Profit Margin (Net Margin)

The percentage of revenue that remains as profit after all expenses.

What Is Profit Margin (Net Margin)?

Net profit margin shows how much of every dollar in revenue becomes actual profit. A 15% profit margin means the company keeps $0.15 as profit from every $1 of sales. It's the bottom-line efficiency metric.

Formula

Profit Margin = Net Income / Revenue × 100

Why It Matters

Higher margins indicate pricing power, cost efficiency, or both. Declining margins can signal competitive pressure or rising costs. Comparing margins to peers reveals who operates most efficiently.

Typical Ranges: Varies by industry. Software: 20-30%+. Retail: 2-5%. Healthcare: 10-20%.