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Net Profit Margin Calculator

Find your net profit margin.

How it is calculated

Net profit margin is margin = net income / revenue × 100. Revenue is total sales for the period; net income is what is left after all costs, interest and taxes. Enter both in the same currency and for the same period. The tool needs revenue greater than zero. A loss can be entered as a negative net income and gives a negative margin. The result is a percentage with two decimals. Because it is a ratio of the whole business, it differs from gross margin (which ignores overheads, interest and tax) and from operating margin (which ignores interest and tax). What counts as a good margin varies widely by industry.

Worked example

A business has net income of 45,000 on revenue of 300,000. Divide: 45,000 / 300,000 = 0.15. Multiply by 100 to get 15.00%. So for every 100 units of sales, 15 units remain as profit after all expenses.

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Common mistakes

  • Using gross profit or operating profit as the income figure, which overstates the net margin.
  • Confusing margin with markup: a 15% margin is not a 15% markup on cost.
  • Entering revenue and income for different periods, such as annual income against quarterly revenue.
  • Putting costs in the revenue field, which makes the denominator wrong.
  • Comparing margins across industries with different cost structures as if they were equivalent.

Sources

About this calculator

This calculator finds net profit margin — net income divided by total revenue, expressed as a percentage — showing how much of every dollar in sales actually turns into profit after all expenses, taxes and interest are paid.

Business owners use it to track profitability over time, investors and analysts use it to compare companies regardless of size, and lenders check it when assessing how financially healthy a business is.

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Comments (1)

  • Editorial team

    Net margin is only meaningful against firms with a similar cost structure, so compare it within an industry, not across them. Use the same period for both figures and check whether net income includes one-off items such as an asset sale, which can lift a single year. Net income of 12,000 on revenue of 150,000 gives 8 percent. A loss is accepted and shows a negative margin. Which industry are you benchmarking against?

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