# Industry Gross Margin Benchmarks

Use these as context when explaining whether an SMB owner's margins are typical, above average, or concerning. These are rough ranges based on industry averages — not targets the owner must hit.

Always frame benchmarks as context, not judgment: "For your industry, gross margins typically run 40–55%. You're at 38%, which is slightly below average — here's what that means for your pricing scenarios."

## Benchmarks by category

| Category | Typical Gross Margin | Notes |
|---|---|---|
| **Retail — General** | 40–55% | Varies widely by product category |
| **Retail — Apparel / Fashion** | 45–65% | Higher for brands, lower for resellers |
| **Retail — Food & Grocery** | 20–35% | Thin margins; volume-dependent |
| **E-commerce** | 30–50% | Depends on fulfillment costs |
| **Restaurant / Food Service** | 60–70% | Gross margin on food; net is much lower after labor |
| **Professional Services** | 60–80% | Consulting, legal, accounting, design |
| **Skilled Trades** | 35–55% | Plumbing, electrical, HVAC; materials-heavy |
| **Cleaning / Maintenance Services** | 40–60% | Labor-intensive |
| **Health & Wellness** | 50–70% | Fitness studios, massage, coaching |
| **SaaS / Software** | 70–85% | Software delivery cost is low; high gross margins are expected |
| **Wholesale / Distribution** | 20–35% | Low margins; depends on volume and terms |
| **Manufacturing** | 25–45% | Varies by product complexity |
| **Construction** | 20–35% | Project-based; materials-heavy |

## How to use these

1. **Match the owner's industry** using the `company-info` profile from QuickBooks, or ask directly if it's unclear.
2. **State the range, not a single number.** Margins vary within categories.
3. **Flag when margins are well below the floor.** Under 20% gross margin in most service categories usually means the owner is underpricing or missing cost items.
4. **Don't cite a specific source.** These are general industry knowledge, not live data feeds.

## When benchmarks don't fit

Some SMBs run hybrid models (e.g., a yoga studio that also sells retail apparel). In those cases, segment the analysis if possible, or note: "Your business spans multiple categories — I'll use the benchmarks for each revenue stream separately."