Data Processing, Hosting & Related Services — profit margin & cost structure (U.S.)

For the U.S. data processing, hosting & related services industry, IRS tax data shows an estimated 23.7% net margin on an owner-operator basis (national, sole proprietorships, tax year 2023). That figure — what a self-employed owner keeps per sales dollar before paying themselves — is the number this page exists to report; read the note below on how it's measured.

23.7%net margin · owner-operator basis

National as of tax year 2023 Moderate confidence source ↗

Owner-operator basis (IRS SOI sole proprietorships, TY2023): net income less deficit ÷ business receipts, at NAICS 518 (Data Processing, Hosting & Related Services). Sole-proprietor labor is not expensed, so this overstates corporate-style profit.

Cost structure

National, from IRS Statistics of Income (weighted sample). Where a component is not separately reported, it is shown as insufficient data — never estimated.

Component	Value
Cost of goods sold (% of receipts)	6.3%	National source ↗
Labor / officer compensation (% of receipts)	Insufficient data

Business size distribution (national)

Share of U.S. data processing, hosting & related services establishments by number of employees (Census County Business Patterns, 2023). 56% have fewer than 5 employees.

1–4 emp10,294 (56%)

5–9 emp2,386 (13%)

10–19 emp1,975 (11%)

20–49 emp1,724 (9%)

50–99 emp905 (5%)

100+ emp1,260 (7%)

Where this industry operates — all 51 states

Establishment counts, employment, and wages are available for free elsewhere too (e.g. Data USA). States ordered by number of establishments — pick one for local context:

Full cost-structure breakdown by business-size class and side-by-side industry comparison are available to subscribers. This page shows the current-year national headline plus the multi-year establishment trend.

Frequently asked

What is the average profit margin for data processing, hosting & related services businesses?

About 23.7% net margin on an owner-operator basis (national, IRS SOI sole proprietorships, tax year 2023). This counts the owner's own labor as profit, so it overstates corporate-style margin — see the note above.

How many data processing, hosting & related services businesses are there in the U.S.?

18,544 establishments with paid employees (Census County Business Patterns, 2023).

What is the average wage in the data processing, hosting & related services industry?

$3,746 per week (BLS QCEW 2024, private sector) — about $194,792/year.

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machine-readable JSON · NAICS 518

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