40% Margins Are Possible. But Not Until You Fix These Two Things.
19 Jul 2026 · 1 min
0:42
In this excerpt, Mike Andes advises home service business owners to achieve sustainable 40% profit margins by addressing two critical levers: first, increase subcontractor and direct labor rates by roughly 20% to better reflect costs; second, implement efficiency metrics and incentive programs that reward crews for completing jobs within budgeted hours. He warns that labor and subcontractor costs exceeding 60% of revenue make profitability virtually impossible, emphasizing that only by combining higher pricing with efficiency incentives can a business stay in the 40% labor cost range necessary for profitability.
