Contractor Profit Margins in 2026: Benchmarks by Trade

"What profit margin should I be running?" is one of the most common questions contractors ask, and one of the hardest to get a straight answer to. Margins vary by trade, by market, by job type, and by how you account for overhead. This guide lays out the typical ranges by trade, explains the markup-vs-margin math that quietly costs contractors thousands every year, and shows you how to calculate your own numbers instead of guessing.

A quick, important caveat: the ranges below are typical industry benchmarks compiled from publicly cited figures and trade norms. They are a sanity check, not gospel. Your real numbers depend on your overhead, your market, and your mix of work, which is exactly why the second half of this guide is about measuring yours.

Markup vs. Margin: The Mistake That Costs the Most

Before any benchmark means anything, you have to be clear on the difference between markup and margin, because they are not the same number and confusing them is the single most common pricing error in the trades.

• Markup is how much you add on top of your cost. If a job costs you $1,000 and you charge $1,500, that's a 50% markup.
• Margin is profit as a percentage of the price you charge. On that same job, your profit is $500 on a $1,500 price, which is a 33% margin, not 50%.

Here's why it matters: a contractor who thinks "I add 20% so I make 20%" is actually earning a 16.7% margin. Over a year, that gap is the difference between a healthy business and one that's quietly bleeding. Use the conversion below as a cheat sheet:

Markup	Equivalent Gross Margin
10%	9.1%
20%	16.7%
35%	25.9%
50%	33.3%
67%	40.0%
100%	50.0%

If you want to skip the math, our markup vs. margin calculator converts between the two instantly, and the contractor profit margin calculator shows the full picture on any job.

Gross Margin vs. Net Margin

Two different numbers, and you need both:

• Gross margin is what's left after the direct cost of the job: materials and labor for that specific job. This is the number you control when you price a quote.
• Net margin is what's actually left after everything: overhead, your truck, insurance, software, marketing, admin time, and taxes. This is what you actually keep.

Gross margins in the trades commonly land in the 30%-50% range. Net margins are far smaller, because overhead eats the difference. A trade business running a healthy operation often nets somewhere in the high single digits to mid-teens as a percentage of revenue. If your gross looks great but there's nothing in the bank at year-end, your overhead, not your pricing, is usually the leak.

Typical Profit Margin Benchmarks by Trade

The ranges below reflect commonly cited gross and net margin norms for small to mid-size service businesses (owner-operators and small crews, not enterprise operations). Treat them as a "are I in the ballpark?" check.

Trade	Typical Gross Margin	Typical Net Margin
HVAC	35%-50%	5%-15%
Plumbing	35%-50%	8%-18%
Electrical	30%-45%	6%-12%
Handyman / general repair	40%-60%	10%-20%
Roofing	25%-40%	5%-10%
Painting	35%-55%	8%-15%
Flooring	30%-45%	5%-12%
Landscaping	35%-55%	8%-15%

A few patterns worth noticing. Labor-heavy, low-materials trades like handyman work and painting tend to show higher gross margins because you're selling your time, not marking up expensive equipment. Material- and equipment-heavy trades like HVAC and roofing show thinner gross margins because a big chunk of every job is pass-through cost. None of that tells you whether the business is healthy, that's the net margin's job.

HVAC

HVAC is a benchmark-heavy trade because so much of a job is equipment cost. Gross margins on install jobs are often thinner than service and maintenance work, which is why maintenance agreements are so valuable: they're high-margin, recurring, and they smooth out the seasonal swings. If you run HVAC numbers regularly, the HVAC profit margin calculator is built specifically for pricing heating and cooling jobs, and HVAC contractor software can track margin per job automatically.

Handyman and General Repair

Handyman work shows some of the highest gross margins in the trades because it's mostly billable labor with modest materials. The catch is volume and unbilled time: lots of small jobs, lots of driving, lots of quoting. The businesses that win here are ruthless about capturing every billable hour and not letting admin eat the day. Handyman business software exists largely to plug those leaks.

Why So Many Contractors Under-Price

Three reasons show up again and again:

1. They price off markup and think it's margin. See the table above. A 20% "markup" feels like a healthy cushion and is actually a thin 16.7% margin before overhead.
2. They forget unbilled time. Most solo operators bill 20-30 hours a week, not 40. Driving, quoting, invoicing, and chasing payments aren't billable, but they're still hours you have to cover. Price as if you bill 40 and you'll come up short every month. Our hourly rate calculator accounts for this.
3. They never separate gross from net. A job can look profitable and still lose money once the truck payment, insurance, and software are spread across it.

How to Find Your Real Numbers

Benchmarks are a starting point. Your business runs on your numbers. Here's the short version of how to get them:

1. Add up your annual overhead. Insurance, vehicle, fuel, tools, phone, software, marketing, and any admin or office cost. Everything that isn't a specific job's materials or labor.
2. Estimate your real billable hours. Be honest. Most owner-operators land at 1,000-1,500 billable hours a year.
3. Calculate your break-even rate. Overhead divided by billable hours tells you what you have to charge just to keep the lights on, before any profit.
4. Add your target margin on top, and check it against the benchmarks above.
5. Track margin per job going forward. A benchmark you check once a year is trivia. Margin you track on every job is a steering wheel.

You can run the first four steps in a few minutes with the contractor profit margin calculator. The fifth step, tracking margin on every job automatically, is what PocketBoss was built to do: it captures your costs and revenue per job so you see your real margin without spreadsheets.

The Bottom Line

A "good" profit margin depends on your trade, but the contractors who stay profitable all do the same three things: they price off margin (not markup), they cover their unbilled time, and they track net, not just gross. Benchmarks tell you whether you're in the ballpark. Your own numbers tell you whether you're winning.

Start with the free profit margin calculator, then let PocketBoss keep score on every job after that.