different crew training and specialty labor rates that exceed $300 to $600 per square against $150 to $300 for residential asphalt. It carries longer sales cycles measured in months, competitive bidding against established commercial contractors, retention and performance bond requirements, and pollution liability exposure from torch-down work. Entering it in Year 1 would divide a single crew’s attention across two trades and do neither well. Entering it in Year 3 with $42,000 of dedicated equipment, a residential base generating cash and a third crew to absorb the learning is the difference between a second revenue line and an expensive distraction.

7.1 Why the plan does not chase storm work

Insurance restoration work can produce 25 to 35 per cent net margins for a twelve to eighteen month stretch when a market is hit, and the opportunity is real: one national carrier reported $1.24 billion of pretax catastrophe losses in the first quarter of 2026 alone, including $925 million in March from fifteen separate wind and hail events. Those losses are accelerating insurer requirements for impact-resistant roofing upgrades across policy renewals in storm-exposed states, which is a durable demand tailwind.

The plan treats all of it as upside rather than base demand, for three reasons. Storm work arrives without notice and requires the ability to mobilise crews and materials faster than the business can plan for. It ends as abruptly as it begins, leaving a cost base sized for a volume that no longer exists. And a business that underwrites storm revenue in its forecast is underwriting the weather, which no lender should accept and no operator should rely on. A contractor with capacity when a storm hits will capture the work; a contractor whose plan depends on it will not survive the year it does not come.

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