SG&A benchmark · 20 industries
SG&A as a % of Revenue by Industry: 2025 Benchmarks
SG&A as a percentage of revenue measures how much a company spends on selling, general, and administrative expenses per dollar earned. The spread across industries is dramatic — pharma companies run 35% SG&A to drive blockbuster drug sales, while utilities operate below 5% in regulated markets that require no competitive selling. This benchmark table covers 20 industries so you can quickly compare any company's SG&A ratio against its sector peers. High SG&A only creates value when it drives operating margin expansion over time — declining SG&A % with growing revenue is the signal to watch for.
What Is SG&A as a Percentage of Revenue?
SG&A as a percentage of revenue measures how much a company spends on selling, general, and administrative expenses relative to its top line. It is calculated as:
SG&A % = (Selling + General + Administrative Expenses) ÷ Revenue × 100
The ratio captures the full cost of running the business above the cost of goods sold — the sales force, marketing programs, executive compensation, legal fees, and office overhead. A declining SG&A % alongside rising revenue is one of the clearest signals of operating leverage: the company is scaling revenue faster than its overhead base, which expands margins automatically.
SG&A benchmarks are most useful when read alongside gross margin benchmarks. A company with 70% gross margin can sustain 40% SG&A and still run a healthy 30% operating margin. A company with 25% gross margin cannot — which is why capital-intensive industries structurally hold SG&A below 12%. Industry norms below range from 5% for utilities to 35% for pharmaceuticals.
2024-2025 data · 20 industries
SG&A as % of Revenue Benchmarks by Industry
| Industry | Median SG&A/Revenue | Typical Range | Overhead Level | What drives it |
|---|---|---|---|---|
| Pharmaceuticals & Biotech | 35% | 25%–50% | Very High | Blockbuster drug sales forces and DTC advertising spend |
| Technology (Software/SaaS) | 25% | 15%–40% | High | Customer acquisition and cloud marketing growth spend |
| Consumer Discretionary | 22% | 15%–30% | High | Store operations, loyalty programs, and brand marketing |
| Media & Entertainment | 22% | 15%–30% | High | Content licensing, distribution, and subscriber marketing |
| Healthcare (Hospitals/Devices) | 20% | 12%–30% | High | Medical billing, compliance overhead, and device sales force |
| Consumer Staples | 18% | 12%–25% | Medium | Brand advertising and retail distribution costs |
| Food & Beverage | 18% | 12%–25% | Medium | Trade promotions, distribution, and brand marketing |
| Semiconductors | 17% | 12%–25% | Medium | IP overhead, technical sales, and design center support |
| Technology (Hardware) | 15% | 8%–22% | Medium | Channel management, enterprise sales, and partner programs |
| REITs | 14% | 8%–20% | Medium | Property management, leasing overhead, and asset management |
| Industrials (Machinery) | 14% | 10%–20% | Medium | Distribution networks, service contracts, and dealer support |
| Telecommunications | 13% | 8%–18% | Low | Customer acquisition costs and churn management programs |
| Specialty Chemicals | 12% | 8%–18% | Low | B2B sales force and technical service teams |
| Financials (Banks/Insurance) | 12% | 8%–18% | Low | Regulatory compliance, back-office, and branch overhead |
| Airlines & Transportation | 10% | 6%–15% | Low | Centralized hub ops and booking/distribution costs |
| Materials (Mining) | 8% | 5%–12% | Very Low | Minimal marketing due to commodity B2B pricing |
| Auto & EV Manufacturing | 8% | 5%–12% | Very Low | Dealer network incentives and warranty administration |
| Real Estate (Non-REIT) | 8% | 4%–12% | Very Low | Brokerage commissions and project management admin |
| Energy (Oil & Gas) | 6% | 3%–10% | Very Low | Asset-heavy operations with minimal competitive selling |
| Utilities | 5% | 3%–8% | Very Low | Regulated monopoly structure with minimal marketing spend |
Why SG&A Varies So Much by Industry
The spread between the highest and lowest SG&A sectors in this table spans 30 percentage points. Pharmaceuticals run 35% SG&A; utilities run 5%. This gap reflects fundamental differences in how businesses create and capture value — not just sector preference.
What drives high SG&A? Persuasion cost is the core driver. Pharmaceutical companies must convince prescribers and patients to use their specific drugs over generic alternatives. Software companies must acquire customers in competitive markets where switching costs are low early in the contract. Consumer brands must maintain top-of-mind awareness through advertising. In each case, revenue requires ongoing investment to create and defend — which structurally elevates SG&A as a percentage of revenue.
What keeps SG&A low? Commodity pricing and regulated markets eliminate the need for competitive selling. A utility does not run advertisements to attract electricity customers — the regulator sets prices and the customer has no alternative provider. Oil and gas producers sell into spot markets where price discovery is automatic. Mining companies sell industrial inputs where relationships and logistics matter far more than brand advertising. In these industries, a dollar of SG&A buys very little additional revenue.
The implication for investors: High SG&A is not inherently bad if it is productive. A pharma company spending 35% of revenue on SG&A and generating 25% operating margin is efficiently monetizing its IP. The analytical question is always: is SG&A creating durable customer relationships and competitive advantage, or is it a treadmill the company must keep running just to maintain market share? Pair SG&A benchmarks with ROIC benchmarks to distinguish growth-productive overhead from structural inefficiency.
How to Benchmark Your Company
Step 1: Find SG&A on the income statement
SG&A appears on the income statement below gross profit, usually as a single line item or broken into “selling expenses” and “general and administrative expenses.” Some companies break out R&D separately — exclude it from SG&A for a cleaner comparison against these benchmarks.
Step 2: Divide by total revenue
Divide SG&A by total revenue for the same period: SG&A % = SG&A ÷ Revenue. Express as a percentage. For trailing-twelve-months (TTM) comparisons, sum the four most recent quarterly figures for both SG&A and revenue.
Step 3: Compare against the sector median above
Find the company's primary industry in the table above and compare its SG&A % to the median. A reading well above the sector median warrants understanding whether it reflects deliberate growth investment (high CAC with strong LTV) or structural overhead inefficiency (high overhead not translating to revenue growth).
Step 4: Track the trend over 3-5 years
A single year snapshot is less informative than the trend. A company with 30% SG&A declining toward 22% while revenue grows is demonstrating operating leverage. SG&A rising alongside stagnant revenue signals an overhead problem that will compress margins unless addressed.
SG&A, Operating Margin, and Operating Leverage
SG&A is the primary driver of operating margin variability within most industries. The income statement waterfall is straightforward: Operating Margin = Gross Margin − SG&A % − R&D %. A company with 65% gross margin and 30% SG&A runs a 35% operating margin before R&D. Reduce SG&A by 5 percentage points and operating margin expands by 5 points — a direct one-for-one pass-through.
This is why investors watch SG&A leverage closely at growth companies. Early-stage software companies often run 40-50% SG&A as they invest in sales capacity ahead of revenue. As the customer base matures and churn declines, the same sales team services a growing renewal base — SG&A % falls while revenue grows, and operating margin expands rapidly. This dynamic is the core thesis behind DCF models that assign high terminal values to high-growth SaaS companies.
The gross margin constraint matters equally. Capital-intensive businesses with thin gross margins cannot absorb high SG&A — every dollar of overhead comes directly out of a narrow margin pool. This is why industrials, energy, and materials companies structurally hold SG&A below 15%: their gross margins simply do not leave room for more. Pair SG&A benchmarks with gross margin benchmarks to understand the full operating model of any company you analyze.
Common questions
SG&A by industry — answered directly.
What is SG&A as a percentage of revenue?
SG&A (selling, general, and administrative expenses) as a percentage of revenue measures how much a company spends on operating overhead per dollar earned. It is calculated as: SG&A % = (Selling + General + Administrative Expenses) ÷ Revenue × 100. The ratio captures everything from the sales force and marketing budget to executive pay, legal fees, and office costs. Analysts use it to assess operating efficiency — a declining SG&A % alongside revenue growth signals operating leverage, meaning the business scales without proportional overhead increases.
What is a good SG&A percentage?
A good SG&A percentage depends entirely on the industry. Utilities and energy companies operate below 10% because they are asset-heavy and sell into regulated or commodity markets that require little persuasion. Software and pharma companies run SG&A at 25–40% because customer acquisition, sales teams, and brand investment are central to growth. The most useful benchmark is the industry median in this table. A company running significantly above its sector median either has a cost efficiency problem or is making a deliberate growth investment — the trend over time clarifies which.
Why do software companies have high SG&A?
Software companies typically report SG&A of 20–40% of revenue because customer acquisition is the primary growth lever. A large direct sales force, marketing programs, and customer success teams can each represent 5–15% of revenue individually. The key distinction for investors is whether high SG&A is growth-productive (spending $1 to acquire a customer worth $3 in lifetime value) or inefficient (high churn erasing CAC investments). Rule of 40 analysis often pairs with SG&A efficiency: a 30% SG&A ratio at 40% growth is efficient; 30% SG&A at 10% growth is a red flag.
How does SG&A affect operating margin?
Operating margin = Gross Margin − SG&A % − R&D %. A company with 60% gross margin and 30% SG&A has a 30% operating margin before R&D. This is why SG&A benchmarks are most useful when read alongside gross margin benchmarks. Asset-light businesses with high gross margins can absorb high SG&A and still generate strong operating income. Capital-intensive manufacturers with thin gross margins cannot — which is why industrials and energy companies structurally hold SG&A below 15%.
What is the difference between SG&A and operating expenses?
Operating expenses include SG&A plus R&D, depreciation, amortization, and sometimes restructuring charges. SG&A is the largest component of opex for most companies — typically 60–80% of total operating expenses in non-manufacturing industries. When analysts say a company has 'high opex,' they usually mean high SG&A. R&D is often broken out separately, particularly for tech and pharma, because it is investment-oriented rather than overhead.
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