Calculate your gross, operating, and net profit margins to understand how efficiently your business converts revenue into profit.
Direct costs to produce your product or service
Rent, salaries, utilities, marketing
Net Profit Margin
0.0%
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Profit margin measures the percentage of revenue that becomes profit after subtracting costs. A healthy net profit margin for small businesses typically ranges from 7-10%, while top performers achieve 15-20% or higher. Gross margin shows pricing efficiency, operating margin reveals operational efficiency, and net margin reflects overall profitability after all costs.
A good net profit margin for small businesses is 7-10%. Margins above 15% are considered excellent. However, margins vary significantly by industry: grocery stores average 2-3%, while software companies can exceed 25%.
Gross margin only subtracts direct production costs (COGS) from revenue. Net margin subtracts all costs including operating expenses, taxes, and interest. Gross margin shows pricing power; net margin shows overall profitability.