For most construction businesses, a healthy gross profit margin runs between 20% and 35%. Net profit margin typically lands between 5% and 10%, with well-run companies hitting 8% to 12%. These numbers vary based on what type of work you do and how your business is structured.

The distinction between gross and net margin matters more than most contractors realize. Gross profit is revenue minus direct job costs like materials, labor on the job, and subcontractors. Net profit is what’s left after you also subtract overhead like trucks, insurance, office expenses, and your own salary. A contractor can have a 30% gross margin and still lose money if overhead is eating everything.

Specialty trades often run higher margins than general contractors. An electrician or plumber doing the work with their own crew typically sees better percentages than a GC managing subs. The GC might move more volume but works on thinner margins per job. Neither model is wrong. They just require different minimum margin targets to stay healthy.

Remodelers and custom builders usually need higher gross margins than production builders or commercial contractors. The jobs are smaller, the sales cycle is longer, and there’s more variability in scope. A remodeler working on 18% gross margin is probably struggling. A production builder with steady volume might do fine at that level.

The honest problem is that many contractors don’t actually know their margins. They look at the bank account and assume things are fine. Or they bid jobs at “20% markup” without tracking whether they actually hit that number when the job closes out. Markup and margin aren’t the same thing, and estimated costs rarely match actual costs.

The only way to know your real margins is to track every job from start to finish. Construction job cost tracking shows you what each project actually cost versus what you estimated. You see which jobs made money and which ones bled. You find out whether your framing labor is always over or your material estimates are consistently low.

If you’re not tracking job costs, any margin target is a guess. You might be hitting 25% gross on most jobs and losing money on a few that drag down the average. You won’t know until you have the numbers.

For small business bookkeeping services that understand construction, the goal is giving you real data so margin targets become something you can actually manage instead of hope for.