Business & Sales

What Is Net Profit Margin?

Net profit margin is net profit expressed as a percentage of revenue, after all costs, including cost of goods sold, operating expenses, interest, and taxes, have been subtracted. Net profit margin = net profit ÷ revenue × 100. It shows how much of each unit of sales becomes profit.

Example

Revenue of 200,000 and net profit of 16,000 give a net profit margin of 8%.

Net vs. Gross Margin

Gross margin subtracts only the cost of goods sold, so it is always equal to or higher than net margin.

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🔗 Related Terms

Profit Margin Gross Profit Operating Expenses Revenue

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.