Margin calculations every owner should know
Gross margin, net margin, and contribution margin. What each one tells you and what it doesn't.
Gross margin
Revenue minus direct cost of delivering the work, divided by revenue. For service shops, target 50-65%. For trades doing material-heavy work, 35-45% is healthier than it sounds.
Net margin
What's left after everything, overhead, owner pay, taxes. For owner-operated shops, 10-20% net is solid. Above 20% is excellent. Below 5% means something is broken or you're paying yourself out of revenue.
Contribution margin per job
Job revenue minus direct cost. The number that tells you which jobs are pulling weight and which are eating your bandwidth for free.
Take your version of this question further
This is one operator-tested angle on the question. Your shop, your size, your trade, and your team change the answer. Ask your specific version inside Ask a Shop Owner to get a response grounded in how owners like you actually handled it.