GUIDE

What is a good profit margin for a trades business?

Q: What is a good profit margin for a trades business?

A healthy net profit margin for a solo tradesperson typically falls between 10% and 20%. To protect this margin, you must accurately track all billable hours and travel mileage to ensure no costs or billable moments are overlooked.

By Ryder Wishart — years on the tools, then time tracking in a contractor’s back office · Updated 2026-06-08

Gross Margin vs. Net Margin

Gross margin only accounts for direct job costs like materials and sub-contractors. It does not tell the whole story of your business health.

Net margin is the true measure of success, as it includes your overhead, insurance, tools, and vehicle expenses. A high gross margin can quickly disappear if your overhead is not strictly managed.

The Impact of Unrecorded Costs

Unrecorded travel time and forgotten mileage are 'silent killers' of profit. If you aren't capturing every billable minute and every taxable mile, your actual margin will be lower than your estimates.

Tracking every trip between jobsites ensures you have the data needed to account for fuel, vehicle wear, and potential billable transit time.

Protecting Your Bottom Line

To maintain a steady margin, you must differentiate between 'stops' (active work) and 'trips' (travel). Accurate logs allow you to see exactly how much of your day is spent generating revenue versus moving between locations.

Use this data to adjust your job pricing. If your travel time is increasing without a corresponding increase in billable hours, your margins are at risk.

FAQ

How do I calculate my net profit margin?

Divide your net profit (total revenue minus all expenses) by your total revenue, then multiply by 100.

Does mileage affect my profit margin?

Yes. Fuel, maintenance, and depreciation are overhead costs that directly reduce your net profit margin.

Last updated 2026-06-08.