Net Profit Margin Calculator
What the business actually keeps after everything — including paying you properly.
Your numbers
Your result
- Gross profit
- $570,000
- Gross margin
- 38%
- Total overhead
- $562,000
- Overhead as % of revenue
- 37.5%
- Net profit
- $8,000
- Net profit margin
- 0.5%
- Revenue needed for a 10% net marginAt your current gross margin and overhead, with no other changes.
- $2,007,143
0.5% net margin
At this margin the business isn't paying for the risk you're carrying. If owner compensation above is realistic, this is a structural pricing problem, not an effort problem.
Everything runs in your browser. Nothing you type is saved, stored or sent anywhere.
What this number actually tells you
Net profit margin is what the business keeps after everything: the cost of delivering the work, the overhead of existing, and a market-rate wage for the owner. That last part is where most small business math goes wrong. If you pay yourself whatever is left, your P&L will always show a profit and never tell you the truth.
Put a real number in the owner compensation field — what you'd have to pay someone to do your job. What's left after that is the business's profit. That's the number a lender looks at, a buyer values, and you can reinvest.
For established service businesses, 10–15% net is a healthy target. Plenty of busy, well-known companies run at 2–4% and can't understand why growth never turns into money.
How the math works
- 01Gross profit = revenue − cost of goods sold.
- 02Overhead = office payroll + owner compensation + marketing + facility + vehicles + insurance + software + other fixed costs.
- 03Net profit = gross profit − overhead.
- 04Net profit margin % = net profit ÷ revenue × 100.
- 05Revenue needed for a target margin = overhead ÷ (gross margin % − target margin %).
What to do with the answer
- Pay yourself a market wage on the books. Everything downstream — pricing, valuation, hiring decisions — depends on that number being honest.
- Watch overhead as a percentage of revenue, not in dollars. Dollars always grow; the percentage tells you whether growth is paying for itself.
- If net margin is under 5%, fix price and gross margin before cutting overhead. There's usually more available there and it doesn't damage the business.
- Recalculate after any price increase. That's how you find out whether the increase actually reached the bottom line.
Want someone to read these numbers with you?
The Growth Assessment is a 30-minute conversation about what your numbers are telling you and what to fix first. No pitch deck, no PDF.
Schedule Your Growth Assessment Or call (737) 888-0415Questions owners ask about this
What is a good net profit margin for a small business?
For established service and trade businesses, 10–15% net is healthy after paying the owner a market wage. 5–10% is workable but fragile. Under 5% means the business isn't compensating you for the capital and risk you're carrying.
Should owner pay be included in net profit?
Yes, at a market rate for the work you actually do. Otherwise you're measuring the business and your salary as one blended number, which hides whether the business itself is profitable. When valuing the business, that owner pay gets added back as part of seller's discretionary earnings.
Why is my net profit high but my bank account empty?
Profit and cash are different. Receivables, inventory, debt principal payments, equipment purchases and tax payments all consume cash without appearing as expenses. Run the cash runway and working capital tools to find the gap.
Use these next
Profit & Pricing
Gross Margin Calculator
Revenue minus the cost of delivering it — the number that funds your entire business.
Profit & Pricing
Break-Even Calculator
The revenue where you stop losing money — per year, per month, per day, per job.
Cash & Capital
Cash Runway Calculator
How many months you can operate at your current burn — and what breaks first.
Profit & Pricing
Revenue Goal Calculator
Work backwards from the income you want to the revenue, jobs and leads it takes.