How Much Does a Custom Home Builder Make?

5-minute read

Tuesday, January 13, 2026

When people ask what a custom home builder “makes,” they usually mean one of three things:

Company revenue: the total contract value billed to clients.

Owner pay: wages or an owner draw for running jobs and managing the business.

Net profit: what the company keeps after job costs and overhead are paid.

This post separates those numbers so builders and homeowners can talk about money with fewer assumptions.

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Quick answer: a benchmark for builder margins

Revenue vs gross profit vs net profit

How builder owners get paid

Simple math: three revenue scenarios

A salary benchmark homeowners recognize

What usually changes the outcome on a custom build

Building in Austin? A clear plan keeps decisions simple

Frequently Asked Questions

Quick answer: a benchmark for builder margins

Margins are one common way to estimate what a builder might keep. The National Association of Home Builders reports that surveyed single-family builders in 2023 averaged a 20.7% gross profit margin and an 8.7% net profit margin (NAHB builder financial performance data).

Custom projects can land above or below a benchmark like that, but it gives you a shared starting point for quick math.

Revenue vs gross profit vs net profit

Here is a simple way to separate the terms:

Revenue is the full contract amount.
Gross profit is revenue minus direct job costs (materials, trade invoices, job labor).
Net profit is what is left after overhead (office, vehicles, insurance, admin).

Investopedia defines profit as revenue minus expenses and breaks it into gross, operating, and net profit (Investopedia profit definitions).

For homeowners, the takeaway is simple: a big revenue number does not automatically mean big take-home pay.

How builder owners get paid

Owner pay usually comes from two buckets:

Salary or wages for the work the owner performs.
Owner distributions or draws tied to ownership and profit.

Entity type can shape how this shows up on paper. The IRS explains that S corporation officers are employees for federal employment tax purposes and that compensation should not be shifted into distributions to avoid employment taxes (IRS Fact Sheet).

Simple math: three revenue scenarios

Using the 8.7% net profit margin benchmark as a reference, here’s what net profit could look like at three different annual revenue levels. (This is meant as a simple illustration—not a guarantee.)

What 8.7% net profit looks like at different revenue levels

$2,000,000 in annual revenue → about $174,000 net profit
$5,000,000 in annual revenue → about $435,000 net profit
$10,000,000 in annual revenue → about $870,000 net profit

Two quick reminders

Net profit is a company number.
Owner compensation can be structured in different ways (for example, through overhead as salary). That means personal income may be higher or lower than net profit, depending on how the business is set up.
Cash timing matters.
A builder can look profitable on paper and still feel cash-tight if invoices go out late, approvals drag, or client payments lag. Profitability and cash flow don’t always move in sync—especially in construction, where billing schedules and deposits play a big role.

A salary benchmark homeowners recognize

If you are trying to compare builder income to a job role, construction manager pay is a helpful reference point. The U.S. Bureau of Labor Statistics reports the median annual wage for construction managers was $106,980 in May 2024 (BLS construction manager pay).

A builder-owner may do project management plus estimating, client communication, purchasing, and warranty follow-up, which is one reason builder-owner income can vary so much.

What usually changes the outcome on a custom build

Instead of guessing a builder’s margin, focus on what drives it:

Scope clarity: plans, specs, and allowance language reduce surprises.
Change process: written approvals and current pricing keep decisions clean.
Schedule control: gaps between trades extend job overhead.
Job costing habits: regular budget checks catch drift early.

For homeowners, these are also signals of a proposal that is easier to live with.

Building in Austin? A clear plan keeps decisions simple

If you are planning a custom build in Austin, you deserve a process that keeps budgeting and decisions straightforward from day one. Our team supports design coordination, budgeting, and build management with a calm, client-focused approach so you always know what comes next. Ready to talk through your goals? Visit our Custom Home Builder Austin page to get started.

Frequently Asked Questions

1. Is builder income mostly salary or profit?It can be either, depending on how the business is structured. A helpful first step is to separate owner pay from company net profit so you are comparing the right numbers.

2. Why does “revenue” not tell me what the builder takes home?Revenue is the total contract amount, but it does not show job costs or overhead. To compare bids fairly, review scope, allowances, and the written change process.

3. What is the easiest way to estimate net profit from revenue?Pick a reference margin and do the math, then treat it as a rough estimate. The table above uses the benchmark mentioned earlier so you can sanity-check different revenue levels.

4. Why can bids vary for the same plan?Two bids can differ because scopes are not identical, allowances vary, and schedules are built differently. Ask for line-item clarity before you compare totals.

5. What should I ask a builder before I sign?Ask who manages the job daily, how selections and allowances are handled, how changes are priced and approved, and what the payment schedule is tied to. Clear answers here usually lead to fewer surprises later.

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