Contractor Profit Margins by Trade: 2026 Benchmarks
By BuildFolio Team · Last updated January 28, 2026
How does your profit margin compare to other contractors in your trade? See 2026 benchmarks for roofing, HVAC, plumbing, electrical, painting, and remodeling.
TL;DR — Quick Answer
Target 15-25% net profit margin regardless of trade. Gross margins by trade: Roofing 35-50%, HVAC 30-45%, Plumbing 35-55%, Electrical 35-50%, Painting 40-55%, Remodeling 25-40%. Service/repair work has higher margins than new construction across all trades. Track job costs to know your real numbers.
Profit Margin Benchmarks by Trade
These are industry averages for well-managed contractor businesses. Your actual margins depend on your market, efficiency, and pricing discipline.
| Trade | Gross Margin | Net Margin (After Overhead) | Typical Overhead |
|---|---|---|---|
| Roofing | 35-50% | 15-25% | 30-45% |
| HVAC | 30-45% | 12-22% | 35-45% |
| Plumbing | 35-55% | 15-25% | 30-40% |
| Electrical | 35-50% | 15-25% | 30-40% |
| Painting | 40-55% | 18-28% | 20-30% |
| Landscaping | 40-55% | 15-25% | 25-35% |
| General remodeling | 25-40% | 10-20% | 25-35% |
| New construction (GC) | 20-30% | 8-15% | 20-30% |
Gross Margin vs. Net Margin
Gross margin = (Revenue – Materials – Direct Labor) / Revenue. This is what is left after direct job costs.
Net margin = (Revenue – All Costs) / Revenue. This includes overhead: insurance, vehicles, office, admin, marketing, and everything else. This is your actual profit.
Most contractors know their gross margin but not their net margin. The gap between the two is your overhead, which typically runs 20-45% of revenue depending on trade.
Why Service Work Beats New Construction
Across every trade, service and repair work generates higher margins than new construction or large installation projects. Here is why:
- Urgency: Customers with broken systems pay premium prices without shopping around
- Smaller scope: Less material cost relative to labor means higher percentage margins
- Minimum charges: A $200 minimum service call might only cost $80 to perform
- Less competition: Emergency and service work has less price-shopping than planned projects
- Repeat business: Service customers become maintenance agreement customers
The Margin Discovery
When Rodriguez HVAC started tracking job costs with BuildFolio, they discovered service calls generated 45% margins vs. 22% on replacements. That single insight changed their entire business strategy. Most contractors do not know which job types are actually profitable.
How to Improve Your Profit Margins
1. Track Actual Job Costs
You cannot improve what you do not measure. Use job costing to track materials, labor, and overhead on every job. Most contractors who start tracking discover they are underpricing by 5-15%.
2. Price to Your Costs, Not Competitors
Your overhead is different from your competitors. Price based on your actual cost structure plus your target margin, not what the other guy charges.
3. Offer Financing
Financing increases average ticket size 15-25% and helps customers choose premium options. BuildFolio includes a built-in financing widget at no extra cost.
4. Use Good/Better/Best Pricing
Always present three options. The middle option anchors the customer’s perception of value, and 15-25% of customers choose the premium tier you would never have offered.
5. Reduce Overhead Through Automation
Automated quoting, SMS follow-ups, and lead capture reduce the admin hours that eat into your margins. BuildFolio automates these tasks for $29/mo.
The $273 Billion Problem
Contractors lose $273 billion annually to underbidding. Without tracking your actual costs per job, you are guessing at your margins. Stop guessing.
How Do Your Margins Compare?
Get your free Profit Score and see how your margins stack up against top contractors in your trade.
Frequently Asked Questions
What is a good profit margin for contractors?
A healthy net profit margin for contractors is 15-25%. Gross margins vary by trade: roofing 35-50%, HVAC 30-45%, plumbing 35-55%, electrical 35-50%, painting 40-55%, and general remodeling 25-40%. Net margins are lower after overhead.
Which contractor trade has the highest profit margins?
Specialty service trades like plumbing and electrical service/repair tend to have the highest margins (35-55% gross) because of high skill requirements and emergency demand. Painting and landscaping also have strong margins due to low material costs relative to labor.
Why do contractors have low profit margins?
Most contractors with low margins are underpricing because they do not track actual job costs. They estimate overhead too low, forget hidden costs like vehicle depreciation and callbacks, and price based on competitors instead of their own cost structure. Job costing software like BuildFolio ($29/mo) reveals the truth.