Net margin is net profit as a percentage of revenue: how many cents of each dollar of sales survive every cost including tax. Enter revenue and the cost layers and the calculator returns the net margin along with gross and operating margins, so you can see which layer takes the biggest bite.
Net margins vary enormously by industry (2–3% for grocers, 20%+ for software), so compare with similar businesses and watch the trend.
Net Profit Calculator
Net profit is the money actually left at the end: revenue less the cost of goods sold, less operating expenses, less interest and other costs, less tax. The net profit calculator walks through each step so you can see where the money goes, and returns the operating margin and net margin alongside the totals.
A business with $500,000 of revenue, $300,000 of direct costs, $120,000 of operating expenses, $10,000 of interest and a 25% tax rate earns a gross profit of $200,000, an operating profit of $80,000, profit before tax of $70,000 and a net profit of $52,500, a 10.5% net margin. Net margins vary widely by industry (supermarkets live on 2–3%, software companies often exceed 20%), so compare yourself with similar businesses, and watch the trend from quarter to quarter rather than a single figure.
Related Calculators
Frequently Asked Questions
What is the net margin formula?
net profit ÷ revenue × 100, where net profit is revenue minus all costs including interest and tax.
What is a good net margin?
Above 10% is solid for most small businesses; 20% is excellent; low single digits are normal in high-volume, low-price sectors.
How can I improve net margin?
Raise prices, cut cost of goods, trim operating expenses or reduce interest by paying down debt. The stage-by-stage margins show where the largest gain is available.
