The Level Index, 2026 Annual Report
The State of Contractor Finance 2026
The founding team's analysis of 2,200+ contractors representing $13.25B in job revenue, across operating, private-equity, and CFO roles. The seven numbers that separate the top quartile from everyone else, and where the money quietly leaks.
Executive summary
Across 2,200+ contractors, the median business earns a 44.3% gross margin on the jobs it can actually cost, collects 85.1% of what it bills, and invoices in a median of 1 day when progress billing is included. The gap between a healthy contractor and a struggling one is not revenue. It is the same across the top and bottom: the top quartile sees its true job margin, collects in the low-to-mid 90s, prices service agreements above 50%, and protects the scarce input, skilled labor. The bottom half runs blind, 91% of jobs carry revenue with no cost data attached, so most owners cannot tell a profitable job from a losing one until it is over.
2,200+
contractors analyzed
$13.25B
job revenue in the dataset
44.3%
median job gross margin
85.1%
median collection rate
The seven numbers that separate top performers
1. Job-level gross margin
44.3%But 91% of jobs have revenue logged with no cost data attached, so most contractors cannot see their real job margin until after the job closes.
What to do
Cost every job in real time, not after closeout. The number you can see is the only one you can protect.
2. Collection rate
85.1%This is effective cash conversion (share of billings collected, reflecting retainage held, unbilled change orders, disputes, and slow pay), not a GAAP bad-debt rate. Top decile collects 96.0%; bottom decile near 39%. The gap is cash earned but tied up in receivables, and it lines up with the roughly 14% slow-payment drag that Rabbet documents industry-wide.
What to do
Every point below the low-90s is cash you already earned sitting in someone else's account. Chase the aging, not just the sale.
3. Billing speed
1 dayMedian is 1 day when progress billing is included (about a quarter of contractors). Among post-completion invoicers the median is 7 days and the slowest decile waits 30+ days.
What to do
Progress-bill wherever the contract allows. Days-to-invoice is the cheapest cash-flow lever you have.
4. Service-agreement gross margin
37.9%Top quartile clears 53%. The bottom decile runs negative, a book priced years ago without cost adjustments quietly losing money while looking like recurring revenue.
What to do
Reprice the agreement book on cost, not on last year's rate. Recurring revenue is not recurring margin.
5. Quote conversion (decided quotes)
73.9%Measured on decided quotes (customer said yes or no), top quartile 83.2%. On an all-quotes basis (including undecided) the median is 38.1%.
What to do
Half your quoting effort dies undecided. Chasing the no-decision pile is often worth more than winning a new bid.
6. Labor as a share of revenue
29.1%The median contractor's field labor is 29.1% of quoted revenue, and 40% of jobs run over their labor-hour budget. Skilled labor, not demand, is the binding constraint.
What to do
Manage gross profit per labor hour, not headcount. The scarce input is skilled time, so measure the return on it.
7. Customer concentration (top account)
31%The median contractor's largest customer is 31% of revenue. A top account above roughly 25 to 30% is commonly flagged as a valuation-discount risk by buyers and lenders in diligence.
What to do
If one account is a third of revenue, a buyer marks you down for it. Diversify before you go to sell.
Methodology
Figures are compiled from the Level founding team's analysis of 2,200+ contractors representing $13.25 billion in job revenue, built across operating, private-equity, and CFO roles (financial reviews, operator interviews, and due diligence), and layered with named public sources including BLS wage data, SEC filings from public specialty contractors, and industry surveys. All figures are aggregated and anonymized; no individual company is identified or identifiable. Distributions are reported as medians and percentiles with per-metric sample sizes. Specific figures are rounded and should be treated as directional benchmarks, not precise measurements. Where our data and industry surveys conflict, we cite both.
Frequently asked questions
What is the median gross margin for a contractor job?
The median job-level gross margin is 44.3% across the founding team's analysis of 2,200+ contractors (n=430). But 91% of jobs have revenue logged with no cost data attached, so most contractors cannot see their real job margin until after the job closes.
What is a good collection rate for a contractor?
The median collection rate is 85.1% (n=464), measured as effective cash conversion, the share of billings actually collected, which reflects retainage held, unbilled change orders, disputes, and slow pay. It is not a GAAP bad-debt rate (large contractors write off well under 1%). The top decile collects 96.0% and the bottom decile near 39%. Contractors should target the low-to-mid 90s; the gap is real cash tied up in receivables, consistent with the roughly 14% slow-payment drag Rabbet reports industry-wide.
Where does the data in this report come from?
The State of Contractor Finance is built on the Level founding team's analysis of 2,200+ contractors representing $13.25 billion in job revenue, across operating, private-equity, and CFO roles, layered with named public sources (BLS, SEC filings, CFMA and industry surveys). All figures are aggregated and anonymized; no individual company is identified.
Is the report free?
Yes. The full report is free to read and the underlying benchmark data is downloadable as machine-readable JSON, free to cite with attribution to the Level Index.
Every figure in this report ships in the machine-readable contractor dataset with its definition, sample size, and source. Free to cite with attribution to the Level Index. Download the underlying dataset (JSON, free to cite)
See where your numbers land against the report
We pull your job margin, collection rate, and labor economics and rank you against the 2,200-contractor benchmark, then show you the first leak to fix. Free audit included.
No commitment. Real numbers, not generic advice.