How much profit should a builder make in Australia?

What the official data says

Building construction made 7.3% in 2024-25

The ABS publishes a profit margin for each industry: operating profit before tax divided by sales and service income. For building construction it was 7.3% in 2024-25, 6.3% in 2023-24 and 6.0% in 2022-23. Construction services, which covers the trades, was higher at 12.8% in 2024-25, and heavy and civil engineering was 6.6% (ABS Australian Industry 2024-25, Table 4).

What that number is not

It is before tax. It mixes residential and non-residential work and businesses of every size. It is also a profit after overheads, not the margin on a single job. Our reasoning: the margin you quote on a job has to cover your overhead and still leave profit, so it needs to be well above an industry figure measured after overhead.

The spread between businesses is wide

In the same ABS table, 73.6% of building construction businesses made a profit or broke even in 2024-25, and 26.4% made a loss.

What the industry body says

In a March 2026 submission to the Fair Work Commission, the Housing Industry Association said Commission data show residential builders' gross margins sitting below their five-year average, among the lowest of any sector. It also described fixed-price contracts as carrying thin margins (HIA submission, 27 March 2026). It gave no percentage.

What we could not find

We found no official net margin for small residential builders, and no Master Builders figure. Be wary of any "builders should make 20%" claim that does not name its source and its definition of margin.

Margin is not markup

Margin is profit as a share of the price. Markup is profit as a share of the cost. Government small-business guides draw the same distinction (Business Victoria). The conversions are:

• Margin = (price − cost) ÷ price.
• Markup = (price − cost) ÷ cost.
• Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin).

Here is where it costs money. Your job cost is A$340,000 and you want a 15% margin. If you add 15% markup, the price is A$391,000 and the margin is only 13.0%. A 15% margin needs a price of A$400,000, so the mistake leaves A$9,000 on the table. A 15% margin is a markup of about 17.6%. This is a worked example, not a statistic.

Setting the margin you quote

Start from your own numbers, not an industry average. Take last year's overhead (office, vehicles, insurance, your own wage) as a share of turnover, then add the profit you want. If overhead ran at 10% of turnover and you want 8% profit, the jobs you quote need roughly an 18% margin before anything goes wrong. These percentages are an example, not a recommendation. Your accountant can also show you the ATO's small business benchmarks for your trade, which compare your costs with similar businesses.

A crowded field

At 30 June 2025 the ABS counted 95,333 businesses in its two residential building classes, house construction and other residential building. Of those, 62,572 had no employees and 5,045 had 5 to 19 (ABS Counts of Australian Businesses, June 2025). That many competitors is one reason a quote gets squeezed.

How to check a live job against your quote

Do not wait for the final claim. Every week, work out where the job is heading:

• Projected cost = (paid + committed) ÷ percent complete.
• Forecast margin = (contract price − projected cost) ÷ contract price.
• Compare it with the margin you quoted.

Example: a A$400,000 job quoted at 15% has a A$340,000 budget. At 50% complete you have paid or committed A$180,000. Projected cost is A$360,000, so the forecast margin is 10%. You are five points below your quote and A$20,000 over budget, with half the job still to build.

Percent complete is your estimate, and under about 20% a small error moves the forecast a lot, so treat early results with care. The how it works page explains the traffic lights, and the demo shows three sample jobs. If a job is running short on cash even while the margin holds, read why builders run out of cash between stages. When the client asks for extras, see how to price a variation. The tool costs A$149 once; details on the pricing page.

Sources

• ABS, Australian Industry 2024-25, Table 4 (released 19 June 2026), accessed 27 October 2026.
• ABS, Counts of Australian Businesses, cube 2 (released 16 December 2025), accessed 27 October 2026.
• HIA, submission to the Fair Work Commission Annual Wage Review 2026, 27 March 2026.
• Business Victoria, margin and markup guide.