What Is a Good Profit Margin? By Industry (2026)

A good net profit margin is generally around 10%, with 20%+ considered high and under 5% thin — but it varies enormously by industry. Gross margins run much higher (often 50–70% for products, 80%+ for software). Here's how to read your margin, 2026 benchmarks, and a free profit margin calculator.

Gross vs net margin

Gross margin = (revenue − cost of goods) ÷ revenue, measuring product profitability before overhead. Net margin = (revenue − all costs) ÷ revenue, the bottom-line number after everything. A healthy gross margin with a thin net margin means overhead is eating your profit. Calculate both with the Profit Margin Calculator.

Good margins by industry (2026)

• Software/SaaS: gross 75–85%, net can reach 20–30%+.
• Retail/e-commerce: net margins are thin, often 2–5%.
• Restaurants: notoriously low, 3–6% net.
• Professional services: higher net, 15–25%, since costs are mostly labor.

Margin isn't markup

A 50% markup is not a 50% margin — markup is over cost, margin is over price. Mixing them up quietly underprices you. See markup vs margin and the Markup Calculator.

How to improve margin

• Raise prices where you have room — the fastest lever, straight to the bottom line.
• Cut cost of goods — negotiate suppliers, reduce waste.
• Trim overhead that doesn't drive revenue.

Bottom line

Aim for a net margin healthy for your industry, and always separate gross from net so you know whether the problem is pricing or overhead. Calculate your margin free.