Inflation, tariffs, and fierce competition are reshaping how America's tradespeople work. We recently surveyed 521 licensed contractors across a wide range of specialties — including HVAC, electrical, roofing, plumbing, remodeling, and general contracting — to understand the financial and operational challenges they're facing. The findings reveal just how far contractors are going to win jobs, keep their businesses afloat, and what's being sacrificed along the way.

Key Takeaways

• 89% of contractors are struggling to stay profitable due to inflation.
• In the past year, 87% of contractors have felt pressure to bid below cost just to stay competitive.
• 77% of contractors have taken a loss or break-even on a project in the past year in hopes of landing future work or referrals.
• Nearly 1 in 2 contractors (48%) say project quality has declined industry-wide due to economic pressure.
• 70% of contractors have rushed a job due to tight finances or overbooking.
• 70% of contractors say tariffs are crippling their business.
• 59% of contractors have raised rates specifically to offset tariff-related costs.

How Far Contractors Will Go Just To Win the Job

Contractors are being pushed to the financial brink just to stay in business.

Inflation has become the top challenge, with 89% of contractors saying it's getting harder to remain profitable. As a result, more than 4 in 5 (87%) reported feeling pressured to bid below cost in order to stay competitive.

Many tradespeople are gambling on future opportunities to justify today's losses. In fact, 77% said they took a loss or simply broke even on a project within the past year, hoping that it would lead to referrals or repeat business. This kind of risk is becoming common: 43% accepted jobs with profits of just 5% or less, including 13% who knowingly expected to break even.

Unsurprisingly, tight margins often lead to budget overruns. Overall, 11% of contractor projects went over budget in the past year. Even worse, 14% of contractors said over 20% of their projects went over. The main culprit was material costs coming in higher than expected, as cited by 69% of contractors.

Delays from weather or site conditions (41%) and unexpected labor cost increases (38%) were also top contributors to exceeding a project's budget, as were scope creep from the client (28%) and subcontractor issues (25%).

Quality Takes a Hit

With razor-thin margins and overwhelming pressure to stay competitive, nearly half of contractors (48%) said they believe that project quality is suffering industry-wide.

Rushed jobs are a major factor contributing to quality decline, as 70% of respondents admitted they've sped through projects because of tight finances or overbooking. Thirty-one percent also used lower-quality materials, and 28% hired workers or subcontractors with less experience.

Cutting corners doesn't come cheap. Among contractors who had to redo rushed work, the average cost was $2,409. Beyond the financial loss, these situations also strain time, reputation, and customer trust.

Contractors Are Adapting, but at What Cost?

To combat economic pressure, many contractors are raising rates and changing the types of jobs they accept.

Tariffs have emerged as a major burden, with 70% of contractors saying they're hurting their business and 59% increasing prices to compensate. On average, contractors reported raising rates by 11% just to stay afloat in 2025.

But raising prices isn't the only strategy. Contractors are also rethinking what types of work are worth pursuing. Jobs with tight margins or unclear budgets are being avoided by 39% of contractors, while projects with complex permitting (31%) or small residential scopes (29%) are also getting passed over. Others are steering clear of tight timelines (22%) or luxury custom builds (18%) due to cost and complexity concerns.

Conclusion: Contractors Under Pressure

As 2025 unfolds, financial pressure is changing the trades from the inside out. Contractors are bidding lower, accepting thinner margins, and rushing jobs to keep their businesses alive, sometimes at the expense of quality. While many are adapting through higher rates and selective project choices, the long-term effects on client trust, job satisfaction, and industry standards remain uncertain.

For now, contractors are doing what they must to survive, but the question remains: How long can the trades absorb these pressures without lasting damage?

Methodology

We surveyed 521 contractors in June 2025 to explore the financial and operational pressures they're facing this year. Respondents included general contractors, remodelers, HVAC specialists, electricians, plumbers, roofers, and other licensed trade professionals. The data was collected in June 2025.

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