Specialty trade contractors cleared 6.9% net income before taxes in fiscal 2023. If your electrical shop thinks it runs a 30% margin, it is quoting markup.

Specialty trade contractors reported 6.9% net income before taxes for fiscal year 2023. That is the number worth holding your own bottom line against, and it is nowhere near the figure most electricians quote when asked what margin they run.

If you think you run a 30% margin, you are probably quoting markup or gross margin. Those are different numbers, and the gap between them is wide enough to change how you price jobs, judge your crew, and decide whether the shop is actually making money.

A 30% markup is only about a 23% gross margin

Markup starts with cost. Margin starts with revenue.

Take a job that costs you $100. A 30% markup adds $30, so you sell the job for $130. Your gross profit is $30. But $30 is 23.1% of the $130 sale price. That is a 23% gross margin, not a 30% margin.

The three numbers need separate names:

• Markup: how much you add to your cost.
• Gross margin: gross profit as a percentage of revenue.
• Net margin: what remains after overhead and everything else it takes to run the shop.

This is why an owner can say “I run a 30% margin” while the books show something much lower. The owner may be describing a 30% markup. Or they may be describing gross margin, before the office, trucks, insurance, software, and phone are paid for.

Use the right number when you set prices. The method in how to price electrical jobs without underbidding starts with that distinction, because the distinction controls every calculation after it.

Published construction benchmarks put net margin in the single digits

CFMA’s 2024 Construction Financial Benchmarker, covering fiscal year 2023, reported 6.9% net income before taxes for specialty trade contractors. Earlier editions put the same segment at roughly 9% for fiscal 2021 and roughly 8% for fiscal 2020. The direction over those years was down.

Two things about that 6.9%. It is fiscal 2023 data, not a current-year result, and the 2025 edition of the Benchmarker has not published a comparable specialty trade figure for fiscal 2024. And it does not mean your shop should produce exactly 6.9%. A small residential or service company can legitimately run well above a large contractor. What it does mean is that single-digit net margins are ordinary in construction, not a sign that something has gone wrong.

The sample is worth knowing. The 2025 Benchmarker included 1,558 companies after screening, roughly 42% of them specialty trade contractors. This is not a thin survey of general contractors with a few trades mixed in.

JMCO’s 2025 construction performance benchmarks land in the same place: 5% to 8% net profit margin for well-managed companies, with gross profit margin for specialty contractors typically running 15% to 25%, and anything above 25% considered best in class. The industry average gross margin sits just over 16% for specialty contractors.

NYU Stern’s margins data, current as of January 2026, shows the same shape at the top of the market. Across 48 publicly traded US engineering and construction companies: 15.46% gross margin, 7.96% EBITDA margin, 6.49% pre-tax operating margin, 5.94% net margin.

Those are large public companies, not a target for a shop running three trucks. The point is narrower. Thin margins are not a small-contractor problem. They run the length of the industry.

Gross margin minus overhead leaves net margin

The equation is not complicated:

Gross margin minus overhead equals net margin.

A shop at a 16% gross margin carrying 10% overhead is left with about 6% net. That is the whole reason the benchmark numbers look so thin even when the gross profit percentage sounds respectable.

JMCO puts overhead and general administrative costs at 8% to 15% of revenue. That is everything that does not sit on one specific job: the office, the software, the phone, the insurance, the trucks.

Your own pay belongs in that calculation. A shop showing a 15% net margin because the owner pays themselves nothing is not a 15% net shop. It is a shop with an unpaid employee. Put a market-rate wage for your own field hours into the costs before you read the result, because if you spend the week troubleshooting and running work without charging the business for that labor, the margin on paper is fiction.

None of those fixed costs pause when the schedule has a hole in it. The trucks still need payment and insurance. The phone and the software still bill. Most of the expenses itemized in what it costs to start an electrical business in California do not stop being expenses once the doors are open.

Labor is the largest input sitting under your gross margin

The Bureau of Labor Statistics put median electrician pay at $63,190 per year, or $30.38 per hour, on May 2025 data. BLS counted 821,000 electrician jobs in 2025 and projects 9% growth through 2035, which it labels much faster than average.

That wage is the biggest number underneath your gross margin, and in California both labor and workers’ compensation run above the national average. Those costs sit directly below the gross margin line, which means a California shop that merely matches the national benchmark is outperforming it, not keeping pace with it.

A price that covers your material markup but not your productive labor, payroll burden, and the hours it genuinely takes to finish the work is not a profitable price. It is a busy way to lose money.

Unbilled time does the same damage more quietly. Estimating, travel, callbacks, and scheduling all consume hours that your gross margin is supposed to be paying for. Whether you charge for estimates, covered in should you charge for an electrical estimate, is a margin decision before it is a customer service one.

Work mix moves gross margin further than a bigger markup does

Service and residential call-out work generally carries a higher gross margin than competitively bid new construction. The reasons are concrete: the jobs are smaller, the customer is not comparing five bids line by line, and the call-out itself is billable.

That does not make every service call profitable. It means the kind of work you take on sets the gross margin that is available to you before overhead is paid.

So a shop that wants a better margin usually needs different work, not a bigger number on the materials line. Raising your markup cannot fix a schedule full of low-margin jobs, unpaid hours, and labor that runs longer than the price allowed for. Your call-out fee and your hourly or day rate have to work together, and the ranges in what electricians charge hourly, by day, and for a call-out cover the revenue side of that. The accounting question underneath it is whether the price leaves enough gross profit to pay for the labor and still fund overhead.

At 6.9% net, the job you never picked up costs more than the math suggests

At a 6.9% net margin, producing $1,000 of net profit takes about $14,500 of revenue. That is $1,000 divided by 0.069, or $14,493. It is a lot of work for a modest amount of profit.

Run the same math on a single $600 service call and it looks almost pointless: about $41 of net profit.

But net margin is the wrong lens for judging one additional job. Overhead is largely fixed, so once the month’s overhead is covered, every job after that contributes closer to the gross margin than the net margin. At a 20% gross margin, that same $600 call contributes about $120, and nearly all of it drops to the bottom line because the fixed costs are already paid.

This is why the last few jobs of a month are worth several times the average job. It is also why a call you never picked up costs you more than $41. What you lost is closer to the gross profit that would have landed on top of overhead you had already covered.

And that loss is invisible where you would look for it. A missed call does not show up as a negative line on your profit and loss statement. It does not show up at all. A P&L can only report the work you captured; it is structurally incapable of showing you the work that rang out. The real cost is laid out in what a missed call costs a California electrician, and it is a capacity problem before it is a phone problem.

The two levers that actually move a single-digit net margin

At single-digit net margins, you are not going to cut your way to profitability out of a materials invoice. The two levers that move the number are work mix and capacity utilization.

Work mix sets the gross margin available from the jobs you take. Capacity utilization decides how much of the work that already comes to you gets captured and billed.

The second lever is the one most shops cannot see. A full schedule tells you the trucks are busy. It does not tell you how many calls came in, how many were answered, which turned into booked jobs, and which were gone before they ever reached the calendar. Those are different questions, and only one of them is answered by your accounting.

This is where a call log and an income statement diverge. Wirewoman answers 24/7 and logs every call, including the ones that never became jobs, which are exactly the ones your P&L cannot report. She asks the electrical questions you would ask: panel or power, breaker behavior, outlet or GFCI, lighting, EV charger, and the caller’s preferred time. Routine work gets booked straight into your schedule. Sparking, smoke, a burning smell, or full power loss rings your cell instead. Within 30 seconds of hang-up you get an SMS with the caller’s name, address, the problem in their own words, the urgency, and the booked time, on every answered call, booked or escalated.

Read across a week of that log and the pattern that shows up is rarely the one owners expect. It is not the quoted jobs that got away. It is the volume of after-hours and mid-job calls that never reached anyone, from people who were ready to book.

Change what you measure before you change your margin target

Stop calling markup “margin.” Put your own field labor into the costs. Read net margin after overhead, your salary included.

Then track gross margin by work type and set it against the calls your shop actually captured. Treat 6.9% as what it is: a fiscal 2023 specialty trade benchmark, not a promise and not a target handed down to you.

At your next pricing review, calculate three numbers: the gross margin on the job, the overhead percentage for the shop, and the net margin left after both. At your next operations review, calculate three more: calls answered, calls booked, calls missed.

That leaves you with two decisions worth making. Price the work mix that produces the gross margin you need, and capture more of the billable work that is already reaching your phone.