What is the average gross profit margin for construction subcontractors?

Gross margins for commercial subcontractors doing $1M to $5M in revenue typically range from 18% for labor-heavy trades like framing, flooring, and drywall up to 26% for electrical, mechanical, and waterproofing. Margins climb steadily as revenue grows because larger contractors negotiate better material pricing, run more efficient crews, and have more leverage on equipment costs.

What gross margin should a construction subcontractor target?

The CFOS target is 22 to 30% gross margin per project. Industry averages at $1M to $5M sit between 18% and 26% depending on trade. Gross margin has to cover overhead before any net profit exists, so a 20% gross margin against a 22% overhead is already a losing project before the first day of work.

Why is gross margin different from net profit?

Gross margin is what is left after direct job costs (material, labor, subcontractors, equipment specific to the job). Net profit is what is left after gross margin pays the overhead (rent, office staff, owner salary, software, insurance). A subcontractor running 24% gross margin with 18% overhead has 6% net profit. The same gross margin against 28% overhead has negative 4% net profit.

How is gross profit margin calculated for construction subcontractors?

Gross profit margin equals gross profit divided by total revenue. Gross profit equals revenue minus direct job costs: material, labor (fully burdened with payroll taxes, workers comp, and benefits), subcontractors, and equipment costs allocated to specific projects. It does not include overhead, owner salary, or office costs.

Why do some trades show higher gross margins than others?

Specialty trades with high technical content, licensing requirements, or safety risk (electrical, mechanical, waterproofing, elevator) command higher gross margins than commodity trades (framing, painting, flooring). The market rewards trades that fewer contractors can perform competently. Labor-intensive trades with low barriers to entry compress to the lower end of the range.

Does revenue band affect gross margin?

Yes, but less than it affects overhead. Gross margin typically improves 5 to 10 percentage points from the $1M to $5M band up to the $500M+ band, while overhead drops 6 to 8 points across the same range. The combined effect is why net profit benchmarks improve faster than either input metric alone.

Gross Margin · 48 Trades · 7 Revenue Bands

WHAT’S THE AVERAGE
GROSS MARGIN FOR
YOUR TRADE?

Gross margin is what is left after direct job costs and before overhead. It has to cover overhead before net profit even exists. Here’s the industry data: 48 trades, 7 revenue bands. Enter your revenue to see what every benchmark means in real dollars.

Gross margins across commercial construction trades range from 18% at the low end (framing, painting, flooring at $1M–$5M) to 36% at the top (scaffolding at $500M+). For most subcontractors doing $1M–$12M, industry gross margins sit between 18% and 26% depending on trade. The CFOS target is 22 to 30% per project. A thin gross margin caps net profit no matter how lean the office runs, so this is where every job has to start.

Published: May 2026Updated: June 202648 Trades · 336 Data Points

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Trades Covered

SPM Trades

$1M–$500M+

Revenue Range

GROSS MARGIN

Metric Tracked

Your Annual Revenue type or slide to see real dollar values

$ Million

$1M$3M$5M$10M$25M$50M$100M+

1% Gross Margin Equals

$30,000

per year at your revenue

Industry Average Gross Margin

$225,000

based on the average across all trades

Each 1% Improvement Adds

$30,000

in gross profit dollars per year

Gross Margin · Industry Benchmarks · By Trade and Revenue Band

SPM SPM serves this trade directly through CFOS

° derived from nearest comparable trade

SPM trade names are clickable. Click to see the financial operating system for that trade.

Trade	$1M–$5M	$5M–$10M	$10M–$25M	$25M–$50M	$50M–$100M	$100M–$500M	$500M+

SPM badge = one of 24 CFOS trades. These are industry-average benchmarks, not the CFOS target. 1% of $1M = $10,000 | 1% of $5M = $50,000 | 1% of $10M = $100,000

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