"Good" depends on which margin you mean and what industry you're in. Here are the benchmarks that matter.
Profit margin is the share of revenue left as profit after costs, shown as a percentage. A 20% net margin means you keep 20 cents of profit from every revenue dollar. Higher margins mean more of each sale becomes profit.
Gross margin subtracts the cost of goods sold. Operating margin also subtracts operating expenses like rent and payroll. Net margin subtracts everything, including interest and taxes — it's the true bottom line.
When someone asks about "a good margin," clarify which one they mean, because the healthy range differs a lot between them.
| Industry | Typical net margin |
|---|---|
| Grocery / retail | 1% – 5% |
| Restaurants | 3% – 9% |
| Professional services | 10% – 20% |
| Software / SaaS | 15% – 40%+ |
As a rough general guide, a 10% net margin is considered average, 20% is healthy, and 5% is thin. But context is everything — a supermarket thrives on 2%.
On $500,000 revenue with $300,000 cost of goods and $150,000 operating expenses, gross profit is $200,000 (40% gross margin) and operating profit is $50,000 (10% operating margin).
Raise prices where the market allows, lower cost of goods through better sourcing, trim operating expenses, and shift your mix toward higher-margin products or services.
Small margin gains compound. Lifting net margin from 8% to 10% is a 25% increase in profit on the same revenue.