Industry Economics
What an industry earns and what it pays: the two benchmarks a seller's P&L gets measured against.
Operating Margins
A buyer staring at a CIM has a prior question before any specific number: is 18% even normal in this trade, or is the add-back schedule doing the work? These are the IRS's own aggregates of every Schedule C in the country, and Schedule C net income is earnings before any owner salary, which makes net income over receipts the closest public analog to an SDE margin that exists.
| Legal services | 43.8% | 49.5% | 10.4% | 316,370 | – |
| Accounting services (CPA and other) | 40.7% | 53.8% | 9.6% | 361,556 | – |
| Computer systems design services | 37.0% | 51.2% | 12.1% | 318,183 | The line holds solo consultants alongside managed-service firms; an MSP with contracts and a bench runs lower margins on higher revenue quality. |
| Insurance agencies and brokerages | 36.1% | 46.1% | 7.5% | 313,543 | – |
| Real estate agents, brokers, and property managers | 35.0% | 48.6% | 3.7% | 1,046,471 | Dominated by commission agents with near-zero cost structures; do not read this as a property-management company's margin. |
| Offices of dentists | 27.1% | 32.3% | 25.6% | 56,157 | – |
| Personal and laundry services | 24.4% | 42.7% | 6.4% | 2,957,905 | Mostly salons, barbers, and beauty services by count; a coin-operated laundromat's economics sit inside this line but are not typical of it. |
| All industries (the national baseline) | 18.3% | 31.4% | 8.5% | 31,125,909 | – |
| Specialty trade contractors | 15.7% | 21.2% | 11.1% | 2,521,516 | One line covers all the trades; HVAC, plumbing, electrical, roofing, and painting sit inside it together. |
| Home health care services | 12.7% | 40.6% | 17.6% | 478,730 | Dominated by solo caregivers; an agency with a real roster runs a heavier payroll line than this aggregate shows. |
| Truck transportation | 10.1% | 18.0% | 5.2% | 837,211 | Owner-operators with one truck dominate the count; fleet economics differ. |
| Auto repair and maintenance | 8.0% | 18.7% | 10.5% | 465,852 | – |
| Restaurants and drinking places | 3.4% | 13.6% | 18.8% | 653,372 | The widest gap between the two margins on the page: restaurant losses are real and common, and the all-filers figure carries them. |
How to Read the Margins
Two margins ship for every line on purpose. The all-filers figure includes every side gig and every money-loser in the country, which drags it below what a real business earns. The profitable-only figure excludes the failures, which lifts it above the typical. A buyable business usually lives between the two, and the width of the gap is itself information: restaurants show the widest spread on the page because restaurant losses are real and common.
These are sole-proprietorship aggregates, not comparables for your target's LLC. Use them for the sanity check they are good at: a listing claiming twice the profitable-only margin of its industry is making a claim diligence has to prove, usually about add-backs. Industries whose tax treatment makes even this bracket misleading, like real-estate lessors whose depreciation turns the aggregate negative, are omitted rather than published soft.
IRS SOI, Nonfarm Sole Proprietorship Returns, Table 1 (TY2023), tax year 2023, from the SOI sole-proprietorship tables.
Two Questions Pay Answers
Is the seller's payroll line plausible?A P&L claiming twelve employees and $300,000 of payroll is claiming $25,000 a head. That is not what a plumbing and HVAC company pays: the industry average is close to $70,000. The gap is either part-time staff, cash, a mistake, or a story, and all four are worth knowing before the LOI.
What is the job you are about to take actually worth? The market-rate salary for the owner's role is the add-back a lender scrutinises hardest, because an owner who pays themselves nothing makes the earnings look bigger than the business is. The number that holds up is what the role would cost to hire, and the way to argue it is against a benchmark rather than a feeling.
Pay by Industry
The industries we have guides for first, then every industry with enough businesses to measure. Sort by pay to see where the skilled labour is, and by staff per business to see what you would be managing.
| Software Publishers | $201,426 | 54.9 | $11.1M | 1,011,187 |
| Investment Advice | $167,820 | 4.7 | $791k | 110,125 |
| Drugs and Druggists' Sundries Merchant Wholesalers | $159,612 | 34.0 | $5.42M | 302,952 |
| Offices of Lawyers | $125,580 | 6.6 | $830k | 1,093,331 |
| Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers | $125,412 | 26.4 | $3.32M | 272,209 |
| Other Management Consulting Services | $124,921 | 3.5 | $439k | 51,177 |
| All Other Telecommunications | $124,637 | 13.9 | $1.73M | 26,774 |
| Custom Computer Programming Services | $124,254 | 14.9 | $1.85M | 1,012,250 |
| Other Computer Related Services | $123,684 | 12.7 | $1.57M | 168,654 |
| Offices of Other Holding Companies | $122,698 | 13.7 | $1.68M | 89,908 |
| Computer Systems Design Services | $122,171 | 13.2 | $1.61M | 766,160 |
| Administrative Management and General Management Consulting Services | $121,753 | 8.3 | $1.01M | 869,457 |
| Public Relations Agencies | $119,649 | 6.9 | $831k | 60,066 |
| Engineering Services | $109,949 | 19.9 | $2.19M | 1,260,577 |
| Advertising Agencies | $106,841 | 12.9 | $1.38M | 200,465 |
| Offices of Physicians (except Mental Health Specialists) | $105,652 | 13.2 | $1.40M | 2,706,297 |
| Support Activities for Oil and Gas Operations | $105,320 | 23.0 | $2.42M | 221,126 |
| All Other Miscellaneous Electrical Equipment and Component Manufacturing | $102,335 | 49.1 | $5.02M | 40,197 |
| Computer Facilities Management Services | $101,822 | 16.2 | $1.65M | 103,562 |
| Other Activities Related to Real Estate | $101,505 | 3.4 | $346k | 78,923 |
| Other Scientific and Technical Consulting Services | $101,433 | 6.4 | $652k | 180,378 |
| Offices of Certified Public Accountants | $100,691 | 11.0 | $1.11M | 604,209 |
| Architectural Services | $98,717 | 8.3 | $820k | 189,468 |
| Highway, Street, and Bridge Construction | $98,566 | 34.0 | $3.35M | 314,940 |
| Other Chemical and Allied Products Merchant Wholesalers | $97,332 | 15.3 | $1.49M | 135,062 |
What the Pay Number Is Not
It is a wage bill divided by headcount, so it is not a salary. It mixes full-time and part-time staff, it mixes the owner on payroll with the newest hire, and it is an average across an industry that contains both a two-person shop and a company with ninety people. An industry paying $28,000 a head is not paying everyone $28,000; it is an industry with a lot of part-time work in it.
Census payroll also excludes what a sole proprietor DRAWS rather than pays themselves, so the smallest businesses contribute headcount without contributing the owner's own compensation. That pulls the average down in industries full of owner-operators, which is most of the ones a searcher looks at. For the other angle on the same cost, the Industry Jobs & Pay page carries average weekly pay from BLS, which runs higher because it counts full-time payroll roles rather than dividing by every head.
Census County Business Patterns (2023). What the earnings mean once the payroll is right is in the SDE build on the valuation calculator, and how many of these businesses exist is in Market Depth.