Net margin shows how much of each dollar of sales becomes profit. The average across U.S. industries is roughly 7–10%, but software firms can exceed 20% while supermarkets run at 1–3%.
How to use the Net Profit Margin Calculator
- Revenue
- Net income
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter revenue and net income.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Revenue | Amount in your currency |
| Net income | Amount in your currency |
What each result means
- Net profit margin = [Net income]÷[Revenue]×100
- Total expenses = [Revenue] – [Net income]
- Profit per $100 of sales = [Net income]÷[Revenue]×100
Example values
How the main result changes when Revenue changes and everything else stays at the example values above:
| Revenue | Net profit margin (%) |
|---|---|
| 600,000 | 16 |
| 900,000 | 10.67 |
| 1,200,000 | 8 |
| 1,500,000 | 6.4 |
| 1,800,000 | 5.33 |
| 2,400,000 | 4 |
Formula
Net profit margin = net income ÷ revenue × 100Net income = revenue − COGS − operating expenses − interest − taxesWorked example
Inputs — Revenue: $1,200,000; Net income: $96,000.
Results — Net profit margin = 8 %; Total expenses = $1,104,000.00; Profit per $100 of sales = $8.00.
Frequently asked questions
What is a good net profit margin?
About 10% is average; 20% is high; 5% is low.
How do I improve net profit margin?
Raise prices, cut costs, or reduce interest and taxes.
Can net profit margin be negative?
Yes, when the company makes a loss.
What formula does the Net Profit Margin Calculator use?
Net profit margin = net income ÷ revenue × 100.