Where fire alarm contractors lose money
6 things cost fire alarm contractors money without ever becoming a line item, and each one traces to a step you can install. Fire alarm contractors average 24% gross margin, 16% overhead and 8% net profit at $1M–$5M of revenue. The CFOS target at that size is 26.5% gross margin, 15% overhead and 11.5% 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.
Fire alarm ranks 4th of 7 in mechanical and life safety on net profit, and it has heavier overhead than the 48-trade average. Here is every figure, across all 7 revenue bands.
Fire alarm 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 | 24% | 25% | 26% | 27% | 29% | 30% | 32% | 26.5% |
| Net profit | 8% | 10% | 12% | 14% | 17% | 19% | 22% | 11.5% |
| Metric | $1M–$5M | $5M–$10M | $10M–$25M |
|---|---|---|---|
| Overhead | 15% | 14% | 13% |
| Gross margin | 26.5% | 27.5% | 28.5% |
| Net profit | 11.5% | 13.5% | 15.5% |
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: Fire alarm. 2026. Sulphur Prairie Operations, LLC. https://runoncfos.com/trades/fire-alarm. 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.
6 problems specific to fire alarm
Sixty grand of control panel is on your shop floor and there's nothing on the pay application it can go against. You've got NICET time, riser drafting, and battery calcs stacked up on a job where you haven't set a single box, and no cost code holds any of it. You bid the equipment off a quote good for 30 days, then bought it out eight months later at the new price sheet, with no second vendor to shop it to. The building can't get its certificate of occupancy without your acceptance test, and you're still chasing ten percent a year after you passed it.
Each one below points at the item, the unit, the clock, or the party that makes it a fire alarm problem, and it says which step fixes it.
| Mechanism | Why it's specific to this trade | Step |
|---|---|---|
| Your panel ships months before you can bill a dollar | Fire alarm is a closed proprietary line. Devices only talk to their own panel, so every piece comes from one authorized distributor at that manufacturer's price sheet, with no second bid and no substitution to soften the buy. Engraved annunciators and voice message firmware are built to order once the point count is locked, so the lead-time clock doesn't even start until submittals come back, and Fire-Lite currently lists panels discontinued outright for component constraints. | Monthly cadence |
| Two hundred drafting hours with no cost code to hold them | Most trades submit cut sheets and move on. Fire alarm submits engineering, and that engineering goes through two reviews back to back, the second one held in a permit queue you don't control and can't schedule around. Every hour of it is real payroll and real fee money spent months before any schedule of values line will accept it. | Job cost structure |
| A 30-day quote can't hold a nine-month buyout | Any other trade with commodity exposure can at least re-bid the buyout against a second supplier and claw some of it back. You can't, because the devices are keyed to the panel and the panel comes from one authorized distributor at one price. On a two-year school or hospital, that same exposure repeats on every release you take. | Estimating system |
| You gate the CO, which is why your retention pays last | Subcontractors wait an average of 167 days for retainage against 99 days for GCs, and two of three subs give up 10% where one of three GCs does. Fire alarm is at the far end of that curve because its scope can't close until everybody else's does. The money you earned setting boxes in month four is the last money on the job to move. | Software and bookkeeping alignment |
| You bid three trips and you've made nine | Each of those fixes is a two-man crew and a lift for half a day, written on a T&M ticket the superintendent won't sign because he calls it your device. Other trades finish an area and leave it. Fire alarm keeps coming back because its devices live in a ceiling four other trades are still working in, and because acceptance is one event the whole building has to be ready for at once. | Project management |
| A dirty detector at 2 a.m. isn't warranty work | The call comes at night, there's no PO, and the owner on the other end is still holding your retention, so no one in your shop wants to be the one who sends the invoice. Every one of those hours is fully burdened labor with a night premium, charged against jobs you already closed and already reported a margin on. It settles into overhead where it looks like the cost of doing business. | Overhead calculation |
Fire alarm against the other 47 trades
| Metric | Fire alarm | Mechanical and life safety average | All 48 average | Rank |
|---|---|---|---|---|
| Overhead | 16% | 16.1% | 15.1% | 32nd of 48 |
| Gross margin | 24% | 24.6% | 22.1% | 8th of 48 |
| Net profit | 8% | 8.4% | 7% | 8th of 48 |
Fire alarm sheds 6 points of overhead between $1M–$5M and $500M+, against 6.3 for mechanical and life safety as a group. Inside that group, Mechanical, Plumbing and Elevator all keep 9%, the most in the group, and Fire protection runs the leanest overhead at 15%. Fire alarm is neither, which is the usual position and the one with the most room in it.
Other mechanical and life safety trades
What owners ask
What overhead should a fire alarm contractor run?
Fire alarm 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 0.1 points below the mechanical and life safety average of 16.1%. 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 a fire alarm contractor run?
Fire alarm shares its gross margin figure with 4 other trades at this revenue, which is what the published data resolves to. It averages 24% at $1M–$5M and 32% at $500M+, as a percentage of revenue. That is 0.6 points below the mechanical and life safety average of 24.6%. The CFOS target at $1M–$5M is 26.5%. 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 a fire alarm contractor run?
Fire alarm shares its net profit figure with 12 other trades at this revenue, which is what the published data resolves to. It averages 8% at $1M–$5M and 22% at $500M+, before taxes, as a percentage of revenue. That is 0.4 points below the mechanical and life safety average of 8.4%. The CFOS target at $1M–$5M is 11.5%. 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 fire alarm business run?
Owners usually mean net profit when they say profit margin, and for fire alarm at $1M–$5M that's 8%. Gross margin is a different number, 24%, and it's what's left after job costs but before overhead. Overhead is the 16% between the two. A small fire alarm business holding 8% net is at the published figure for its size, and the CFOS target at that revenue is 11.5%.
Does fire alarm get more profitable as it grows?
Overhead is the number that moves. Fire alarm sheds 6 points between $1M–$5M and $500M+, which is in line with the 6.3 points mechanical and life safety 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 fire alarm rank against the other trades?
Fire alarm ties 3 trades in mechanical and life safety on net profit, all at 8%. Mechanical, Plumbing and Elevator are the most profitable at 9%. Fire protection runs the leanest overhead at 15%. Gross margin ranks 8th of 48 and overhead ranks 32nd.
That's the industry average and the CFOS target for fire alarm 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 fire alarm 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.