Say which margin first. Gross margin on a job and net margin on the business are different numbers, and a roofer running 40 on the first and 7 on the second can be one company in one year, telling the truth twice. Do not copy a benchmark. Build the target out of your own costs, which takes twenty minutes and produces a number with your name on it.
Written by JD Davenport, who still sells for a living. Updated 4 November 2026.
Roofing in the question because that is where the examples come from. The arithmetic is the same for any business that quotes the work, does the work and sends an invoice: landscaping, fencing, decking, power washing, painting, HVAC, plumbing, electrical, remodeling.
Every published figure for roofing margin has the same defect. Almost none of them say whether they mean gross margin on a job or net margin on the business, and those two numbers are not close to each other in the same company in the same year.
Gross margin on a job. Contract value minus the costs that exist because that job existed. Material, labor, subcontractor, equipment, disposal, permits.
Net margin on the business. All of that, minus the costs you carry whether or not you sold anything. Rent, insurance, the truck payment, the office, your own pay.
A roofer saying he runs 40 is talking about the first. A roofer saying he runs 7 is talking about the second. They can be the same business, the same year, both telling the truth.
So the first thing to do with any margin figure you read is ask which one it is. If the source does not say, you have a number without a denominator, and it cannot be compared to anything you have.
Required gross margin is an output of your overhead, your volume and your crew cost. All three are yours.
Two roofing companies in the same county can need different gross margins to produce the same take-home, because one carries a shop, three trucks and an office person, and the other works out of a driveway with a phone. The one with lower overhead can win work at a margin that would bankrupt the other. Neither is doing it wrong.
Copy a number off a forum and you are running at a margin somebody else's cost structure can carry. Yours may not.
Take your fixed costs for a year. Everything that bills whether or not you sell a roof.
Add what you intend to pay yourself, as a real number rather than whatever is left.
Add what you want the business to keep.
Divide that total by the revenue you can realistically produce next year.
That ratio is the gross margin your business requires. It is defensible because you can show the arithmetic that produced it, and it is the only benchmark that answers your question rather than somebody else's.
The spread.
A company averaging 28 percent might be running a steady 27 to 29 on everything, or it might be running 40 on most jobs and losing money badly on five. Same average. Different business. Different fix.
The first has a pricing problem across the board. The second has an execution problem on a handful of jobs and cannot name which ones, which is worse, because it is invisible in every report that reports an average.
Sort your finished jobs by margin, worst first. Look at the bottom ten. If your shortfall is concentrated there, the average was never the thing to fix.
A margin figure is only as good as the cost underneath it, and roofing costs land late and scattered. The disposal invoice comes after the job closed. A labor ticket with dump fees on it goes entirely to labor. Material for two jobs on the same street goes to whichever job number got typed. Returned material is credited to the account instead of the job.
Until every dollar can be attached to a job, a date and a document, your margin is an opinion with decimal places. Fix that first and the benchmark question answers itself.
The method for closing a job's cost to the dollar, and the tests that surface what did not reconcile, are The Job Cost Standard. If the shortfall turns out to be concentrated, the gates are The Production Standard. More answers on the questions page.