Net Profit Margin Calculator
Use our net profit margin calculator to calculate net profit margin percentage and the net profit margin ratio from net profit (net income) and total revenue. See the net profit margin formula, examples, and how to calculate net profit margin for business and accounting.
What is Net Profit Margin?
Net profit margin is the percentage of revenue that remains as net profit (net income) after all expenses are paid. If you’re asking what does net profit margin show, it shows how efficiently a business turns sales into bottom-line profit.
People use a net profit margin calculator to compare profitability across months, products, or companies. It’s also commonly used in accounting and finance to evaluate performance over time.
Net margin is often used as shorthand for net profit margin, but it’s helpful to know the context: net margin vs net profit is a ratio vs a dollar amount. Net profit is the total dollars earned after expenses, while net margin is that profit expressed as a percentage of revenue.
Net Profit Margin Formula
The net profit margin formula calculates profitability as net profit (net income) divided by total revenue. This returns a net profit margin percentage (or net profit margin ratio).
If you want the net profit margin ratio instead of percent, omit × 100.
If net profit is $25,000 and total revenue is $200,000, your net profit margin percentage is 12.5%.
The net profit margin ratio is the same calculation without converting to a percentage.
Gross profit margin looks at revenue minus cost of goods sold (COGS). Net profit margin includes all expenses (operating costs, taxes, interest), so it’s usually lower.
“Profit margin” can refer to gross, operating, or net margin. In many contexts, net margin and net profit margin mean the same thing.
How to Use the Net Profit Margin Calculator
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Enter your net profit (net income) for the period.
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Enter your total revenue for the same period.
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Click “Calculate” to get your net profit margin percentage.
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If you need the net profit margin ratio, use the same result divided by 100 (or omit × 100 in the formula).
Frequently Asked Questions
Divide net profit (net income) by total revenue, then multiply by 100 to get net profit margin percentage.
The net profit margin ratio is net profit divided by total revenue (no × 100). It’s the same measure expressed as a decimal.
Yes. If a business has a net loss (negative net profit), the net profit margin will be negative, meaning expenses exceeded revenue.
They’re usually the same. “Net income margin” is another name for net profit margin because net profit and net income often refer to the same bottom-line figure.
It shows how much profit a business keeps from each dollar of revenue after all expenses. Higher net margin generally indicates better overall profitability.
A “good” net profit margin depends on industry, pricing power, and cost structure. Compare against industry averages and your own historical performance for the best benchmark.
Net profit is a dollar amount. Net margin (net profit margin) is net profit divided by revenue, expressed as a ratio or percentage.
“Profit margin” can mean gross, operating, or net margin. “Profit percentage” is often used casually to mean profit margin, but you should confirm which margin is being discussed.