What is Net Profit Margin?
Net profit margin is the percentage of revenue that becomes profit after every cost: COGS, operating expenses, interest and tax.
A real Kenyan example
A pharmacy bills KES 1.2M/month. After all expenses it keeps KES 144,000. Net margin = 12%.
Formula
Net margin % = Net profit ÷ Revenue × 100
Why it matters
Net margin is the truth-teller of the P&L. It is what actually goes into the owner’s pocket or back into growth.
How Veira helps
Veira tracks every revenue line and every expense category, so net margin is always current, not a quarterly accountant surprise.
FAQs
What is a healthy net margin?
5-10% for retail and restaurants; 15-25% for professional services; 25%+ for software.
Is net margin the same as profit?
Profit is a shillings number; margin is profit expressed as a percentage of revenue.
Why might it be negative?
Operating losses, one-off costs, or growth-stage spending. Negative for 3+ months is a serious warning.
Should I price for net margin?
No, price for gross margin and control operating costs to hit a target net margin.
How does Veira help?
Live P&L per branch and category; alerts when net margin slips below a target.