What's a "good" net margin?

Highly industry-dependent. SaaS: 15-25% is healthy. E-commerce: 5-10%. Restaurants: 5%. Banking: 20-30%. Compare to your industry, not a universal number.

Why are margins falling even though revenue is up?

Either COGS is growing faster than revenue (raw material costs, scaling pains), OpEx is growing (hiring, software bloat), or you've cut prices to drive volume. Look at which margin first — it tells you where to investigate.

Profit Margin Calculator

Gross, operating, and net margin — three standard profitability ratios.

Result

Net profit margin

18.0%

Revenue

$500k

COGS$200,000(40%)

OpEx$180,000(36%)

Tax + Int$30,000(6%)

Net profit$90,000(18%)

Gross margin(Revenue - COGS) / Revenue60.0%
Operating margin(Gross - OpEx) / Revenue24.0%
Net margin(Operating - tax/interest) / Revenue18.0%
— Dollars —
Gross profit$300,000.00
Operating profit$120,000.00
Net profit$90,000.00

How to use this calculator

Enter total revenue for the period (year/quarter/month — be consistent across all four fields).
COGS = direct cost of producing/delivering the thing you sold.
OpEx = everything else needed to run the business (rent, payroll, marketing).
Taxes + interest = bottom-of-the-statement items.

About this tool

Three margins, increasing in reality. **Gross margin** is the simplest — what's left after the direct cost of making the thing. **Operating margin** subtracts overhead like rent, salaries, marketing — the cost of running the business beyond the product itself. **Net margin** subtracts taxes and interest — the actual money left over. Healthy benchmarks vary wildly: SaaS often runs 70-80% gross / 20% net; retail often 30% gross / 5% net; restaurants 30% gross / 5% net is celebration-worthy. The relative sizes of the gaps tell you where money is leaking.

Frequently asked

COGS scales with sales (materials, hosting per user, transaction fees). OpEx is mostly fixed (rent, salaries, software subscriptions). Some classifications differ by industry; what matters is being consistent.