TRADE CONTRACTOR
GROSS MARGIN
BENCHMARKS.
A healthy gross profit margin for a commercial trade contractor is 22–30% per project. Below 15% and overhead consumes all remaining profit. The benchmark varies by trade and revenue band — specialty trades like insulation and SWPPP can run higher. Concrete and civil typically range 20–28%. This data is compiled from direct client engagements through Sulphur Prairie Management across commercial subcontractors doing $500K to $25M in annual revenue.
Gross profit margin is the most controllable number in your business. It is what you earn on each project before overhead. If your gross margin is right and your overhead is managed, net profit follows. Most trade contractors do not know their gross margin because job costing is not set up correctly enough to calculate it accurately.
| TRADE | TYPICAL REVENUE RANGE | BELOW AVERAGE | HEALTHY TARGET | HIGH PERFORMER |
|---|---|---|---|---|
| Concrete (structural) | $1M–$5M | 18–24% | 22–28% | 25–32% |
| Concrete (flatwork) | $500K–$3M | 16–22% | 20–26% | 23–30% |
| Civil / Earthwork | $2M–$10M | 15–22% | 20–28% | 24–32% |
| Electrical (commercial) | $1M–$5M | 18–25% | 22–30% | 26–34% |
| SWPPP / Erosion Control | $500K–$4M | 20–28% | 24–32% | 28–36% |
| Masonry | $1M–$5M | 17–23% | 21–27% | 24–31% |
| Framing | $2M–$8M | 16–22% | 20–26% | 23–30% |
| Demolition | $1M–$5M | 20–28% | 24–32% | 28–36% |
| Underground Utility | $2M–$10M | 18–25% | 22–30% | 26–34% |
| Structural Steel | $2M–$10M | 18–26% | 22–30% | 26–34% |
| Sitework | $2M–$8M | 16–22% | 20–27% | 23–30% |
| Drywall / Framing | $1M–$5M | 17–23% | 20–27% | 24–31% |
| Insulation | $500K–$3M | 20–28% | 24–32% | 28–38% |
| Paving | $1M–$5M | 18–25% | 22–30% | 26–34% |
Data compiled from direct client engagements at Sulphur Prairie Management (The Construction CFO) across commercial subcontractors doing commercial progress-payment work. Ranges reflect project-level gross profit before overhead allocation. Results vary by market, labor structure, and job type mix.
Below Average
If your gross margin is consistently in this range, overhead is likely consuming all or most of your remaining profit. The business may look okay on revenue but is not generating real wealth. Job costing and overhead calculation are the first priorities.
Healthy Target
This is the range the CONTROL system is designed to achieve and maintain. At 22–30% gross margin with 9–13% overhead, you are producing 9–21% net profit — enough to build working capital, fund growth, and pay yourself properly.
High Performer
High performers are typically operating in favorable market conditions, have strong estimating discipline, run tight PM standards, and have been running job costing long enough to know which work types to pursue and which to avoid.
Why the Range Varies by Trade
Specialty trades with lower competition and higher risk (SWPPP, insulation, demolition) tend to carry higher margins. High-volume, competitive trades (concrete, framing, civil) tend to run tighter. Labor intensity, material risk, and market concentration all affect what is achievable.
The three most common reasons trade contractors run below-benchmark gross margins:
- Overhead buried in job costs. Superintendent time, PM time, and general equipment costs get charged to jobs instead of overhead. This inflates job costs and makes gross margin look lower than it is — while also making overhead look artificially low. The benchmark shows project-level gross margin assuming correct cost categorization.
- Change orders not billed. Every dollar of scope change that is not formally billed reduces your effective gross margin. A $2M project with $200K in unbilled change orders has an effective gross margin 10 points lower than the estimate assumed.
- Estimates not aligned to actuals. When the estimate and the job cost structure do not match, you cannot see variance in real time. By the time you know you are over on labor, the project is already closed. Benchmark margins require real-time visibility.
CONTROL Chapters 1 and 3 cover how to set up job costing correctly so your gross margin is calculated on the right cost basis — and how to calculate your real overhead so your estimates account for the full cost of running your business.
A healthy gross profit margin for a commercial trade contractor is 22–30% per project. Below 15% and overhead will likely consume all remaining profit. Above 30% is achievable for specialty trades or highly efficient operations. Most trade contractors doing commercial progress-payment work should target 22–30%.
Gross profit is revenue minus the direct costs of building a project — labor, material, equipment, subcontractors, and direct job expenses. Net profit is gross profit minus overhead. If your gross profit is 25% and your overhead is 13%, your net profit is 12%. Both numbers matter, but gross profit is what you control at the project level.
Three reasons: overhead is being buried inside job costs (inflating costs and reducing apparent gross profit), change orders are not being billed (reducing revenue on completed work), and estimates do not align to job cost codes (making variance invisible until the project is closed).
The healthy range is 9–13% of annual revenue. Most contractors discover their real overhead is 25–42% when they calculate it for the first time. If your overhead is above 20%, it is consuming your gross profit and leaving little or nothing for net profit.
The fastest path to improving gross profit is: 1) install job costing so you can see where every dollar goes, 2) calculate your real overhead so you stop bidding projects that lose money from day one, and 3) install billing standards so you collect every dollar you earned. CONTROL covers all three.
KNOW YOUR NUMBERS.
CONTROL walks you through exactly how to calculate your real gross margin and build toward the benchmark. Get the book.
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