Where electrical contractors lose money
5 things cost electrical contractors money without ever becoming a line item, and each one traces to a step you can install. Electrical contractors average 25% gross margin, 16% overhead and 9% net profit at $1M–$5M of revenue. The CFOS target at that size is 27.5% gross margin, 15% overhead and 12.5% net, and the 3.5 points left on the table is where those mechanisms live. Figures for all 7 revenue bands are in the table below.
Electrical ranks 1st of 6 in electrical and technology on net profit, and it has heavier overhead than the 48-trade average. Here is every figure, across all 7 revenue bands.
Electrical by revenue band
| Metric | $1M–$5M | $5M–$10M | $10M–$25M | $25M–$50MModeled | $50M–$100MModeled | $100M–$500MModeled | $500M+Modeled | CFOS target at $1M–$5M |
|---|---|---|---|---|---|---|---|---|
| Overhead | 16% | 15% | 14% | 13% | 12% | 11% | 10% | 15% |
| Gross margin | 25% | 27% | 28% | 29% | 30% | 32% | 33% | 27.5% |
| Net profit | 9% | 12% | 14% | 16% | 18% | 21% | 23% | 12.5% |
| Metric | $1M–$5M | $5M–$10M | $10M–$25M |
|---|---|---|---|
| Overhead | 15% | 14% | 13% |
| Gross margin | 27.5% | 29.5% | 30.5% |
| Net profit | 12.5% | 15.5% | 17.5% |
Modeled extension of the survey curve, not reconciled against the licensed CFMA Benchmarker. That applies to the 4 bands above $10M to $25M, and no CFOS target is published for them.
Gross margin and overhead come from CFMA, Jones Maresca and SPM's own trade data, because those are the figures those sources report by trade and size. Net profit is calculated from them as gross margin minus overhead, so the three rows tie. That makes it an operating profit figure: what is left before interest, other income and expense, and the tax planning choices owners make, such as bonuses, depreciation methods and retirement contributions.
Surveys report net income before taxes after those items, so a reported net can run below the figure here. At the typical contractor the difference is small: CFMA's 2025 medians are 7.1 percent before interest and taxes and 6.7 percent net income before taxes. It grows with size. Against the separate measured net profit dataset, the calculated net runs 0.8 points higher at $1M to $5M, 2.2 points at $5M to $10M and 3.5 points at $10M to $25M, because the gross margin and overhead rows change faster with size than reported net profit does.
Above the $10M to $25M band the gross margin and overhead rows are a modeled extension of the same curves. They have not been reconciled against the licensed CFMA Benchmarker, and the calculated net there runs well above survey medians, so read those bands as a model and not as a survey result.
Run On CFOS. Run On CFOS Trade Benchmark Reference: Electrical. 2026. Sulphur Prairie Operations, LLC. https://runoncfos.com/trades/electrical. CC BY 4.0.
Figures on this page were last revised 2026-08-21. Published under CC BY 4.0, which permits reuse of any figure here, including commercially, as long as the credit above travels with it. The same figures in machine-readable form: /benchmarks.json.
Trade level gross margin and overhead come from figures CFMA, Jones Maresca and other sources publish, and Run On CFOS derives net profit as gross margin minus overhead. The CFOS targets beside them are from the book CONTROL: C.F.O.S. Construction Financial Operating System, published with the full reference at runoncfos.com.
- 2024 Construction Financial Benchmarker, Executive Summary, Construction Financial Management Association, 2024.
- 2025 Construction Financial Benchmarker, Executive Summary, Construction Financial Management Association, 2025.
- 2025 Performance Benchmarks, Construction Companies, Jones Maresca and Company, 2025.
- Run On CFOS Trade Benchmark Reference, Sulphur Prairie Operations, LLC, 2026.
Sourcing and method: the methodology page.
Which bands are measured. The 4 bands above $10M–$25M extend the survey curve further out and have not been reconciled against the licensed CFMA Benchmarker. How every figure was built is explained on the methodology page.
5 problems specific to electrical
Gear can't release for fabrication until the utility publishes available fault current, and the utility isn't on your subcontract at all. Gear billed as stored material gets retainage at the same rate as labor, even though you funded 100 percent of it in cash before billing a dollar. The NEC edition governing your job is locked by the permit issue date, not your bid date. You bid labor in unit hours and the field hit the unit hours.
Each one below points at the item, the unit, the clock, or the party that makes it an electrical problem, and it says which step fixes it.
| Mechanism | Why it's specific to this trade | Step |
|---|---|---|
| Your gear release clock starts at the power company | No other trade's fabrication release depends on a letter from a regulated monopoly that has no contract with anyone on the site. The study sets protective device settings and arc flash labeling, which makes the utility letter a hard gate in front of a 30 to 60 week build rather than a paperwork step. Everyone on the job treats energization as the electrician's date, and the electrician controls none of the three parties who set it. | Project management |
| Retainage on gear is a loan you didn't agree to | Electrical has a far higher equipment to labor ratio on the front half of a job than the trades it shares a wall with, so retainage on material is a much larger line here than anywhere else on the GC's subcontractor list. Retainage held against labor at least trails a payroll you funded 30 to 45 days earlier. The same percentage held against gear trails a wire transfer you made a year earlier, for an asset the owner already holds title to. | Monthly cadence |
| The permit date picks the code, and the code picks cost | Code cycles change quantities for this trade in a way they don't for others: more GFCI and AFCI breakers means more panel space, which can mean bigger panels, which can mean different feeders. The added cost scales with device count, so a bigger job produces a bigger miss, and a repetitive multifamily deck multiplies it by every unit. The GC's position never changes either: code compliance was always in your scope, so a hard bid swallows it with no change order. | Estimating system |
| You hit the hours and still lost money on the rate | Labor runs 40 to 45 percent of revenue in an electrical shop, and the estimate treats it as a quantity question while the damage happens on the price side. The electrical bid passes through two conversions, unit hours to crew hours and crew hours to dollars, and both assumptions live in a settings screen that never gets opened. License law and crew availability set the apprentice mix you run, while the template still assumes the mix somebody typed in years ago. | Estimating system |
| You make six trips and bid temp power at month zero | Electrical is the only trade that installs a system for the entire site at month zero and then maintains it for everybody else at no additional charge for the full duration, on a lump sum priced before the schedule existed. Two guys changing lamps and repairing cords other trades ran over is a real crew on a real payroll with nowhere to bill. The rough in is also the most exposed work in the wall, thin wall conduit and MC that other trades hang from, drill through, and climb on, and the damage turns up at trim when no one can be charged for it. | Standards and accountability |
Electrical against the other 47 trades
| Metric | Electrical | Electrical and technology average | All 48 average | Rank |
|---|---|---|---|---|
| Overhead | 16% | 15.5% | 15.1% | 32nd of 48 |
| Gross margin | 25% | 22.8% | 22.1% | 5th of 48 |
| Net profit | 9% | 7.3% | 7% | 2nd of 48 |
Electrical sheds 6 points of overhead between $1M–$5M and $500M+, against 6 for electrical and technology as a group. Inside that group, Electrical is the most profitable at 9%, and Fiber, Solar and Telecom all run 15% overhead, the leanest. The first of those is this trade.
Other electrical and technology trades
Proof from this trade
What owners ask
What overhead should an electrical contractor run?
Electrical shares its overhead figure with 12 other trades at this revenue, which is what the published data resolves to. It averages 16% at $1M–$5M and 10% at $500M+, as a percentage of revenue. That is 0.5 points above the electrical and technology average of 15.5%. The CFOS target at $1M–$5M is 15%. The CFOS target is one point leaner than your trade's industry average at your revenue.
What gross margin should an electrical contractor run?
Electrical shares its gross margin figure with 2 other trades at this revenue, which is what the published data resolves to. It averages 25% at $1M–$5M and 33% at $500M+, as a percentage of revenue. That is 2.2 points above the electrical and technology average of 22.8%. The CFOS target at $1M–$5M is 27.5%. The CFOS target recalculates at your revenue: whatever gross margin produces the net profit target once overhead is paid, never below your trade's own industry average.
What net profit should an electrical contractor run?
Electrical shares its net profit figure with 5 other trades at this revenue, which is what the published data resolves to. It averages 9% at $1M–$5M and 23% at $500M+, before taxes, as a percentage of revenue. That is 1.7 points above the electrical and technology average of 7.3%. The CFOS target at $1M–$5M is 12.5%. The CFOS target recalculates at your revenue: 10 percent before taxes, or 3.5 points better than your trade's industry average, whichever is higher.
What profit margin should a small electrical business run?
Owners usually mean net profit when they say profit margin, and for electrical at $1M–$5M that's 9%. Gross margin is a different number, 25%, and it's what's left after job costs but before overhead. Overhead is the 16% between the two. A small electrical business holding 9% net is at the published figure for its size, and the CFOS target at that revenue is 12.5%.
Does electrical get more profitable as it grows?
Overhead is the number that moves. Electrical sheds 6 points between $1M–$5M and $500M+, which is in line with the 6 points electrical and technology sheds as a group. Net profit is already above the 48-trade average, so the room is in holding it while revenue climbs.
Where does electrical rank against the other trades?
Electrical is 1st of 6 in electrical and technology on net profit. It is the most profitable in the group. Fiber, Solar and Telecom run the leanest overhead at 15%. Gross margin ranks 5th of 48 and overhead ranks 32nd.
That's the industry average and the CFOS target for electrical at every size. Want your own books set beside them? The Financial Health Snapshot builds a CEO Report from your last twelve months, sets every figure against your trade, and walks you through it on a 60 minute call. SPM The Construction CFO (Sulphur Prairie Management, LLC) is a separate firm, and the same author runs it.
Everything on this page is something you can install yourself, and CONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for electrical contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.