Net Profit Margin Benchmarks by Industry in Australia
What the ATO data actually says, and the one adjustment that changes every number on this page.
Last reviewed August 2026. Built on ATO Small Business Benchmarks for the 2023-24 income year, published March 2026.
Most owners have never seen a benchmark for their own industry. The ones who have usually compared themselves against the wrong number and either panicked or relaxed, both for no good reason.
Here are the real figures, and the adjustment you have to make before any of them mean anything.
What is a good net profit margin in Australia?
For an established Australian business turning over $1M to $3M, 10% to 15% net is healthy, above 15% is strong, 5% to 10% is fragile, and under 5% means you have bought yourself a job. That is after paying yourself a genuine market salary.
That last sentence is the whole page. Read on before you compare yourself to anything.
The adjustment nobody tells you about
The ATO publishes benchmarks for around 100 industries, drawn from more than two million small businesses. It is the best data we have in this country. It also has one feature that trips up almost everyone who uses it.
ATO benchmarks exclude the owner's own pay. Their words: "Do not include amounts paid to associated parties, for example, labour provided by a business owner or business partner." Total expenses are calculated after stripping out payments to associated parties.
So every margin derived from ATO data is a margin before the owner is paid anything.
Here is what that means in practice. A trades business showing a 19% net margin against the ATO benchmark, on $1.2M of turnover, is making $228,000 before the owner takes a cent. Pay that owner a market salary of $150,000 and the real margin is about 6.5%.
Same business. Same year. Two numbers, thirteen points apart, and only one of them tells you whether the business works.
Most advisory benchmarks you will find online do the opposite and quote margins after owner pay, usually without saying so. Comparing the two produces an error of five to twenty percentage points. If a benchmark does not tell you which convention it uses, it is not usable.
Net margin benchmarks by industry
Every figure below is derived from published ATO cost ratios for the 2023-24 income year, at the largest turnover band the ATO publishes for that industry. All of them are before owner pay.
Construction and trades
| Industry | Turnover band | Net margin range | Average |
|---|---|---|---|
| Electrical services | Over $500k | 14 to 25% | 19% |
| Plumbing services | Over $600k | 14 to 25% | 20% |
| Carpentry services | Over $400k | 13 to 24% | 19% |
| Painting services | Over $600k | 14 to 26% | 20% |
| Landscape construction | Over $500k | 14 to 24% | 19% |
| Cabinet making | Over $900k | 10 to 18% | 14% |
| Panel beating and smash repairs | Over $300k | 14 to 27% | 20% |
| Commercial cleaning | Over $250k | 15 to 31% | 23% |
Hospitality and food
| Industry | Turnover band | Net margin range | Average |
|---|---|---|---|
| Coffee shops | Over $600k | 7 to 14% | 11% |
| Restaurants | $500k to $2M | 7 to 16% | 12% |
| Restaurants | Over $2M | 6 to 12% | 9% |
| Takeaway food | Over $600k | 7 to 16% | 11% |
| Pubs, taverns and bars | $750k to $2.5M | 7 to 14% | 11% |
| Catering services | Over $600k | 9 to 19% | 14% |
| Bakeries | Over $750k | 10 to 18% | 14% |
Retail
| Industry | Turnover band | Net margin range | Average |
|---|---|---|---|
| Clothing retailing | Over $500k | 9 to 17% | 13% |
| Florists | Over $600k | 9 to 17% | 13% |
| Hardware and building supplies | Over $1M | 7 to 13% | 10% |
| Pharmacy | $1.5M to $3.5M | 7 to 13% | 10% |
| Grocery and convenience | Over $950k | 4 to 8% | 6% |
| Motor vehicle retail | Over $1.5M | 4 to 9% | 6% |
Health and personal services
| Industry | Turnover band | Net margin range | Average |
|---|---|---|---|
| Dental surgeons, general | Over $815k | 20 to 33% | 27% |
| Chiropractic and osteopathic | Over $600k | 18 to 33% | 25% |
| Physiotherapy | Over $600k | 16 to 27% | not published |
| Veterinary services | Over $800k | 16 to 26% | 21% |
| Health and fitness centres | Over $600k | 15 to 28% | 21% |
| Beauty services | Over $400k | 12 to 23% | 18% |
| Hairdressing | Over $300k | 14 to 25% | not published |
| Child care services | Over $600k | 12 to 21% | 16% |
Transport, manufacturing and professional
| Industry | Turnover band | Net margin range | Average |
|---|---|---|---|
| Road freight transport | Over $600k | 11 to 22% | 16% |
| Courier services | Over $300k | 11 to 24% | 18% |
| Furniture removalists | Over $525k | 11 to 22% | 16% |
| Printing | Over $500k | 11 to 20% | 16% |
| Architectural services | Over $400k | 21 to 39% | 30% |
How to use these properly
Find your industry and your turnover band. Band matters enormously. A carpenter under $110,000 derives a 50% to 68% net margin from the same dataset, purely because their own labour is not counted as an expense. Same trade, same year, wildly different number.
Add your own market salary back before you compare. Work out what it would cost to hire someone to do your job, then deduct it. On a $1M to $3M business that is usually $110,000 to $145,000 base plus 12% super. Only then are you looking at a real margin.
Understand what the ATO range actually is. In the ATO's own words, "the range is represented by 30% of the population around the average." It is not the middle 50% and it is not the interquartile range. Roughly seven in ten businesses sit outside it. Being outside the range is normal, not alarming.
Remember what the benchmarks are for. The ATO built them to detect undeclared cash income, not to define good management. Their framing is that businesses outside the range are more likely to attract a closer look. That is a compliance tool, and it is being used here as a performance yardstick because nothing better exists.
Three industries with no Australian benchmark
Worth naming so you do not think they were missed.
Tourism, tour operating, accommodation and travel. No ATO benchmark exists. Tourism Research Australia publishes visitor spend, room numbers and employment, but not profitability. The nearest usable proxies are health and fitness centres or sports and recreation instruction, and they should be labelled as proxies.
Professional services beyond architecture. No accounting, legal, engineering, marketing or consulting benchmarks. This is a real gap in the ATO set.
Wholesale and real estate at small business scale. Only whole-of-economy figures exist, and those are dominated by large firms.
What the trend actually is
The narrative that Australian SME margins are collapsing is not supported by the data.
The Reserve Bank's position, drawing on ABS figures to mid-2025, is that operating margins for small and medium firms sit around the levels recorded in the decade before the pandemic, and that most firms slightly improved their margins despite strong input cost growth. Their October 2025 review found the median small business operating margin improved a little over the year.
Distress is real, but it is concentrated. Hospitality and construction carry insolvency rates well above the national average. The average business is not in trouble. Specific sectors are.
One number does deserve attention. The Australian Small Business and Family Enterprise Ombudsman found that around 43% of small businesses were not making a profit at all, against 15% of medium and large companies. That analysis rests on 2021-22 data and has not been refreshed, so treat it as directional rather than current.
What to do with your own number
Work it out this week. Revenue, minus all costs, minus a market salary for yourself. Divide by revenue.
If you land below the range for your industry, the gap is usually recoverable and it is usually sitting in two or three specific places rather than spread across everything. If you land above it, find out why before you assume it will hold.
A Business Analysis does this properly. It runs your real numbers across twelve profit levers, quantifies each gap in dollars, and tells you which ones are worth your attention first.
Call me at 0491 729 043, or book a conversation at sarahcolgate.com.au.
Sources. Australian Taxation Office, Small Business Benchmarks, 2023-24 income year, published March 2026. Reserve Bank of Australia, Financial Stability Review, March 2026, and Bulletin, October 2025. Australian Bureau of Statistics, Australian Industry 2024-25. Australian Small Business and Family Enterprise Ombudsman, Small Business Matters. Net margins are derived from published ATO expense ratios and are stated before owner remuneration.