Where solar contractors lose money
5 things cost solar contractors money without ever becoming a line item, and each one traces to a step you can install. Solar contractors average 22% gross margin, 15% overhead and 7% net profit at $1M–$5M of revenue. The CFOS target at that size is 24.5% gross margin, 14% overhead and 10.5% 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.
Solar ranks 3rd of 6 in electrical and technology on net profit, and it has leaner overhead than the 48-trade average. Here is every figure, across all 7 revenue bands.
Solar by revenue band
| Metric | $1M–$5M | $5M–$10M | $10M–$25M | $25M–$50MModeled | $50M–$100MModeled | $100M–$500MModeled | $500M+Modeled | CFOS target at $1M–$5M |
|---|---|---|---|---|---|---|---|---|
| Overhead | 15% | 14% | 13% | 12% | 11% | 10% | 9% | 14% |
| Gross margin | 22% | 23% | 24% | 25% | 27% | 28% | 30% | 24.5% |
| Net profit | 7% | 9% | 11% | 13% | 16% | 18% | 21% | 10.5% |
| Metric | $1M–$5M | $5M–$10M | $10M–$25M |
|---|---|---|---|
| Overhead | 14% | 13% | 12% |
| Gross margin | 24.5% | 25.5% | 26.5% |
| Net profit | 10.5% | 12.5% | 14.5% |
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.
SPM The Construction CFO. SPM Trade Benchmark Reference: Solar. 2026. Sulphur Prairie Management, LLC. https://runoncfos.com/trades/solar. 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 compiled by SPM The Construction CFO, validated against published CFMA and JMCO benchmarks. The CFOS targets beside them are from the book CONTROL: The 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.
- SPM Trade Benchmark Reference, Sulphur Prairie Management, 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 solar
Your panels came in three weeks and the pad-mount transformer is quoted at a year. You sold at a fixed dollar per watt in March and bought steps in June, and a trade ruling in between moved the cost. The physical work ended months ago. You bid one mobilization and the job pulled six: survey, panel upgrade, racking and set, inspection, meter swap, and commissioning.
Each one below points at the item, the unit, the clock, or the party that makes it a solar problem, and it says which step fixes it.
| Mechanism | Why it's specific to this trade | Step |
|---|---|---|
| The transformer sets your schedule and you don't own it | Most trades wait on the GC, and a GC delay at least comes with a schedule impact letter and somebody to send it to. A solar sub waits on a regulated monopoly that has no contract with him, owes him no delivery date, and can add scope to his job after the price is locked. The interconnection queue is the only critical path in construction where the party holding up the work is also the party who has to approve it when it's done. | Project management |
| A tariff ruling can eat the margin on a signed contract | Copper and lumber move on markets, where you can hedge and a supplier will hold a quote for a while. Solar's biggest cost line moves on rulings from Commerce, USTR, and CBP that publish with no warning and apply retroactively to product already in transit. No other trade in the stack has half their job cost resting on a customs decision. | Estimating system |
| Your retention is released by a document reviewer | Other trades get held for punch work, and punch work is fixable with a truck and a Tuesday. A solar sub gets held because a tax equity reviewer three parties removed needs to prove the array performs and the labor was paid correctly, and neither of those is something a foreman can go fix. The retention is functionally collateral on somebody else's tax credit. | Monthly cadence |
| You bid one trip and the inspector made it seven | Most trades mobilize once or twice and stay until the scope is done. Solar returns four to six separate times by design, with three different agencies and a utility each able to send you back for a defect the crew can't see from the roof. A wrong placard costs the same truck roll as a failed array, and neither one is billable. | Equipment cost basis |
| The part is covered. The lift and the crew are on you. | No other trade gives its customer a live telemetry feed pointed at its own workmanship. A homeowner can't see a drywall seam degrade, but a solar customer watches a per-panel production graph on his phone every morning and calls when one tile turns yellow. Twenty-five years of that, against hardware coverage that pays for the part and nothing else, is a labor liability that never reached the balance sheet. | Overhead calculation |
Solar against the other 47 trades
| Metric | Solar | Electrical and technology average | All 48 average | Rank |
|---|---|---|---|---|
| Overhead | 15% | 15.5% | 15.1% | 17th of 48 |
| Gross margin | 22% | 22.8% | 22.1% | 20th of 48 |
| Net profit | 7% | 7.3% | 7% | 21st of 48 |
Solar 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 leanest one is this trade.
Other electrical and technology trades
What owners ask
What overhead should a solar contractor run?
Solar shares its overhead figure with 14 other trades at this revenue, which is what the published data resolves to. It averages 15% at $1M–$5M and 9% at $500M+, as a percentage of revenue. That is 0.5 points below the electrical and technology average of 15.5%. The CFOS target at $1M–$5M is 14%. The CFOS target is one point leaner than your trade's industry average at your revenue.
What gross margin should a solar contractor run?
Solar shares its gross margin figure with 12 other trades at this revenue, which is what the published data resolves to. It averages 22% at $1M–$5M and 30% at $500M+, as a percentage of revenue. That is 0.8 points below the electrical and technology average of 22.8%. The CFOS target at $1M–$5M is 24.5%. 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 solar contractor run?
Solar shares its net profit figure with 16 other trades at this revenue, which is what the published data resolves to. It averages 7% at $1M–$5M and 21% at $500M+, before taxes, as a percentage of revenue. That is 0.3 points below the electrical and technology average of 7.3%. The CFOS target at $1M–$5M is 10.5%. 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 solar business run?
Owners usually mean net profit when they say profit margin, and for solar at $1M–$5M that's 7%. Gross margin is a different number, 22%, and it's what's left after job costs but before overhead. Overhead is the 15% between the two. A small solar business holding 7% net is at the published figure for its size, and the CFOS target at that revenue is 10.5%.
Does solar get more profitable as it grows?
Overhead is the number that moves. Solar 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 starts 0 points under the 48-trade average, so the room is in the overhead line before it's anywhere else.
Where does solar rank against the other trades?
Solar ties 2 trades in electrical and technology on net profit, all at 7%. Electrical is the most profitable at 9%. Its overhead is the leanest too, level with Fiber and Telecom. Gross margin ranks 20th of 48 and overhead ranks 17th.
That's the industry average and the CFOS target for solar 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, andCONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for solar 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.