What is a good profit margin for a tradie in Australia?
By Bailey Holdsworth, founder
25 August 2026 · 8 min read
It depends on your trade and whether you mean gross or net. The ATO's small business benchmarks (2023-24 tax returns) put total expenses for carpentry businesses turning over more than $400,000 at 76% to 87% of turnover, leaving 13% to 24% before tax. For a sole trader that slice still has to cover your own pay.
Ask ten tradies what a good margin is and you will get ten numbers measuring different things. Some mean markup. Some mean gross. Here is what the numbers mean, what the ATO's benchmarks say a trade business keeps, and how to check your own on every job.
The short answer
There is no single good margin for a tradie. The percentage depends on your trade, how much of your turnover is materials, and whether your own wage has come out before you measure. A painter selling mostly labour and a plumber selling a lot of copper can bank the same dollars on very different percentages.
The closest thing to a published national figure is the ATO's small business benchmarks, built from real tax returns. The key ratio for the trades is total expenses to turnover. For carpentry businesses turning over more than $400,000 in 2023-24 it sits between 76% and 87%, so 13% to 24% of every ex-GST dollar is left before income tax. Smaller businesses show a bigger slice, but for a sole trader it still has to pay the owner, because drawings are not a business expense. Full table by trade below.
Gross margin vs net margin
Gross margin is what is left from the price once the direct costs of the job come out. Net margin is what is left after the job has also carried its share of overhead. Both are worked out ex GST, as a percentage of the price.
| Compare | Gross margin | Net margin |
|---|---|---|
| What it measures | Price minus the direct costs of the job | Price minus direct costs and a share of overhead |
| What it includes | Materials, labour on the tools, hire, disposal, subbies | All of that plus the ute, insurance, phone, software and unbillable time |
| The $14,000 deck | $11,900 direct cost, $2,100 left: about 15% | $700 overhead share on top, $1,400 left: 10% |
Same deck, same dollars, two honest margins.
Take the deck from our job costing guide: quoted at $14,000 ex GST, with materials, 90 hours of labour, hire and tip fees coming to $11,900. Gross profit is $2,100, about 15%. Our guide on how to quote a carpentry job prices the same deck with a $700 overhead share on top, leaving $1,400, or 10%. One number compares jobs. The other tells you whether the business makes money.
Why markup and margin are different
Markup is a percentage added on top of cost. Margin is a percentage of the price. Same dollars, different base, so markup always looks bigger. The carpentry quoting guide covers the divide-by method for building margin into a quote; the example below is worth memorising.
Same dollars, two percentages
- Job cost
- $10,000
- Add 25% markup
- $2,500
- Price ex GST
- $12,500
- Profit as a share of the price: $2,500 / $12,500
- 20%
A 25% markup is a 20% margin. Add 20% instead and you land a margin of 16.7%.
This is how tradies quietly lose a few points. You tell yourself you make 25%, but that was a markup, the margin on the invoice is 20%, and after overhead you are closer to 10%. Say which one you mean.
Benchmarks by trade type
The ATO publishes small business benchmarks for many trades, calculated from the tax returns of businesses in the same industry and updated each year; the current set uses 2023-24 returns. For the trades the key ratio is total expenses to turnover: the total expenses reported on the tax return, less payments to associated persons, divided by turnover excluding GST. The ATO says the benchmarks are one of the tools it uses to identify businesses that may be avoiding their tax obligations, and that a business outside the range for its turnover band may have room to improve.
To turn the ratio into something like a margin, take it away from 100: a business at 80% expenses keeps 20 cents of each ex-GST dollar before income tax. Read the last column with care: it is not a net margin in the accountant's sense, because a sole trader's own drawings are not an expense on the return.
| ATO benchmark | Annual turnover band | Total expenses to turnover | Left before tax |
|---|---|---|---|
| Carpentry services | $50,000 to $110,000 | 32% to 50% | 50% to 68% |
| Carpentry services | $110,001 to $400,000 | 46% to 66% | 34% to 54% |
| Carpentry services | More than $400,000 | 76% to 87% | 13% to 24% |
| Electrical services | $50,000 to $200,000 | 51% to 68% | 32% to 49% |
| Electrical services | $200,001 to $500,000 | 59% to 75% | 25% to 41% |
| Electrical services | More than $500,000 | 75% to 86% | 14% to 25% |
| Plumbing services | $50,000 to $150,000 | 50% to 66% | 34% to 50% |
| Plumbing services | $150,001 to $600,000 | 59% to 74% | 26% to 41% |
| Plumbing services | More than $600,000 | 75% to 86% | 14% to 25% |
| Painting services | $50,000 to $150,000 | 36% to 51% | 49% to 64% |
| Painting services | $150,001 to $600,000 | 54% to 71% | 29% to 46% |
| Painting services | More than $600,000 | 74% to 86% | 14% to 26% |
| Landscape construction | $50,000 to $200,000 | 46% to 64% | 36% to 54% |
| Landscape construction | $200,001 to $500,000 | 63% to 77% | 23% to 37% |
| Landscape construction | More than $500,000 | 76% to 86% | 14% to 24% |
ATO small business benchmarks, 2023-24 income year, as published (checked August 2026 against the ATO pages in the sources below). 'Left before tax' is 100 minus the ATO ratio; for a sole trader it still includes the owner's pay.
The ATO's other ratios show the shape of each trade. Painting businesses report cost of sales of between 13% and 21% of turnover across all three bands, with labour at 36% to 49% in the biggest band: labour-heavy. Electrical and plumbing businesses report cost of sales of 20% to 41% depending on the trade and band: material-heavy, with turnover passing straight through to the wholesaler. The carpentry benchmark publishes no cost of sales ratio, only labour (21% to 43% across the bands) and motor vehicle expenses.
That shape changes how you read a margin. In a material-heavy trade a big invoice can carry a thin percentage and still be a good job. In a labour-heavy trade the percentage looks healthier, but you are selling hours, so every unbilled hour comes straight off it. Compare yourself with your own trade and turnover band.
One more pattern: the expense ratio climbs with turnover in every trade, from as low as a third of turnover in the smallest carpentry and painting bands (around half for electrical and plumbing) to three quarters or more in the biggest band. That is structure more than efficiency. A sole trader has no wages bill on paper for their own work, because the owner's pay is drawings. By the top band there are usually employees, super and a second ute, and the owner may be on a company wage. Your sole-trader number and your mate's Pty Ltd number are not comparable.
In our experience the tradies happiest with their margin are not the ones with the highest percentage. They are the ones whose actual margin, job after job, lands close to what they quoted.
What eats margin on real jobs
- Variations never invoiced: the 'while you're here' extras you do to keep the client happy and forget to write up. Two or three can eat a tight job's whole margin.
- Travel and pick-ups: the trip for the thing you forgot, the second trip for the handles, the hour in traffic between jobs. Rarely quoted, always paid for.
- Callbacks and warranty: the door that drops, the tap that drips. Going back is right, and it costs a morning nobody pays for.
- Unbillable quoting time: every site visit and written quote for a job you do not win is overhead the jobs you do win have to carry.
- Rework: a bad set-out, a wrong measurement or the wrong stock delivered means doing something twice for the same price.
None of these show up in a quote-versus-invoice comparison, which in our experience is why so many jobs look fine on paper and thin in the bank. Our guide on why your jobs are not as profitable as you think covers each leak and how to catch it while the job is running.
How to check your margin on every job
You do not need an accountant to check margin. You need the numbers while the job is live. Set the job value ex GST on day one. Log materials as you buy them and hours as they happen, at your true hourly cost, not your bare wage. Cost against value is gross margin; take off the overhead share and you have net. Do it on every job and you learn which work to chase.
Put your last job's quote total, materials and hours into the job profit calculator below and watch what an extra day on site does. It reports gross margin, so take your overhead share off the result.
If you would rather not maintain a spreadsheet, that is what TrackYaTradie does: set the job value once, log costs from your phone on site, and see live profit on every job. See how it works built for carpenters.
Questions
Is 10% margin good for a tradie?+
It depends what the 10% measures. A 10% net margin, after a proper wage for yourself and the job's share of overhead, is a business running to plan. A 10% gross margin, before overhead, leaves little or nothing once the ute and insurance are counted. A 10% that is really a markup is thinner still. Compare it with the ATO benchmark for your trade and turnover band.
Should margin include my own wage?+
No. Pay yourself first, as a cost, then measure margin on what is left. If your wage lives inside the margin you cannot tell whether the business makes money or you are just working. The ATO treats money a sole trader draws from the business as drawings, not wages, so the benchmark's leftover slice includes your pay. Put a market wage for yourself into your hourly cost; the margin on top is the reward for the risk.
Does GST count as revenue?+
No. GST is a 10% tax you collect for the ATO on top of your price once you are registered, and you must register when your GST turnover reaches $75,000. Work every margin on ex-GST figures; the ATO's benchmarks use turnover excluding GST too. Put the GST you collect aside as you go. It was never yours.
What margin do I quote at to land 20% net?+
Start from your full cost, direct costs plus the job's share of overhead, and divide by 0.8. That builds 20% of the price in as margin, the same as a 25% markup on full cost. Then allow for the leaks: unbilled variations, callbacks and travel all come out of that 20%, so price a contingency or write up every variation on the day. The quoted margin is a ceiling.