Net Profit Margin
Definition
The percentage of every sales dollar that ends up as profit after all expenses.
Want a deeper explanation?
Formula
Net Profit Margin % = Net Income ÷ Net Sales × 100Net margin is what you keep. Many e-commerce brands run in the high single digits; improving it usually comes from margin structure, not just more sales.
It is best viewed alongside gross and contribution margin to see where profit leaks. Watch for: growing revenue with a shrinking net margin, which often means fixed costs or ad spend grew faster than sales.
Example
$180,000 of net income on $2.4M of net sales is a 7.5% net profit margin.