How Much Profit Should Contractors Make?

Net profit — what's left after every cost including your own salary is paid — commonly lands between 8% and 15% for general contractors on residential work, with remodeling and specialty trades often reaching 15-20% because the labor is more skilled and less commoditized. New construction and large commercial work tends to run thinner, sometimes 5-10%, because it's more competitively bid and margins get squeezed by volume.

Gross profit (before overhead) is a different, larger number — often 30-40% — and it's the one that confuses owners who think they're profitable because gross margin looks healthy while overhead quietly eats the difference.

The contractors who consistently hit 15%+ set that target before they price a job, not after. They build the margin into the estimate the same way they build in material cost, then treat any erosion of it — a supplier price increase, a scope creep the client didn't pay for — as a problem to solve with a change order, not something to quietly absorb.

If you're pricing jobs and just seeing what's left at the end, you're not managing profit, you're hoping for it. That's the single biggest difference between contractors who grow and contractors who stay the same size for a decade.

Take your last five completed jobs, subtract every actual cost including a fair overhead allocation, and divide by revenue. If the average is under 10%, look first at whether your estimates include overhead at all — that's the most common leak.