Profit Margin
The percentage of revenue left as profit after costs — profit divided by revenue.
What does profit margin mean?
Margin measures profitability relative to sales. It’s distinct from markup (profit over cost): the same sale always has a higher markup than margin. Comparing margins to industry norms reveals business health.
Put it to use
Related terms
Profit Margin — frequently asked
How do I calculate profit margin?
Divide profit by revenue and multiply by 100. If a business earns $20,000 profit on $100,000 of sales, its net margin is 20%. Gross margin uses gross profit; net margin uses profit after all expenses.
What is a good profit margin?
It varies widely by industry — grocery runs on low single-digit margins while software can exceed 30%. Compare against peers in your field; a rising margin over time is a stronger signal than any single benchmark.