Net Profit Margin Calculator
Example: Total revenue: 250000 $ · Total expenses (all costs): 210000 $
| Net profit | $40,000 |
| Net profit margin | 16.00% |
Worked example
On $250,000 of revenue with $210,000 of total expenses, net profit is $40,000. Dividing $40,000 by $250,000 gives a 16% net profit margin, meaning 16 cents of every sales dollar is profit after all costs. If you can lift revenue without expenses rising as fast, or trim expenses while holding revenue, that margin climbs and the whole business gets healthier.
Frequently asked questions
What is the difference between gross and net margin?
Gross margin subtracts only the direct cost of goods sold. Net margin subtracts everything, including overhead, marketing, interest, and taxes. Net margin is the truest measure of overall profitability.
What is a good net profit margin?
It varies widely by industry. Grocery and retail run thin at a few percent, while software and professional services can exceed 20%. Compare yours to peers in your sector rather than a universal target.
Should expenses include taxes?
For a true net margin, yes, include income taxes and interest along with operating costs. If you exclude taxes you are measuring pre-tax margin, which is still useful but not the final bottom line.
How can I improve net margin?
Raise prices, increase efficiency, cut unnecessary overhead, or shift toward higher-margin products and services. Because net margin captures every cost, improvements anywhere in the business show up here.