What profit margin should a home service business make, and how do you know yours?

Gross margin and net margin are not the same

Gross margin is what is left of a job's price after its direct costs: the crew's pay, parts, fuel and disposal. Net margin is what is left after you also pay for overhead: office staff, insurance, trucks, ads, software and your own admin time. Gross answers "did I price this job right?" Net answers "is the business making money?"

The gap is where owners get fooled. A junk removal bookkeeping guide breaks down a $350 cleanout with about $143 of direct cost, a 60 percent gross margin. Once marketing, insurance, truck payments and admin are spread across jobs, that job often nets $50 to $100, a 15 to 30 percent net margin. The owner feels rich at 60 percent and is paid at 15.

When you read any benchmark below, ask which kind it is. Many web pages mix them.

Margins by trade

These numbers come from trade guides, software vendors and one industry study. They disagree with each other, so I show the source type. Treat them as a range for a sanity check.

Trade	What the sources say
HVAC (heating and cooling)	A consultant guide says typical net margin is 8 to 15 percent and the best reach 16 to 20 percent. A 2024 survey from ACCA, the air conditioning contractors' trade group, as quoted on a vendor's blog, has a median net of about 5.8 percent. Gross margin is 28 to 42 percent in one guide and 30 to 45 percent in another.
Plumbing	A 2026 trade guide puts service plumbing at 35 to 55 percent gross margin, the highest of the trades it covers. Net is lower and depends on how much you spend on overhead.
Electrical	The same guide puts electrical service and repair at 35 to 50 percent gross.
Landscaping and lawn care	A time-tracking vendor says healthy net is 10 to 20 percent: 15 to 20 for residential lawn work and 10 to 15 for commercial. It cites an industry average of 13.0 percent for 2025. Design and hardscape jobs run 25 to 40 percent against 10 to 15 for basic maintenance.
Cleaning	A cleaning business owner writing for a phone-system vendor reports residential gross 40 to 50 percent and net 20 to 30 percent, and commercial gross 30 to 35 and net 20 to 25. A landscaping and cleaning software vendor, quoting a business magazine, says janitorial owners aim for 10 to 28 percent net, and the same page cites IBISWorld, a market research firm, putting actual janitorial profit at a steady 6.3 percent. The spread is wide, possibly because sources count the owner's own labor differently.
Pest control	The 2025 study from the National Pest Management Association and a bookkeeping firm, as quoted by PestPac, reports average gross margin of 58 percent, operating profit of 15 percent, direct labor at 25.8 percent of revenue, and recurring revenue at 74 percent of income.
Junk removal	A bookkeeping blog says well-run operations earn 20 to 40 percent net, with single-truck owners at the low end.
Dumpster rental	See my worked example in dumpster rental profit: 19 percent at 20 hauls a month, 29 percent at 40, in made-up numbers.

PestPac is software for pest control companies, Harvest is a time-tracking tool, Aspire is software for landscaping and commercial cleaning companies, and Quo is a business phone system. Each has a reason to publish benchmarks, so use the numbers to start questions, not to score yourself.

Can an HVAC, plumbing or junk removal business be profitable?

Yes. All of these trades have owners who clear 15 percent or more. HVAC is hurt by low-margin equipment sales. A consultant guide gives 30 to 38 percent gross for service work, 18 to 25 percent for equipment and 45 to 55 percent for maintenance agreements. A shop that is 75 percent emergency calls will struggle to exceed 10 percent net, according to the same guide, while one with 30 to 40 percent maintenance can hit 15 or more.

Plumbing has high margins on repair and repiping, but the same overhead problem as everyone else. Junk removal and dumpster rental depend heavily on volume, since truck and insurance costs are fixed.

Why home service businesses fail

There is no tidy failure rate by trade, but the same patterns show up again and again in the sources:

• Unknown net margin. A trade guide describes HVAC owners who thought they ran a 25 percent net margin and found it was nearer 7 percent after overhead was spread across jobs.
• Labor too high. One HVAC guide calls labor above 40 percent of revenue a red flag and wants technicians billable 75 to 80 percent of hours.
• Equipment priced too low. The same guide says equipment sales should carry a 25 to 35 percent markup and recommends fixed call and diagnostic fees instead of discounting.
• Too much emergency work. It earns well per call but is unpredictable. Without maintenance agreements, slow weeks sink you.
• Underpricing. The guide says a 5 percent better average ticket price adds 1.5 to 2 points of net margin, so a 5 percent discount gives up a similar amount.
• Thin landscaping margins. One trade guide calls landscaping the trade with the lowest skill barrier and lowest margin among those it covers, so there is little room for mistakes in pricing.
• Cash gaps and fixed costs. Trucks, insurance and payroll hit whether or not jobs are booked.

Almost every one of these is invisible if you only look at the bank balance. They show up when you look at each job.

How to see profit per job, step by step

1. List the direct costs for one job type. Loaded labor (wages plus payroll tax and benefits), parts, fuel or drive time, disposal, and payment fees.
2. Log the actual hours and parts for each job, not the quote. This is the step most shops skip.
3. Calculate job profit. Price billed minus direct costs. Divide by price to get gross margin.
4. Find your overhead rate. Add up a month of rent, office pay, insurance, ads, software and truck payments. Divide by that month's revenue. A trade guide says HVAC overhead typically runs 18 to 26 percent.
5. Subtract overhead from gross margin. That is net margin for the job type.
6. Compare job types. Repairs, installs, maintenance visits and commercial work usually earn very differently.

Here is a made-up example for a water heater replacement billed at $2,400.

Line	Amount
Price billed	$2,400
Water heater and parts	$900
Two technicians, 4 hours, loaded	$440
Truck, fuel and disposal	$90
Card fees (about 3 percent)	$72
Job profit	$898 (37 percent gross)
Overhead at 24 percent of price	$576
Net profit	$322 (13 percent net)

The same job quoted 5 percent lower ($2,280) with the same $576 of overhead would net about $206, down 36 percent. That is why small discounts hurt so much.

Where the data lives

A spreadsheet with one row per job works at first. Most field service tools hold the price, labor and parts, so the gap is usually reporting. My KPI dashboard guide covers which numbers to watch each week, and business process automation shows how to move job data into one place without retyping. If your tool can't show margin by job type, that is a sign the report needs building, not that your data is bad.

How I'd approach this

Pick one job type that you do most. Pull the last 20 jobs of that type and work out gross and net margin with the steps above. This takes an afternoon and teaches more than any benchmark.

Then decide with your own number. If it is under 10 percent net, look at labor, parts markup and discounting first. If it is over 15, protect it by growing the high-margin work, usually maintenance agreements or commercial contracts. Check your accountant's overhead figures twice a year, because overhead creeps. If your software cannot show you margin by job, I can build you a simple report on top of your existing data.