The bands
As a share of revenue, accrual basis, with owner compensation normalized to market rate. These are operating targets for trades and home services businesses, not audited industry statistics.
| $3M – $8M | $8M – $15M | $15M+ | |
|---|---|---|---|
| Gross margin | 48 – 54% | 50 – 56% | 52 – 58% |
| Marketing | 6 – 9% | 5 – 8% | 4 – 7% |
| Overhead | 27.5 – 32.5% | 25 – 30% | 22.5 – 27.5% |
| Net margin | 12.5 – 17.5% | 15 – 20% | 17.5 – 22.5% |
Why the bands move with size
Fixed overhead absorbs as revenue grows — the same dispatcher, the same building and the same software license spread across more work. That is the entire economic argument for scale in this industry, and it means a single flat benchmark across a 7× revenue range will always mislead one end or the other.
Gross margin drifts up more slowly than overhead falls, because larger operations buy better but also carry more warranty, callback and management cost inside delivery.
The four caveats
Read all four before comparing yourself to anything above.
- Chart of accounts. If your job costs and overhead are mixed, your gross margin is not comparable to anyone's. Fix the accounts first.
- Owner compensation. Normalize to what it would cost to replace you. Otherwise a business paying its owner $400k looks unprofitable and one paying $80k looks exceptional, when they may be identical.
- Trade mix. New-construction-weighted work runs lower gross margin at higher volume; service and replacement run higher. A roofing business and a pest control route do not share a band.
- Accounting basis. Cash-basis books understate expense because unpaid bills sit off the statement. Comparing cash-basis actuals to accrual benchmarks flatters you by roughly ten percent of overhead.
Key point. A benchmark tells you where to look, never what to do. The number is a question, not a verdict.
What being outside the band actually means
Below the gross margin band: pricing has not kept up with cost, or delivery is inefficient, or discounting is happening in the field. Most expensive problem on the page.
Above the marketing band: only a problem if cost per booked job is rising. Otherwise it may be the best investment you are making.
Below the marketing band: the most dangerous place to be, and it feels like the safest. You are borrowing from next year.
Above the overhead band: the structure has outgrown the revenue. Check overhead per field technician before cutting anything.
Below the net band with everything else in band: an arithmetic impossibility — one of your inputs is misclassified. Start with the chart of accounts.
Put it to work
Part of Fix My Business , Profit Coaching and Get Ready to Sell .