Net Profit Margin Calculator

The net profit margin calculator shows what share of every sales dollar you keep as profit once all costs are accounted for. You enter your net profit and your total revenue for the period, and the tool returns your net profit margin as a percentage. Net profit is the figure left after every expense has been deducted from revenue, including the cost of goods sold, wages, overheads, interest, depreciation, and tax if you choose to include it. Dividing that profit by revenue turns it into a margin, which is far more useful for comparison than the dollar figure alone, because it strips out the effect of size. A business turning over millions and one turning over thousands can be compared fairly on margin. A New Zealand business owner, manager, or investor can use this to track profitability over time, benchmark against competitors, and judge whether growth in sales is actually flowing through to the bottom line. To get a meaningful result, make sure net profit and revenue cover the same period and that net profit reflects all costs, since a margin built on understated expenses will flatter the business. Watch the trend across several periods rather than reading too much into a single quarter, and pair the margin with the dollar profit so you keep sight of the actual money earned. If your margin is falling while sales rise, costs are likely climbing faster than revenue, which is worth investigating early. All figures are in New Zealand dollars and the result is an estimate to guide decisions, not a substitute for advice from your accountant.

Advertise on this page

Net profit ($)

Revenue ($)

16.0%

Net profit margin

Net margin = net profit / revenue. Estimate only, not financial or tax advice.

How it works

Net profit margin is net profit divided by revenue, shown as a percentage. It tells you how many cents of each sales dollar end up as bottom line profit. The defaults use $80,000 of net profit and $500,000 of revenue.

Worked example

With net profit of $80,000 and revenue of $500,000, dividing $80,000 by $500,000 gives 0.16. As a percentage that is a 16.0 percent net profit margin.

Related calculators

Net Profit Calculator: profit in dollars.
Gross Profit Margin Calculator: margin after direct costs.
Operating Margin Calculator: margin from operations.
Profit Margin Calculator: price, margin and markup.
Profit Margin Guide: background on this topic.

Frequently asked questions

What is a good net profit margin?

It depends heavily on the industry. Low margin sectors like supermarkets may sit in the low single digits while software firms can be much higher. Compare against similar businesses and focus on the trend.

Should the net profit be before or after tax?

Either works as long as you are consistent. If your net profit is after tax, the margin is an after tax margin. If it is before tax, treat the result as a pre-tax margin.

How is net margin different from gross margin?

Gross margin only accounts for direct costs of goods sold. Net margin accounts for all expenses, so it is always equal to or lower than the gross margin for the same business.