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A first-year studio
FDIC’s Immortal Images example has 100,000 of photography sales, 10,000 of supplies and assistant pay, 40,000 of studio overhead, and a 10,000 tax estimate. Net profit is 40,000.
Revenue: 25% lower
Change revenue to 75,000 while keeping the other example values the same.
Revenue: 25% higher
Change revenue to 125,000 while keeping the other example values the same.
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Quick answer
What does the Net profit margin calculate?
What share of revenue is left after cost of goods sold, overhead, and income tax? This calculator uses revenue, cost of goods sold, overhead (operating expenses), and income tax to estimate net profit as a share of revenue immediately in your browser.
With the values currently entered, the result is 40% — net profit margin. It also shows net profit, operating profit, and gross profit.
How to use the Net profit margin
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Revenue
- Cost of goods sold
- Overhead (operating expenses)
- Income tax
Net profit margin formula
Net profit = revenue − COGS − overhead − income tax. Net profit margin = net profit ÷ revenue.
Assumptions
- FDIC Money Smart writes profit margin as net profit ÷ revenue. Net profit is what remains after COGS, overhead, and income tax.
- Investor.gov defines net income as profit after every expense and tax. Enter the tax amount you already estimated. This page does not compute tax.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Writes the P&L as revenue − COGS = gross profit, then − overhead = operating profit, then − income tax = net profit. Profit margin is net profit ÷ revenue.
Net incomeInvestor.gov — US Securities and Exchange CommissionScope: General investor education; US sourceDefines net income as the profit after all expenses and taxes have been deducted from revenue.
Beginners’ guide to financial statementsUS Securities and Exchange CommissionScope: General investor education; US sourceWalks an income statement from sales to cost of sales, then to gross profit, operating expenses, and the bottom-line net earnings.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Net profit margin example and edge cases
Net profit is the bottom line. FDIC Money Smart writes it as revenue minus cost of goods sold, overhead, and income tax, then divides that leftover by revenue.
Example: A first-year studio
FDIC’s Immortal Images example has 100,000 of photography sales, 10,000 of supplies and assistant pay, 40,000 of studio overhead, and a 10,000 tax estimate. Net profit is 40,000.
- Revenue
- 100,000
- Cost of goods sold
- 10,000
- Overhead (operating expenses)
- 40,000
- Income tax
- 10,000
Calculated result40%net profit margin
40,000 ÷ 100,000 is a 40 percent net margin. The operating profit line is 50,000, before that tax estimate. This page does not compute tax. Type the amount you already have.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the percent, then the net profit in money. A 40 percent margin on 20,000 of sales is a different business from the same percent on 200,000.
- Overhead is the running cost FDIC calls operating expenses. Keep owner draws out of this box unless you treat them as an expense in your own books.
Edge cases worth checking
The tax figure is still a guess
Type a cautious estimate and run a higher one next. Investor.gov treats net income as profit after tax. The tax authority still decides the real bill.
You mixed a one-off equipment purchase into overhead
FDIC spreads equipment through depreciation, not the full purchase. Put only this period’s operating cost in overhead, or the margin looks worse than the year really was.
What changes the result most
Revenue
Use a current amount for revenue. Include fees or recurring costs that belong in the same figure.
Cost of goods sold
Use a current amount for cost of goods sold. Include fees or recurring costs that belong in the same figure.
Overhead (operating expenses)
Use a current amount for overhead (operating expenses). Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Revenue: 25% lower
75,00020%net profit margin
Revenue: 25% higher
125,00052%net profit margin
Cost of goods sold: 25% higher
12,50037.5%net profit margin
Common mistakes
Check revenue
FDIC Money Smart writes profit margin as net profit ÷ revenue. Net profit is what remains after COGS, overhead, and income tax. Make sure this matches the number you enter.
Keep income tax consistent
Investor.gov defines net income as profit after every expense and tax. Enter the tax amount you already estimated. This page does not compute tax. Use the same units and time period throughout the calculation.
Do not rely on one net profit margin scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What share of revenue is left after cost of goods sold, overhead, and income tax?
It does not replace a quote, contract, accountant, or local employment guidance.