TRADE CONTRACTOR
NET PROFIT
MARGIN BENCHMARKS.
A healthy net profit margin for a commercial trade contractor is 12% after all expenses — overhead, all project costs, everything. Most trade contractors without a financial operating system are running 2–6% net — some are running negative without realizing it. The gap between where most contractors are and where they should be is almost always explained by three things: overhead underestimated in bids, job costs invisible until after the project closes, and billing that leaves money in AR or unbilled entirely.
Net profit is the only number that actually matters in a construction business. You can win all the work you want, run a busy crew, and generate impressive revenue — and still go broke. Net profit is what determines whether the business builds wealth or just stays alive.
| TRADE | TYPICAL REVENUE RANGE | BELOW AVERAGE | HEALTHY TARGET | HIGH PERFORMER |
|---|---|---|---|---|
| Concrete (structural) | $1M–$5M | 2–6% | 8–14% | 14–20% |
| Concrete (flatwork) | $500K–$3M | 2–5% | 7–13% | 13–19% |
| Civil / Earthwork | $2M–$10M | 1–5% | 7–14% | 14–20% |
| Electrical (commercial) | $1M–$5M | 2–7% | 8–14% | 15–22% |
| SWPPP / Erosion Control | $500K–$4M | 3–8% | 10–18% | 18–26% |
| Masonry | $1M–$5M | 2–6% | 7–13% | 13–19% |
| Framing | $2M–$8M | 1–5% | 6–12% | 12–18% |
| Demolition | $1M–$5M | 3–8% | 9–16% | 16–24% |
| Underground Utility | $2M–$10M | 2–6% | 7–13% | 14–20% |
| Structural Steel | $2M–$10M | 2–7% | 8–14% | 15–22% |
| Sitework | $2M–$8M | 1–5% | 6–12% | 12–18% |
| Drywall / Framing | $1M–$5M | 2–6% | 7–13% | 13–18% |
| Insulation | $500K–$3M | 3–8% | 10–18% | 18–26% |
| Paving | $1M–$5M | 2–6% | 8–14% | 14–20% |
Data compiled from direct client engagements at Sulphur Prairie Management across commercial subcontractors doing commercial progress-payment work. Net profit after all project costs and overhead. Results vary by market, overhead structure, and billing discipline.
Revenue
What you actually invoice and collect. Not drafts, not unapproved change orders, not retention you will not see for two years. Real invoiced revenue only.
Minus: Project Costs
Labor, material, equipment, subcontractors, direct job expense, and other. Tracked by project using the 7-category job cost structure from Chapter 1 of CONTROL.
Equals: Gross Profit
What each project earns before overhead. Target: 22–30%. This is what you control at the project level through job costing, estimating, and billing discipline.
Minus: Overhead
Everything it costs to keep the business running when you are not building. Target: 9–13%. Most contractors are running 20–32% without calculating it. Chapter 3 of CONTROL fixes this.
Net Profit = Gross Profit − Overhead. At 25% gross profit and 13% overhead: 12% net. At 25% gross profit and 28% overhead: −3% net. The overhead number is the difference between building wealth and going broke on the same revenue.
Overhead Underestimated by 10–20 Points
The single biggest gap. A contractor bidding 10% overhead and running 28% is losing 18% of revenue right off the top — before the crew drives to the site. Chapter 3 of CONTROL fixes this with the exact overhead calculation.
Gross Profit Invisible Until After Close
Without real-time job costing, you find out a project was unprofitable 90 days after it closes. By then you have bid the next five jobs the same way. The loss compounds. Chapter 1 installs the visibility.
Revenue Left in AR or Unbilled
Change orders never submitted. Pay apps out late. Stored materials never billed. Every dollar of billable work not collected reduces your effective net margin. Chapter 6 closes the billing gap.
No Monthly Forward Visibility
Without cost to complete and the CEO report, you find out about problems when they are already crises. Chapter 7 installs the monthly cadence that gives you 8–10 weeks of forward visibility.
A healthy net profit margin for a commercial trade contractor is 12% after all expenses including overhead. Below 6% and the business is not generating enough retained earnings to build working capital, fund growth, or weather a slow quarter. Most commercial subcontractors without a financial operating system are running 2–6% net — or negative.
Gross profit is revenue minus the direct costs of building a project — labor, material, equipment, subcontractors. Net profit is gross profit minus overhead. If your gross profit is 24% and your overhead is 12%, your net profit is 12%. Both matter. Gross profit is what you control at the project level. Net profit is what determines whether the business builds wealth.
Three reasons: overhead is being underestimated in bids by 10–20 points, job costs are not tracked granularly enough to see which projects are profitable, and billing discipline is weak meaning revenue is left in AR or unbilled entirely. CONTROL addresses all three.
If your gross profit target is 22–30%, hitting 12% net requires overhead of 10–18%. Most contractors are running 20–32% overhead without realizing it. Chapter 3 of CONTROL covers the exact overhead calculation and how to bring it into the target range.
CONTROL improves net profit through five mechanisms: job costing that reveals which projects are profitable, overhead calculation that stops underbidding by 10–20 points, estimating alignment that compares actuals to estimates in real time, billing standards that collect every dollar earned, and the monthly cadence that catches overruns while there is still time to correct them.
KNOW YOUR NET.
CONTROL shows you how to calculate your real overhead, fix your estimates, and hit the 12% net profit benchmark. Get the book.
JOIN THE WAITLIST →