Net Profit Margin Formula
Net Profit Margin = Net Profit / Revenue × 100
Net profit is revenue minus all costs: COGS, operating expenses, interest, and taxes.
Example Calculation
A company with $2M revenue, $800k COGS, $600k OpEx, $40k interest, and $140k taxes:
- Gross Profit: $1,200,000
- Operating Income: $600,000
- Net Profit: $420,000
- Net Profit Margin: 21%
Benchmarks by Industry
| Industry | Net Margin Range |
|---|---|
| Software / SaaS | 15–30% |
| Consulting | 15–25% |
| Healthcare services | 4–8% |
| Retail | 2–5% |
| Restaurants | 3–9% |
| Manufacturing | 5–10% |
Why It Matters
Net margin is the ultimate efficiency metric — it tells you what fraction of every revenue dollar actually flows to shareholders. A business with 40% gross margin but 2% net margin is losing efficiency somewhere in its cost structure.
Use the Net Profit Calculator to trace exactly where margin is lost across the income statement waterfall.