Net Profit Margin Calculator
Calculate the percentage of revenue that becomes net profit.
What the Net Profit Margin Calculator does
Net profit margin is the share of revenue that survives every cost — production, overheads, interest and tax. It is the bottom-line measure of whether a business converts sales into money for its owners.
Formula
Net profit margin % = Net profit ÷ Revenue × 100
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Revenue | selected currency | Yes | Accepts more than 0. |
| Net profit | selected currency | Yes | After all costs, interest and tax. Accepts 0 or more. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Revenue and Net profit.
- Select Calculate.
Worked example
$2,400,000 revenue producing $216,000 of net profit.
- Revenue
- 2400000
- Net profit
- 216000
216,000 ÷ 2,400,000 = 9% net margin.
Reading the result
- Net margin is what survives every cost — production, overheads, interest and tax — so it is the share of revenue that actually reaches the owners.
- It sits far below gross margin because gross margin only deducts direct costs. The gap is the whole of the operating base.
- Typical net margins vary enormously by sector, so the useful comparison is against the same industry and against the same business over time.
Common mistakes
- Comparing net margin across industries as though it were a general measure of quality.
- Reading a single period in isolation, where a one-off cost or tax adjustment can distort the figure.
Frequently asked questions
Why is my net margin so much lower than my gross margin?
Because overheads, interest and tax sit between them. A wide gap suggests operating costs are consuming the value the product creates.