How do hardware stores make money?

An investment of 5,000 yuan plus a waterproofing solution only you understand equals a 150,000 yuan waterproofing project. That “insider” solution alone is worth 145,000 yuan. What he’s saying is that waterproofing contractors are notoriously exploitative—not only do they charge steep prices, but once they’ve done the job, you’ll likely be stuck relying on them for years, needing them to come back and fix things down the line.

Look at those small hardware stores run by husband-and-wife teams in residential compounds. The storefronts look tiny, and business seems slow, but in reality, those owners have already made over 10 million yuan in cash after just ten years in the city.

How do they make money? Is it from selling materials? No. They’re actually running a client network.

The husband usually comes from an plumbing/electrical background. He effectively handles all those hard-to-solve problems around the neighborhood for every household.

The wife manages the store and handles purchasing.

That air-conditioning repairman who charges 300 yuan an hour? He’s a freelance游击队 (mercenary), while the hardware-store owner operates from a solid base.

Freelancers spend a lot of time hunting for clients, whereas the store owner already has his client circle locked in.

On top of that, they have an even bigger revenue stream tied to construction sites.

With such a small shop, net profits of 1–2 million yuan annually are pretty normal. But don’t expect to learn this by asking them directly—they’ll always tell you they’re losing money. The real signal? When you see several hardware stores lined up next to each other, clustered together—that means they all have steady business and healthy margins.

The lowest-cost, forever-solved engineering solution isn’t exactly a secret. But if you truly solved the problem once and for all, it would cut off their ongoing revenue stream.