Net Profit Margin

Definition

Net profit margin is the percentage of revenue that remains as profit after deducting all expenses — COGS, operating expenses, interest, taxes, depreciation, and amortization.

Formula: Net Profit Margin = (Net Income ÷ Revenue) × 100

Why It Matters

Net profit margin is the ultimate measure of business efficiency. It tells you how much of every dollar earned actually becomes profit. A company with $10M in revenue and a 5% net margin keeps $500K. A company with $5M in revenue and a 15% net margin keeps $750K.

Revenue is vanity. Gross margin is sanity. Net profit margin is reality.

Industry Benchmarks

• SaaS: 15–25% is typical for mature companies; negative for growth-stage.
• Professional services: 10–20% depending on utilization and pricing.
• E-commerce: 3–10% depending on category and scale.
• Construction: 3–8%, with significant project-to-project variation.

How CentSight Helps

CentSight calculates your net profit margin in real time and tracks it monthly. It connects all the layers — from gross margin through EBITDA to net profit — so you can see exactly where margin is being lost. Ask: “Where are we losing the most margin compared to last quarter?”