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Net margin

Also called net profit margin

Dasha ShakovReviewed by Dasha ShakovVP Marketing, Proton

Updated

What is net margin?

Net margin is the percentage of revenue a company keeps as profit after all expenses, including COGS, operating expenses, interest and taxes. Net margin % = net income ÷ revenue; in distribution it is much smaller than gross margin, because warehouses, trucks and salespeople use up most of the gross profit.

Net margin example

On $50 million of sales at a 26% gross margin, a distributor ends the year with $1.5 million of net income after wages, rent, trucks, interest and taxes, a 3% net margin.

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