Contractor’s Digest- The Daily Rundown- Thursday, March 13, 2025
🛠 Helping Residential Contractors & Subs Build Smarter, Work Safer, and Grow Faster
🚧 Today’s Rundown
🔹 Is 2025 the Year of the Remodeling Boom? New Data Says Yes
🔹 3 Ways to Negotiate Better Payment Terms with Clients
🏗️ Feature Story: Is 2025 the Year of the Remodeling Boom?
📉 What’s Happening?
With housing affordability at record lows and interest rates still hovering above 7%, fewer homeowners are willing—or even able—to buy new homes. Instead, many are opting to remodel their current homes to better suit their needs.
According to the latest industry report, home remodeling spending is projected to increase by 1.2% in 2025, with key trends including:
🏡 Kitchen and Bathroom Renovations – The two most popular upgrades, as homeowners seek modern, high-functionality spaces.
💡 Energy-Efficient Upgrades – Solar panels, high-efficiency HVAC systems, and smart home technology are in demand as energy costs rise.
🌿 Outdoor Living Spaces – More homeowners are investing in covered patios, decks, and outdoor kitchens, turning their backyards into year-round entertainment areas.
With new home sales potentially slowing, remodeling and renovation projects are becoming the go-to solution for homeowners who want to improve their living spaces without the cost of moving.
📌 Why It Matters for Contractors
✅ A Surge in Remodeling Means More Business for GCs & Subcontractors
As homeowners shift their focus to upgrading instead of moving, demand is increasing for plumbers, electricians, HVAC techs, roofers, cabinet makers, flooring specialists, and painters. If your business specializes in home renovations, this is your time to thrive.
✅ Luxury Remodels Are Gaining Momentum
Higher-income homeowners who would typically upgrade to a larger home are now customizing their existing space instead. This is fueling demand for high-end finishes, custom cabinetry, smart home integrations, and designer-level renovations.
✅ Material Prices Are Stabilizing
After years of wild price fluctuations, many materials—especially lumber and steel—have leveled out, making it easier for contractors to estimate costs accurately and maintain strong profit margins.
💡 Take Action: How to Position Your Business for the Remodeling Boom
✔️ Adjust Your Marketing to Target Homeowners Looking to Stay Put
➡️ Update your website and advertising to focus on remodeling services rather than just new builds.
➡️ Showcase before & after photos of past renovation projects on social media and in your marketing materials.
✔️ Network with Realtors & Mortgage Brokers
➡️ Many realtors are advising clients to renovate instead of sell, creating an opportunity for strategic partnerships.
➡️ Partner with mortgage brokers offering cash-out refinances or home improvement loans so potential clients have funding options.
✔️ Offer Financing Options to Close More Deals
➡️ Many homeowners hesitate on large remodels due to upfront costs. Offering financing options (or partnering with a lender) can remove price objections and help clients move forward.
🚀 Pro Tip: Homeowners are researching projects months before hiring a contractor. By consistently posting educational content, before/after transformations, and financing options, you can capture leads before they start actively looking for a contractor.
📌 3 Ways to Negotiate Better Payment Terms with Clients
Getting paid on time and in full is one of the biggest challenges contractors face. Delays in payment can cripple cash flow, making it harder to pay for materials, labor, and overhead. Instead of accepting payment terms that put your business at risk, use smart negotiation tactics to protect your finances and ensure smoother operations.
Here are three key strategies to negotiate better payment terms with clients:
1️⃣ Require a Larger Deposit Upfront 💰
🔹 Many contractors make the mistake of accepting small or no deposits before starting a project, leaving them exposed to financial risk.
🔹 Clients often assume that deposits should be 10-15%, but for most projects, this is too low to cover upfront material and labor costs.
💡 How to Negotiate It:
✅ Set clear deposit expectations upfront – Aim for 30-50% down, especially for custom work or material-heavy projects.
✅ If a client pushes back, explain that securing materials upfront ensures the project stays on schedule and avoids cost increases.
✅ Consider offering discounted pricing for upfront payments, incentivizing clients to commit early.
🚀 Pro Tip: Avoid low-ball deposits—if a client refuses to put real money down, it’s a red flag they may delay or refuse payment later.
2️⃣ Structure Progress Payments Instead of Lump Sums 🏗️
🔹 Many contractors rely on a 50/50 payment split (half upfront, half at completion), but this creates cash flow gaps and can put you at risk if a client delays final payment.
🔹 Instead, set progress payments based on project milestones.
💡 How to Negotiate It:
✅ Break payments into 3-5 milestones, such as:
✔️ 30% deposit before work starts
✔️ 25% after rough-in work is completed
✔️ 25% after finishing work begins
✔️ 20% final payment upon completion
✅ This method ensures steady cash flow and protects you from clients who withhold final payment over minor disputes.
🚀 Pro Tip: Write payment terms clearly into your contract—if a milestone is reached, payment is due before work progresses to the next stage.
3️⃣ Enforce Late Payment Penalties & Interest Charges ⏳
🔹 Clients may take weeks or months to pay you without clear penalties for late payments, assuming there are no consequences.
🔹 Many contractors hesitate to enforce late fees, but banks and credit card companies do it—so should you.
💡 How to Negotiate It:
✅ Include a clause in your contract:
📌 "Invoices not paid within 10 days will incur a 5% late fee. Payments overdue by 30+ days will accrue interest at 1.5% per month."
✅ Make this non-negotiable—this isn’t about punishing clients, but ensuring they take timely payments seriously.
✅ If a client is consistently slow to pay, consider offering early payment discounts (e.g., “2% off if paid within 5 days”).
🚀 Pro Tip: Be firm but professional—if a client repeatedly ignores payments, stop work immediately until the balance is settled.
🚀 Take Action This Week
✅ Review your contracts – Do they clearly outline deposits, payment schedules, and late fees?
✅ Start requiring larger deposits to protect your business from cash flow issues.
✅ Implement progress payments on all future contracts instead of lump sums.
✅ Send invoices immediately and follow up consistently to avoid delays.
By negotiating better payment terms, you’ll improve cash flow, avoid disputes, and ensure you get paid on time—every time.
🛠️ Quick Bites
📌 Business Tip: 3 Ways to Negotiate Better Payment Terms with Clients
🔹 Require a larger deposit upfront—at least 30% of the project total.
🔹 Offer milestone payments instead of lump sums to ensure steady cash flow.
🔹 Include late payment penalties in contracts to discourage slow payers.
😂 Contractor Humor: "Why don’t electricians ever get shocked? Because they know how to conduct themselves!"
📣 Call to Action
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👷♂️ Stay safe, keep building smarter!
— Benjamin Patton