"How much profit should a contractor make?" gets answered with a lot of confident percentages that cite nothing. This page does the opposite: every number below names the study it came from and the year it covers, and the ranges that are rules of thumb are labeled as rules of thumb. Numbers were checked on September 4, 2026; the studies update yearly, and this page will follow them.
Two definitions first, because the whole subject hinges on them. Gross margin is what's left of revenue after the direct costs of the jobs: labor, materials, subcontractors, permits. Net margin is what's left after overhead too: rent, trucks, insurance, office, your own salary. A remodeler with a 30% gross margin and a 6% net margin isn't doing anything wrong; that's the average shape of the business. If the two words are still blurry, the markup vs. margin guide sorts them out in five minutes.
The sourced benchmarks
| Segment | Gross margin | Net margin | Source and year covered |
|---|---|---|---|
| Residential remodelers | 29.9% | 6.3% | NAHB, Remodelers' Cost of Doing Business Study, 2026 edition, fiscal 2024 |
| Residential remodelers, prior study | 24.9% | 4.7% | Same study, 2022 edition, fiscal 2021 |
| Single-family home builders | 20.7% | 8.7% | NAHB, The Cost of Doing Business Study, 2025 edition, fiscal 2023 |
| All construction companies | not reported | 6.7% average net income before taxes, up from 6.3% the year before | CFMA, 2025 Construction Financial Benchmarker, fiscal 2024 |
| All construction companies, best in class | not reported | 11.9% net, top quartile | CFMA, 2024 Construction Financial Benchmarker, fiscal 2023 |
| General contractors | about 14.8% | not broken out | CFMA, 2024 Financial Benchmarker, fiscal 2023, as summarized by JMCO |
| Specialty trade contractors | about 16% | about 6.9% | CFMA, 2024 Financial Benchmarker, fiscal 2023, as summarized by Foundation Software and JMCO |
| Residential contractors, CFMA members | not reported | 8.7% | CFMA, 2024 Financial Benchmarker, fiscal 2023 |
| Industrial and commercial | not reported | about 4.1% | CFMA, 2024 Financial Benchmarker, fiscal 2023 |
| US contractors, all | not reported | about 5%, range 3.5% to 7% | Turner & Townsend, International Construction Market Survey 2024 |
Three things to notice before you compare yourself to any of it.
The averages are averages of survivors. NAHB's remodelers averaged $2.7 million in revenue in 2024. CFMA's respondents are member firms with a CFO. Nobody surveys the two-person shop that lost money and closed, so the real distribution is wider and lower than the table.
Margins moved a lot in three years for the same trade. Remodelers' gross margin went from 24.9% in 2021 to 29.9% in 2024, five points, and net from 4.7% to 6.3%, the best since 1996; the study attributes most of it to trade contractor costs falling from 36% of revenue to 30%. A benchmark is a photograph of a year, not a law.
Gross margin is the number you control on a bid; net margin is the number you control with overhead. The remodelers' study says operating expenses ran 23.6% of revenue in 2024. Gross 29.9% minus 23.6% is the 6.3% net. Every point of overhead you don't carry goes straight to net.
The rules of thumb, labeled as such
The trade-by-trade ranges you'll see on other pages, roofing 30 to 45%, plumbing 35 to 55%, painting 35 to 50%, are not from a study. They're aggregated experience from estimators and software vendors, and they describe what a well-run shop in that trade targets on a bid, not what the average shop achieved. Used that way, they're useful:
| Trade | Typical gross margin target on a bid | Why it's higher or lower |
|---|---|---|
| Remodeling and small GC | 30% to 40% | Lots of subcontracted work at pass-through prices drags the blend down; NAHB's average is 29.9% |
| Electrical, plumbing, HVAC service | 35% to 50% | Short jobs, high labor share, flat-rate pricing |
| Roofing | 30% to 45% | Material-heavy, weather risk priced in |
| Painting | 35% to 50% | Labor-heavy, low material share |
| Concrete and foundations | 25% to 40% | Material and equipment heavy |
| Landscaping and hardscape | 40% to 55% | Labor-heavy, seasonal overhead |
Treat the range as the margin the bid needs to carry, then check it against your own overhead with the overhead and break-even calculator: if your overhead rate is 25% of revenue and you want 8% net, your bids need a 33% gross margin whatever the trade table says.
What a healthy target is
Sourced advice converges more than the trade tables suggest:
- Foundation Software recommends 8% to 12% net for most contractors, and 10% for small and mid-size firms, against a CFMA industry average of 6.3% for fiscal 2023 and 6.7% for fiscal 2024.
- CFMA's own best-in-class line, the top quartile of its respondents, sat at 11.9% net in the 2024 report.
- Next Insurance's summary of the same studies suggests 5% to 10% net as a healthy goal.
So: 6% to 7% net is average, 10% is a good year, 12% is the top quarter. A remodeler at 6% net on $2.7 million takes home about $170,000 in profit after paying themselves a salary; the same firm at 10% takes home $270,000. That gap is almost entirely overhead discipline and change orders that got written down, not bid price.
How to find your own number
Benchmarks tell you where you stand only if you know your own margin, and most small contractors know their bid margin, not their achieved one. The difference is the subject of the markup vs. margin guide; the short version is a three-step check you can run on the last three finished jobs:
- Job gross margin. Revenue actually collected, including change orders, minus every direct cost that landed on the job, including the committed costs that arrived after you thought it was over. The job cost and profit calculator does the arithmetic.
- Blended gross margin. Add the three jobs together. If the blend is ten points below your bid margin, the leak is unbilled extras, lost receipts, or labor you never costed; the job costing spreadsheet finds which.
- Net margin. Blended gross margin minus your overhead rate. If you've never calculated the overhead rate, that's the calculator above, and it takes ten minutes with last year's bank statements.
If step 1 can't be done from records you have, that's the finding. A shop that can't compute its achieved margin on a finished job isn't running at 6% or 10%; it's running at a number it will learn at tax time. Obra exists for that gap: each project shows its recorded cost, cash collected, change orders and expected margin while the job is open, from receipts the crew sends as they buy. But the arithmetic above works on paper too, and doing it once by hand is the fastest way to know whether you need anything else.
Questions people ask
What is a good profit margin for a general contractor? By CFMA's benchmarks, general contractors run gross margins around 15% and the industry averaged 6.7% net before taxes in fiscal 2024; the top quartile reaches about 12% net. A residential GC or remodeler should expect a higher gross margin, near 30%, because more of the work is self-performed and marked up.
What is the average profit margin for a remodeling company? 6.3% net and 29.9% gross in fiscal 2024, according to NAHB's 2026 Remodelers' Cost of Doing Business Study, the highest net margin the study has recorded since 1996.
Is a 20% profit margin good for a contractor? As a gross margin on a bid, it's low for most trades and below NAHB's remodeler average. As a net margin, it's exceptional; CFMA's top quartile is under 12%. Which one you mean is the whole question.
What's the difference between overhead and profit? Overhead is what the business costs to exist whether or not there's a job: rent, trucks, insurance, office, the owner's salary. Profit is what's left after the jobs and the overhead are both paid. The common "10 and 10" rule of thumb, 10% overhead plus 10% profit on every bid, understates overhead for most small shops; measure yours.
Get the template
The free job costing spreadsheet below is the fastest way to run step 1 on your last three jobs: one sheet per job, costs and payments kept separate, with a margin line at the bottom. Enter your email and the download starts right away.