ServiceTitan, Glendale, Calif., a software platform for trades such as electrical, HVAC, painting, plumbing and roofing, recently released its 2025 Residential Trades Report on the health of the residential home services industry. The research was conducted by Thrive Analytics on behalf of ServiceTitan.

According to the report, 63% of the 1,000 residential services contractors polled self-reported that they are “thriving”—experiencing consistent growth and positioned for success. Another 19% reported that they are “surviving”—stable, but unable to grow. This category includes the electrical industry.

Despite an uncertain economy, the majority of businesses in this sector report revenue between $1 million and $19 million, demonstrating this sector’s resilience. Nevertheless, growing revenue and retaining customers were listed as the top two business goals for this year. Attracting new customers and improving cash flow tied for third place.

Survey participants indicated that their biggest challenges in 2023 included the economic recession, labor shortages and access to working capital. The largest risks to meeting their 2025 goals were identified as labor and overhead costs, the shortage of skilled workers and rising material prices. However, in order to overcome those obstacles—and the competition—those thriving contractors are investing in additional technology and purchasing more tools and trucks to provide their customers with the best service.

“In a highly competitive industry, residential contractors [who] innovate by adopting best-in-class technology stand to benefit meaningfully compared [with] those [who] don’t,” according to Chris Petros, general manager of residential markets at ServiceTitan.

Petros believes that end-to-end software platforms empower contractors to standardize, track and optimize business performance from initial marketing all the way through to the final invoice.

“On the revenue side, the key is to capture and convert consumer demand before the competition does,” he said. “This includes visibility into where that demand is across marketing channels, insights into how effectively you’re converting calls into appointments, and lastly, providing a phenomenal selling experience in the home to drive a higher close rate and average ticket. Real-time insights, standardized best practices and best-in-class technology all work together to provide the right tools for contractors to meaningfully accelerate performance.”

Nevertheless, despite aiming to modernize the customer experience, 64% of contractors continue to rely on phone calls as the primary form of communication, far exceeding online booking forms (10%) and text messaging (7%). Whichever form of communication is employed, prompt response times can influence a homeowner's choice to do business with a contractor.

Nearly half (47%) of contractors with annual revenue of $10 million or more revealed that following up on estimates accounts for 11%–15% of additional revenue. Offering customers choices is another successful tactic. Over half (54%) of thriving contractors offer good, better and best options when providing estimates. This multichoice approach allows customers to compare price and other factors when making decisions.