What profit margin should a home service business run?
Two margins matter, and owners mix them up all the time.
Gross margin is what's left of the price after the job cost: materials, labor, subs, permits and equipment. It tells you whether each job is priced right.
Net margin is what's left after everything else too: office, trucks, insurance, software, marketing and a fair salary for you. It tells you whether the business is healthy.
What good looks like
ServiceTitan's guidance for HVAC:
- Aim for a gross margin of 50 to 55% across your services.
- A net margin of 10 to 20% is healthy. 20% is what to shoot for.
- The average HVAC business often runs below 10% net, and net margins can fall as low as 2 to 3%.
Buyers watch the same thing from a different angle. CT Acquisitions' 2026 report on home services sales puts an HVAC EBITDA margin under 10% in the discount zone, 12 to 18% at market, and 20% and up in the premium zone.
Your trade may run different numbers. HVAC just has the best published data. That's why the first step is measuring your own.
Why a few points matter so much
Say you bring in $2 million a year in sales. Moving net margin from 8% to 15% is $140,000 more profit, every year, without one more job.
And if you ever sell, buyers pay a multiple of EBITDA, the profit number they use. CT Acquisitions puts the gap between top and bottom quartile companies of the same size and trade at 2 to 3.5 times EBITDA. On a business earning $2 million in EBITDA, that's $4 million to $7 million of value. Margin isn't just what you keep this year. It's what your business is worth.
Where margin leaks
- Pricing by markup instead of margin. A 50% markup is only a 33% margin. Here's the math.
- Job costs you don't count. Payroll taxes, callbacks, card fees and commissions. Here's what's hiding in yours.
- Discounting to win the bid. You win on trust and speed, not on being the cheapest.
- One service dragging the rest. A busy service isn't always a profitable one.
Check it by service
Look at gross margin for each service on its own, every month. Most owners find one line of work quietly carrying the business and another one quietly draining it. Put the money behind the winners.
Worksheet 2 in our free playbook tracks revenue, job costs and margin by channel and service every month.
Not sure where your business stands yet? Our free Growth Ladder assessment takes about four minutes.
- Understanding HVAC Profit Margins (ServiceTitan)
- The 2026 Home Services M&A Multiples Report (CT Acquisitions)
- Run It Like They Would, The Next Right Move (2026)
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