Most profitable business in Australia

We analysed the latest benchmark data from the ATO (2022–23) to find the most profitable business types in Australia. We looked at cost of sales, total expenses, and turnover levels. Then we grouped similar businesses to find industry themes.

Here’s what we found.

Service businesses win every time

Businesses that sell time or expertise have the lowest costs and the highest margins. No inventory. Minimal overhead.

These types of businesses are simple, lean and scalable if managed well. You don’t need to invest in stock or equipment. Often, your own skills and time are the only things required to get started.

• Architectural services had total expenses as low as 29% for low-turnover businesses. Even at high turnover, total expenses only climbed to 79%. That means some firms are operating with profit margins above 70%. See data
• Tutoring and coaching businesses showed low cost of sales and expense ratios between 32% and 63% for smaller businesses. These businesses can run from home or online, keeping overheads minimal. See data
• Driving instructors often operate with very few costs beyond their vehicle and insurance. Benchmarks show expenses as low as 32%, meaning profit margins can reach up to 68%. See data

If you can sell your knowledge or skill, you're in a high-margin game.

Trades and contractors do well when they stay lean

Solo tradies like bricklayers, plasterers, and carpet layers can keep a high percentage of their income as profit. But as soon as they start hiring employees or expanding overhead, those margins drop.

• Bricklaying services have total expenses between 30% and 48% for low turnover. As turnover grows, expenses rise to 69% or more. That means your margins can drop from 70% down to 31% if you scale poorly. See data
• Carpet laying services maintain margins well even at scale. With total expenses in the 45% to 62% range, this category stands out among trades that can grow without losing efficiency. See data

If you’re a tradie, staying small and subcontracting where needed can keep your margins strong.

Product-based businesses are tough

Retail, food, and other product-led businesses have two big problems: cost of goods and fixed overheads. That leaves thinner margins, even when business is good.

• Clothing retailers deal with cost of sales around 50% and total expenses often topping 80%, leaving margins in the 15–28% range. See data
• Cafes and restaurants often face expense ratios between 78% and 89%, even for smaller operations. Larger venues (over $2M turnover) still only manage 7–13% profit. See data
• Grocery and convenience stores are some of the lowest-margin businesses, with total expenses frequently above 90%. See data

You need serious volume and efficiency to make strong profits in these industries.

Margins shrink as businesses grow

Larger businesses make more revenue, but usually keep less of it. That’s because bigger businesses bring admin costs, rent, wages, and other overheads.

• A driving school might run lean with 68% profit as a solo operator. But once they scale with a fleet of instructors, that drops to 27–47%. See data
• An architectural firm can drop from 71% to 21–38% profit as they expand. See data

Scaling often means spending more just to maintain operations.

Not all growth is good

Just because turnover grows doesn’t mean profits do. This is especially true for food and retail.

• A takeaway food shop might start with 20–30% profit at small scale. But that can drop to 13–24% as turnover grows. See data
• Restaurants earning over $2M often make just 7–13% net profit. See data

If you want to grow fast and stay profitable, choose a business model with flexible costs.

Scale with smarts

Some businesses keep margins healthy even as they grow. The key is using contractors, tech, or variable cost models.

• Delivery and courier services show expense ratios as low as 47%, even at higher turnover. See data
• Pest control, landscaping, and cleaning services also scale well when structured efficiently. These industries often rely on subcontracted labour and avoid major capital expenses. See data

These are smart models if you want to grow and protect your margins.

What it all means for you

• Selling a service? Great. Keep overhead low. Subcontract if you grow.
• Running a trade? You can make strong profit. Don’t grow too fast.
• In food or retail? Nail your operations. Every percent matters.
• Scaling up? Plan for higher costs. Keep pricing power.

The best businesses don’t just sell more. They keep more.

If you’re starting out or looking to pivot, use these benchmarks as your guide.

Want the full breakdown by turnover and industry? Visit the ATO benchmark data.

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