The Restoration Margin Scorecard: Grade Your Company Line by Line

Owners ask me what a good margin is. The honest answer is a scorecard, not a number — because a restoration company isn’t one business. It’s four or five businesses sharing a roof, and they grade very differently. Pull your last twelve months and grade each line. A means top-quartile discipline. B is healthy. C is where money leaks quietly. Anything in the red-flag band is a diagnostic appointment, not a rounding error.

Gross Margin by Service Line

Water mitigation (residential): A = 62–70%. B = 55–62%. C = 45–55%. Red flag: below 45% — pricing or cost control is broken. Fire and smoke: A = 58–65%. B = 50–58%. C = 42–50%. Material costs — cleaning supplies, specialized PPE — compress this line versus water work. Mold remediation: A = 52–60%. B = 45–52%. C = 38–45%. Containment is the most commonly missed expense; if your mold grade surprises you, look there first. Reconstruction: A = 38–45%. B = 30–38%. C = 24–30%. Lower percentages, but big jobs produce serious absolute dollars — grade the dollars as well as the rate. Commercial large loss: A = 48–55%. B = 40–48%. C = 32–40%.

Net Margin by Company Size

Under $2M: healthy is 5–12%; best performers run 10–12% against a high overhead-to-revenue ratio. $2M–$5M: healthy is 8–15% — the sweet spot for restoration profitability when overhead is managed and job costing is real; best performers 12–18%. $5M–$10M: healthy is 7–14%; expect temporary compression while you build management infrastructure, but name it as temporary and watch it monthly. Over $10M: healthy is 8–15%, with best performers at 12–15%+. Across every tier: below 8% net means there is room; below 5% is a red flag wherever you sit.

The Five Things That Separate A Companies from C Companies

Job costing discipline — A companies measure margin at the job level, C companies measure it at the year level. Pricing from cost up, rather than copied from competitors. Honest mix — program work at wrong rates drags a good book down. Supplement capture — 85%+ approval rates versus inconsistent follow-up. And overhead reviewed monthly instead of discovered annually. Two notes for the grading: franchise royalties of 5–10% are a real overhead cost that lowers net margin versus an independent with the same gross — whether the brand earns it back is your calculation, not an assumption. And if you want outside data to grade against, the RIA’s Cost of Doing Business survey publishes these benchmarks annually by company size.

The full benchmark tables, with the drivers behind the variation, are in Restoration Company Profit Margin Benchmarks: Where Do You Actually Stand?

Related reading

• Restoration Company Profit Margin Benchmarks
• Where Is Your Profit Hiding? A Restoration Owner’s Diagnostic
• The Job Lifecycle Profit Map

Mike McCabe is The Profit Detective — a 36-year restoration industry veteran who has benchmarked restoration company performance against industry data across 150+ consulting engagements.