Net Profit Margin Calculator
(Net, Operating & Gross Margin)
Enter revenue, cost of goods sold and operating expenses for a period. Add interest and taxes to get net profit and net profit margin.
Step 1 — Revenue & Cost of Goods Sold
Gross sales for the period, before any deductions
Direct materials, inventory, or production cost only
Step 2 — Operating Expenses
Software, insurance, utilities, misc.
Calculated Results
Enter your revenue and costs to calculate net profit margin.
This net profit margin calculator shows how much of each dollar of revenue a business keeps after all its costs. Enter revenue, cost of goods sold and operating expenses for a period, then add interest and taxes. It returns net profit and net profit margin, with gross margin and operating margin shown on the way down.
How to Calculate Net Profit Margin
Take a business with $50,000 of revenue in a month:
| Line | Amount | Margin |
|---|---|---|
| Revenue | $50,000 | |
| − Cost of goods sold | $20,000 | |
| = Gross profit | $30,000 | 60% gross margin |
| − Operating expenses | $14,000 | |
| = Operating profit | $16,000 | 32% operating margin |
| − Interest and taxes | $3,600 | |
| = Net profit | $12,400 | 24.8% net margin |
Operating expenses here are $3,000 rent, $8,000 payroll, $2,000 marketing and $1,000 other overhead. Interest is $500 and income tax $3,100. The net profit margin is 12,400 ÷ 50,000 × 100 = 24.8%.
Gross, Operating and Net Margin
The three margins answer different questions about the same revenue.
| Margin | Costs removed | What it shows |
|---|---|---|
| Gross | Cost of goods sold | What the product or service earns before overhead |
| Operating | COGS and operating expenses | What the business earns from running day to day |
| Net | COGS, operating expenses, interest and taxes | What is left for the owners |
Comparing them shows where the money goes. A large drop from gross to operating margin points at overhead. A large drop from operating to net points at debt or tax. The Gross Profit Margin Calculator looks at the first step alone.
Net Profit Margin by Industry
Net margins are far lower than gross margins and vary by industry. These are averages for listed US companies from Aswath Damodaran's margins-by-sector data at NYU Stern, dated January 2026.
| Industry | Net margin |
|---|---|
| Software (system and application) | 25.49% |
| Drugs (pharmaceutical) | 18.54% |
| Restaurant and dining | 9.37% |
| Building materials | 7.42% |
| Engineering and construction | 5.94% |
| Retail (general) | 5.61% |
| Retail (special lines) | 5.19% |
| Apparel | 3.85% |
| Trucking | 3.79% |
| Retail (grocery and food) | 1.32% |
| Auto and truck | 1.29% |
| Food wholesalers | 1.17% |
| Total market | 9.74% |
These are large public companies. A small business is not directly comparable, partly because of how the owner is paid: a sole proprietor's draw is not an expense, so the reported margin includes the owner's income.
Getting the Inputs Right
- One period: use revenue and costs from the same month, quarter or year.
- Each cost once: a cost entered as COGS should not appear again under operating expenses.
- Tax: enter income tax on profit. Sales tax collected from customers is not revenue and not an expense.
- Loan payments: only the interest is an expense. Repaying the amount borrowed does not reduce profit.
How to Use the Net Profit Margin Calculator
- Enter revenue and COGS: Type total sales for the period and the direct cost of the goods or services sold.
- Enter operating expenses: Type rent, salaries and payroll, marketing, and other overhead for the same period.
- Add interest and taxes: Optional. Open the interest and taxes section and enter loan interest and income tax. Leave them out and the result is operating profit.
- Read the result: The calculator shows net profit, net profit margin, gross margin, operating margin and the full breakdown.
Frequently Asked Questions
How do I calculate net profit margin?
Divide net profit by revenue and multiply by 100. Net profit is revenue minus cost of goods sold, operating expenses, interest and taxes. A business with $50,000 of revenue and $12,400 of net profit has a net profit margin of 12,400 ÷ 50,000 × 100 = 24.8%.
What is the difference between gross, operating and net profit margin?
Each one takes more costs out of revenue. Gross margin removes only cost of goods sold. Operating margin also removes operating expenses such as rent, payroll and marketing. Net margin also removes interest and taxes.
What is a good net profit margin?
It depends on the industry. In Aswath Damodaran's January 2026 data on listed US companies, the average net margin is 9.74% across the whole market, 25.49% for system and application software, 5.61% for general retail and 1.32% for grocery and food retail.
Can net profit margin be negative?
Yes. If costs for the period are higher than revenue, net profit is a loss and the margin is negative. A business with $50,000 of revenue and $55,000 of total costs has a net margin of −10%.
Is net income the same as net profit?
Yes. Net income, net profit and net earnings all mean what is left of revenue after every cost, including interest and taxes. It is the bottom line of the income statement.
Does the owner's pay count as an expense?
It depends on how the business is set up. A salary paid to an owner through payroll is an expense. Money a sole proprietor draws from the business is not, so a sole proprietor's net margin includes the owner's own pay and looks higher than that of a company paying its owner a salary.
Industry figures are from Aswath Damodaran's US margins-by-sector data at NYU Stern, dated January 2026, and were checked in October 2026.