Gross profit per job, net profit for the business and what the owner takes home are three separate figures. A man saying he makes 40 percent is usually talking about the first. A man saying he makes 8 percent is usually talking about the second. Both can be the same business in the same year, so set the target from your own overhead rather than from a trade average.
Written by JD Davenport, who still sells for a living. Updated 4 November 2026.
Before the number, the definition, because most of the disagreement about contractor profit is a disagreement about which number is being discussed.
Gross profit on a job. Contract value minus what it cost to deliver that job. Material, labor, subcontractor, equipment, disposal, permits. The costs that exist because that job existed.
Net profit for the business. Gross profit across every job, minus the costs that exist whether or not you sold anything. Rent, insurance, the truck payment, the office, your own salary.
What the owner takes home. Net profit plus or minus how the business is structured, what was reinvested, and what was already paid as wage.
A man saying he makes 40 percent is usually talking about the first. A man saying he makes 8 percent is usually talking about the second. Both can be the same business in the same year.
A target margin is not a fact about your trade. It is an output of your overhead, your volume and your crew cost, and those are yours. Two roofing companies in the same county can need different gross margins to produce the same net, because one carries a shop and three trucks and the other works out of a driveway.
So the useful question is not what the industry makes. It is what you need, which is answerable with arithmetic rather than with a search.
Take your fixed costs for a year. Add what you intend to pay yourself. Add what you want left over. Divide that total by the revenue you can realistically produce. That ratio is the gross margin your business requires, and it is the only benchmark that has your name on it.
Not the average. The spread.
Averages hide tails, and tails are where the money is. A company averaging 28 percent might be running a tight, boring 27 to 29 on everything, or it might be running 40 on most jobs and losing money on five. Those are different businesses with the same average, and they need different fixes. The first has a pricing problem. The second has an execution problem on a handful of jobs and does not know which ones.
Sort your finished jobs by margin, worst first. Look at the bottom ten. If the shortfall is concentrated there, your average is a distraction.
A margin figure is only as good as the cost number underneath it, and job costs assemble late. The disposal invoice arrives after the job closed. A labor ticket with dump fees on it goes entirely to labor. Material for two jobs on one street goes to whichever job number got typed. Returned material gets credited to the account instead of the job.
None of that is carelessness and none of it is fixed by asking people to be careful. It is what happens when cost arrives from four systems on four timetables and nothing forces them to agree.
Until every dollar that left the business can be attached to a job, a date and a document, your margin number is an opinion with decimal places.
You can state a job's full cost within your pay cycle. You can show the line items, not a total. You can name which jobs finished under your floor and say what happened on each one. And the gap between what you quoted and what it cost is small enough that you stopped being surprised.
That is a higher bar than a percentage and it is worth more, because it is the thing that produces the percentage.
The method for closing a job's cost to the dollar, the tests that find what did not reconcile, and the workbook are The Job Cost Standard. If the shortfall turns out to be concentrated in a few jobs, the gates are The Production Standard. More answers on the questions page.