Net Profit Margin
The percentage of revenue that remains as profit after all expenses, taxes, and costs are deducted.
Why it matters
Net profit margin is the ultimate measure of business efficiency. It shows how much of every dollar in revenue actually becomes profit, factoring in all costs.
Formula
Divide net profit (revenue minus all expenses including COGS, operating costs, interest, and taxes) by total revenue, then multiply by 100.
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What's a good NPM?
Early-stage startups are often negative. Growth-stage: 0-10%. Mature SaaS: 15-25%. High-margin businesses: 25%+.
Related metrics
GM
FinanceThe percentage of revenue remaining after subtracting the cost of goods sold (COGS), showing profitability before operating expenses.
Burn Rate
FinanceThe rate at which a company spends money in excess of income, typically measured monthly.
Growth Rate
FinanceThe percentage increase in revenue over a specific period, typically measured month-over-month or year-over-year.