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What's a Good Net Profit Margin for a Trade Business in Australia?

By Luke Tadich · The Tradie Owner

You did $2.1 million last financial year. Your accountant sent through the P&L, you scrolled to the bottom line, and it said something like $60,000 net profit — and that's before you've even paid yourself a proper wage out of it. You've got five crews on the road, a full pipeline, and you're still checking the business account before you approve a super payment. Something doesn't add up, and it isn't your work ethic.

It's your margin. Turnover is a vanity number. Net profit margin — what's actually left after every cost, including a real wage for you — is the number that tells you whether you're running a business or a very demanding, moderately paid job.

What a healthy net margin actually looks like, by trade type

There's no single number that fits every trade, because the cost structure is different. Rough, realistic ranges for a well-run business, after ALL costs including your own market-rate wage and super:

• Service and repair trades (plumbing, electrical, HVAC, auto) running quoted jobs day to day: 15–20%+ is healthy. These trades carry less material risk and can price for margin more precisely.
• Construction, building and renovation (project-based, heavy material and subcontractor spend, fixed-price risk): 8–12% is solid. Don't compare yourself to a service trade here — the cost structure is genuinely different.
• Landscaping, concreting, fencing, tiling and similar labour-plus-materials trades: 12–18% is a fair target.
• Niche and specialist trades with less price competition (pool building, high-end joinery, specialist compliance work): often 18–25%, because the market has fewer people who can do it.

Now compare that to reality. Industry data and every set of trade business books I've been shown over the years put the honest average somewhere around 3–6% net — and a lot of that is owners not paying themselves properly, which flatters the number further. Plenty of $1M–$5M trade businesses are running at 1–2%. That's not a business. That's a very expensive way to stay busy.

Why so many owners are stuck under 5% despite strong turnover

It's almost never one big thing. It's four small things, compounding quietly for years:

• Pricing to match the market, not your costs. You quote what "feels competitive" instead of what covers your actual overhead plus a real margin. Every job you win that way is a job that's quietly losing you money.
• No real wage in the numbers. If you're not paying yourself a market rate — what you'd pay a manager to run this business — your "profit" is partly just your own unpaid labour showing up as a number on a spreadsheet.
• No job costing. You know the business made money this year. You couldn't tell me which three jobs lost it. Without job-level numbers, you can't see the bleed until it's already happened.
• Free variations. Scope creep on-site gets absorbed because pulling out the variation form mid-job feels awkward. That's margin walking out the door, one "while you're here" at a time.

Gross margin vs net margin — the mix-up that hides the real problem

A lot of owners quote me their gross margin — revenue minus direct job costs like labour, materials and subbies — and think that's the health check. It isn't. Gross margin in the 30–45% range can still leave you with a business that nets 2%, because rent, insurance, vehicles, admin wages, software, and your own income all come out of what's left. Net margin is the only number that tells you what actually landed in the business after everything real is paid, yours included.

How to find your real number this week

1. Pull your P&L for the last 12 months — not year-to-date, the full trailing year, so seasonal jobs don't skew it.
2. If you're not already paying yourself a proper market wage plus super through the business, add that back in as a real cost before you calculate anything.
3. Net profit = total revenue minus COGS (materials, direct labour, subbies) minus all overheads minus your real wage.
4. Divide that by total revenue and multiply by 100. That's your actual net margin — compare it to the ranges above for your trade type, not to your turnover.

Most owners who do this exercise properly for the first time go quiet for a minute. That reaction is normal. It's also the useful part — you can't fix a number you've never actually looked at.

What actually moves the number

It's rarely "find more customers." More jobs at the same thin margin is more revenue and the same weak result, just with more risk and more staff to manage. The moves that actually shift net margin are pricing discipline (quoting off your real costs, not the competitor down the road), proper job costing so you know which jobs to say yes to again, charging for variations without apology, and cutting the client types and job types that are quietly unprofitable no matter how busy they keep you.

I built and scaled a trade business myself before I did this full time, and the margin conversation was the one that changed everything else — not because the number itself is magic, but because once you can see it clearly, you stop making decisions on turnover and start making them on profit. That's the whole game.