LOS ANGELES — ServiceTitan, which offers a software platform for trades businesses, has released its third annual Commercial Service Market Report, the results of a survey of more than 1,000 commercial trades business owners and executives.
The report reveals that 66% of commercial contractors said they entered 2025 with stable or growing revenues, even as they have faced persistent headwinds like a shortage of skilled labor (52%), rising labor and overhead costs (45%), and longer material lead times (31%). More than half (53%) expressed optimism about the market, according to the report.
“At the heart of every commercial project is a skilled workforce,” said Alex Kablanian, senior vice president and general manager of commercial and construction at ServiceTitan, in a press release. “Rising material costs and product shortages are already tough enough, but the commercial industry is also feeling the squeeze from ongoing labor shortages. That’s been made worse by post-pandemic shifts, tighter regulations, and mounting compliance pressures. Contractors have a lot to juggle navigating these challenges, managing risk, and protecting their bottom line. Ultimately, it takes a combination of smart technology adoption and strong customer relationships to stay competitive and drive consistent growth.”
Despite positive revenue trends, more than one-third of commercial contractors (39%) remain focused on increasing net profit margins, optimizing existing processes (39%), and growing recurring revenue (37%). Some 33% are focused on retaining existing customers.
In addition to the skilled labor shortage, rising labor and overhead costs, and increasing material lead times, operational gaps in the field, such as the lack of fast access to warranty and service agreement data (70%), issues with parts availability (57%), and struggles to retrieve service and repair histories onsite (55%), could further limit contractors’ ability to meet their goals, the press release said.
According to the report, nearly three-quarters (73%) of contractors anticipate a rise in material costs. More than half (54%) of contractors expecting an increase in material lead times of two weeks or more, and 56% expect an increase in equipment lead times. Of those surveyed, 59% of contractors are concerned these rising costs will significantly impact profitability.
Technology plays a pivotal role in safeguarding profits and reducing operational risk, especially by helping contractors issue invoices quickly, ServiceTitan’s press release said. While they are swift with billing, averaging two days to send invoices, the real pressure point lies in the collection process: the average time to get paid is 28 days. The findings reveal that ACH (37%), checks (30%), and credit cards (14%) are the top methods contractors are utilizing to collect payments. The findings underscore a critical need for meticulous accounts receivable management and diversified payment collection strategies to protect cash flow, the press release said.