Net margin is the answer to "did the business make money this year." It starts from gross margin and subtracts overhead: rent, trucks, insurance, office, software, the owner's salary. CFMA's 2025 benchmarker put the construction industry average at 6.7% net before tax for fiscal 2024, up from 6.3% the year before, and its 2024 report put the top quartile at 11.9%; NAHB's 2026 remodelers' study reported 6.3% for remodelers and its 2025 edition 8.7% for single-family builders.
A worked number
Revenue $560,000, gross margin 30% ($168,000), overhead $112,000 (20%). Net profit $56,000, a 10% net margin, which is a good year. Let gross margin slip to 26% through unwritten change orders and the net falls to $33,600, or 6%, with nothing else changing.
The mistake it hides
Confusing it with the owner's income. If the owner's salary isn't in overhead, "net profit" is the owner's paycheck and the business's real net is whatever is left after that, often nothing. Foundation Software's recommended target of 8% to 12% net assumes the owner is paid first.
In Obra
Obra measures jobs, not the whole business, so net margin is the arithmetic you do once a year with the overhead calculator and the accountant's numbers. What Obra gives you is the honest gross margin per job that the net depends on.