AccountTECH July 2025 Gross Profit Margin Index

Seven-year margin decline underscores the direct link between Gross Profit and bottom-line EBITDA

BOSTON, Aug. 27, 2025 /PRNewswire/ -- AccountTECH has released its July 2025 Gross Profit Margin Index, which reports an industry median of 18.25%. This figure serves as a guide for financial profitability, offering an absolute limit on expenses as a percentage of income.

Gross Profit Margin is the key number that defines how much a business can spend on expenses and still remain profitable. Essentially, it shows how much profit remains after paying commissions and franchise fees. It determines how much is left to fund operations, invest in growth, and ultimately deliver bottom-line profit. When margins are high, companies have more flexibility, stability, and resilience. When margins fall, profitability tightens and financial risk increases.

Each July, this index provides a mid-year pulse on the industry. This year's results point to steady margins compared to 2024, but when placed in a multi-year context, they tell a more sobering story about margin erosion and its impact on long-term sustainability.

Year-over-Year Performance

Compared to July 2024, the index shows a 94% correlation, suggesting that margins have remained relatively consistent over the past year. A correlation of 100% would indicate that the Gross Profit margin is the same year after year. When the correlation is below 100%, the difference is the amount that this July index is below prior year indices. Looking further back, however, a trend becomes clearer:

• Compared to July 2022, margins are down, with a 95% correlation.
• Compared to July 2020, margins are significantly lower, with the index showing 77% correlation.

These comparisons highlight that while short-term performance is steady, longer-term data points to a gradual erosion of profitability.

The 2019 Benchmark and Why It Matters

In 2019, the industry's Gross Profit Margin stood at 23.84%. Today's figure of 18.25% represents a decline of 5.59 percentage points over six years. On the surface, a decrease of 5% may appear modest, but the impact is profound when viewed alongside average EBITDA margins.

For most companies in this sector, EBITDA averages around 4%. This means a 5.59% decline in gross margin more than wipes out the typical bottom-line profit, theoretically pushing an average company from +4% profitability to –1.59% loss. This direct relationship illustrates why monitoring and protecting gross margins is critical: without healthy gross profit, sustainable EBITDA is impossible.

Historical Trends

The 7-year July index trend line shows that while margins peaked in the early 2020s, they have steadily declined into the high teens. This decline reflects a mix of factors: increased competition, rising agent retention costs, and greater discounting pressures. Although companies remain resilient, the long-term trajectory highlights the ongoing need to reduce expenses and increase efficiency.

Gross Profit margin isn't determinative

The July 2025 Gross Profit margin index shows…breakdown shows a clear divide:

• In July, Profitable firms (+6.16% EBITDA index in July), had Gross Profit margins of 18.3%.
• In July, Unprofitable (–5.19% EBITDA index in July), had Gross Profit margins of 16.9%.

Companies that successfully defend gross profit have an easier time remaining profitable. Comparing Profitable and Unprofitable companies in July 2025, shows a spread of only 1.4% in the Gross Profit - but these groups have widely different EBITDA. This proves that while higher gross margins make profitability easier, the key to profitability remains strict expense management.

Conclusion

The July 2025 Gross Profit Margin Index of 18.25% is both a benchmark and a caution. While the industry has shown resilience, the 5.59% decline since 2019 is enough to erase the average EBITDA margin, putting many firms at risk of slipping into unprofitability.

Protecting gross profit must remain a top priority. By maintaining pricing discipline, optimizing agent mix, and controlling delivery costs, companies can stabilize margins and secure sustainable EBITDA. The message is clear: gross profit is not just a performance metric — it is the foundation of long-term financial health.

About the AccountTECH Index

The AccountTECH Real Estate Brokerage Financial Health Index Series provides monthly benchmarks across key financial indicators, including EBITDA margin, gross profit margin, and labor cost. With three decades of specialized accounting focus in real estate, AccountTECH offers one of the most comprehensive and trusted datasets in the industry.

Authored by Mark Blagden, CEO of AccountTECH
www.accounttech.com (978) 947-3600

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SOURCE AccountTECH