Does customer financing pay for a plumbing company? Work it out in four steps

Step 1: Separate your large jobs from everything else

Financing has almost no effect on a $350 drain call. It can matter on a $6,000 water service replacement. So first pull the jobs that matter out of your records.

Pick a threshold, for example $4,000, and list the last six months of quotes above it. For each, record:

• job type (repipe, sewer lateral, water heater or tankless, backwater valve, renovation rough-in, other)
• quoted amount
• whether it closed
• whether financing was mentioned, if you know

You'll likely find that a small number of job types make up most of your large-quote value. Those are where financing marketing belongs, and where our search ads for financeable jobs would focus.

Step 2: Work out your baseline

Using the same records, calculate three numbers:

Monthly gross profit from large jobs = Q × C × T × M. In the example: 20 × 0.30 × $8,000 × 0.35 = $16,800.

Be honest about margin. Include materials, labour at a realistic loaded rate, permits, disposal and vehicle costs. A repipe that looks profitable at 45% may be 30% once you count the third day nobody budgeted.

Step 3: Add the program's cost

Some lender programs charge the contractor a fee on each financed job, often called a merchant or dealer fee, and some carry a monthly or set-up cost. Your agreement tells you which. You need two figures:

• Share of booked large jobs that customers finance (U). If you're new to financing, estimate conservatively, then track the real figure.
• Fee per financed job as a share of the ticket (F), plus any fixed monthly cost (K).

Monthly program cost = (Q × C × U × T × F) + K.

With made-up numbers, say U = 40%, F = 6% and K = $0: 20 × 0.30 × 0.40 × $8,000 × 0.06 = $1,152 a month. That is what financing costs you even if it doesn't win you a single extra job, because customers who would have paid cash anyway may still choose to finance.

Step 4: Find the break-even lift

Now ask: how many extra closed jobs do I need to cover that cost?

Gross profit per extra large job = T × M − (U × T × F). In the example: $8,000 × 0.35 − (0.40 × $8,000 × 0.06) = $2,800 − $192 = $2,608.

Break-even extra jobs per month = program cost ÷ profit per extra job = $1,152 ÷ $2,608 ≈ 0.44.

So in this example, financing pays if it helps you win roughly one extra large job every two months. Expressed as a close rate, that is a lift from 30% to about 32.2% on 20 quotes a month.

If your numbers show you need a lift from 30% to 45%, financing is unlikely to pay through close rate alone, and you should look at whether it raises your average ticket instead (for example, customers choosing a better water heater or adding a backwater valve).

The traps that make financing look better than it is

1. Counting every financed job as a win. Many of those customers would have booked anyway. Only the extra jobs count toward the benefit.
2. Ignoring the fee on jobs you'd have won anyway. It's a real cost every month.
3. Comparing salespeople, not offers. If your best estimator mentions financing and the others don't, a higher close rate may reflect the person, not the program.
4. Mixing job types. Repipes and water heaters behave differently. Compare like with like.
5. Too few quotes. With five quotes in each group, chance dominates. Wait for 30 or more.

Our funnel reporting is built to avoid exactly these traps.

The traps that make financing look worse than it is

1. Nobody mentions it. If financing appears on 10% of large quotes, you're not testing financing, you're testing silence. A program launch fixes the habit first.
2. It comes up too late. Raised only after the homeowner balks, it sounds like a sales trick.
3. The website hides it. Homeowners who research before calling never learn it exists.
4. Quotes go cold. A financing option can't help a homeowner who never hears from you again. See quote follow-up.

A simple test plan for the next 90 days

1. Choose two or three high-ticket job types.
2. Make financing visible on those service pages and on every quote above your threshold.
3. Log, for every large quote, whether financing was mentioned and whether the customer says they applied.
4. After 90 days, compare close rates and average tickets with your baseline from Step 2.
5. Re-run Steps 3 and 4 with the real share of customers who financed.

If the program clears break-even, keep it and put more effort behind it. If it doesn't, you have evidence for renegotiating with the lender or trying another program. Our guide to choosing a financing program lists the questions that matter at renewal time.

Where we fit

We don't set lender fees, approve customers or advise on credit. We help with the marketing side of this test: making the option visible, keeping quotes alive and measuring the outcome. See pricing for plans, and call, text or email if you'd like help running your own numbers.