Canonical formula calculator
Net Profit Margin
How much of every dollar you keep after all expenses.
Worked example
How the number is worked out
The same plumbing company, after every bill for the month has landed.
Starting from
Working
Eight cents of every dollar survives to the bottom. Set that against the 35% gross margin above and the gap — 27 points — is what the business costs to keep open, whether or not a single job goes out.
What this tells you
Net profit margin is the percentage of revenue left after every expense — COGS, operating costs, payroll, taxes, interest, everything. It is the all-in profitability number. Where gross margin says "there is room to run a business," net margin says "the business is actually running profitably right now."
When to use it
Use this at the end of every accounting period (monthly, quarterly, annually) to confirm the business is actually profitable. Pair with gross margin to see whether problems live in cost-of-goods (low gross margin) or operating overhead (high gross, low net).
What it doesn’t tell you
Net profit margin is an accounting figure, not a cash figure. A business with a positive net margin can still run out of cash if customers pay slowly or inventory ties up working capital. Pair this metric with burn rate, runway, and cash conversion cycle to see the cash picture — the one that actually determines survival.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.