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Net Profit Margin

Measure exactly what percentage of sales you keep as profit after all expenses.

100% client-side. Nothing you type is uploaded or stored on a server.

Gross margin flatters; net profit margin tells the truth. After cost of goods, rent, salaries, marketing, payment fees, interest, depreciation and tax, what percentage of every ₹100 of sales actually stays with the business? For many Indian small businesses the honest answer is 3–8%, which is why a 5% discount or a 2% payment fee is not a small thing. This calculator computes net profit and net margin from revenue and each expense head, shows operating margin on the way, and lets you test what a price change or a cost cut does to the bottom line.

The formula

Net profit = Revenue − COGS − Operating expenses − Interest − Depreciation − Tax. Net margin = Net profit ÷ Revenue × 100.

Revenue ₹1.2 crore, COGS ₹72 lakh, operating expenses ₹30 lakh, interest ₹4 lakh, depreciation ₹6 lakh, tax ₹2.4 lakh → net profit ₹5.6 lakh, net margin 4.7%. The same business shows a 40% gross margin and a 15% operating (EBITDA) margin — the EBITDA calculator and gross margin calculator give those layers.

How to use the calculator

  1. Enter revenue excluding GST.
  2. Enter COGS, then operating expenses by head — rent, salaries (loaded, from the employee cost calculator), utilities, marketing, payment and marketplace fees, software, insurance, repairs.
  3. Enter interest, depreciation (from the depreciation calculator) and income tax.
  4. Read gross, operating and net margin, and the rupee profit.
  5. Use the what-if sliders: +3% price, −2% COGS, −₹20,000 rent — and see the net margin move.

Why net margin is thin, and where the leaks are

  • Owner's salary left out of expenses makes margin look better than it is; include a market salary.
  • Payment costs: gateway fees at 2% + GST, and UPI MDR for P2M merchants above ₹2,000 from October 2026 (UPI MDR calculator).
  • Returns and wastage on marketplaces and in food; count them in COGS.
  • Interest on working-capital loans and late GST — the late payment interest tool shows how fast 18% adds up.
  • Discounts given as a habit rather than a decision; check every offer with the discount calculator.
  • Tax: profit under 44AD is presumed at 6–8% of turnover regardless of your real margin; if your actual net margin is lower, regular books may cut tax — see Which ITR form to file.

Improving the bottom line

A 4.7% net margin doubles if you can do any two of: raise prices 3%, cut COGS 3%, or cut operating expenses 10%. Small businesses usually find the third easiest — renegotiating rent, automating billing (the GST invoice generator is free), cutting unused subscriptions — and the first hardest, though a 3% price rise on a differentiated product rarely loses customers. Track results with the budget variance calculator.

Benchmarks (indicative)

BusinessTypical net margin
Kirana / grocery2–5%
Restaurant / café5–12%
Apparel retail5–10%
Manufacturing (small)6–12%
E-commerce seller3–8%
Professional services15–35%

Frequently asked questions

What is the difference between gross, operating and net margin?

Gross margin is after cost of goods; operating margin is after all operating expenses but before interest and tax; net margin is after everything, including tax.

Should I include my own salary?

Yes, at a market rate. Otherwise the margin overstates the business's real profitability and misleads any buyer or lender.

Is GST part of revenue?

No. Use revenue excluding GST, and exclude GST paid on purchases that you claim as input credit.

What net margin should a small shop target?

Grocery 3–5%, apparel 5–10%, food service 8–12%, services 15%+. Consistency and cash conversion matter as much as the percentage.

How do I improve net margin fastest?

Cut the largest controllable expense (often rent or discounts), raise prices modestly on differentiated items, and reduce payment and interest costs. The what-if sliders show which lever moves the margin most.