See what actually reaches your pocket after every cost — from revenue to net profit.
What is net profit?
Net profit is what remains after subtracting every cost from revenue — product costs, marketing, salaries, rent, interest, and taxes. It's the actual bottom line. Gross profit tells you if the product works; net profit tells you if the whole business works.
Net profit = Revenue − COGS − Operating expenses − Interest − Tax
How to calculate net profit (step by step)
- Start with revenue — total sales in the period.
- Subtract COGS → gross profit.
- Subtract marketing & ad spend → what's left after acquisition cost.
- Subtract other operating expenses → operating profit (EBIT).
- Subtract tax → net profit.
Worked example: ecommerce P&L from top to bottom
A DTC brand's monthly numbers:
| P&L line |
Amount |
% of revenue |
| Revenue |
$100,000 |
100% |
| − COGS |
$40,000 |
40% |
| = Gross profit |
$60,000 |
60% |
| − Marketing & ads |
$20,000 |
20% |
| − Other OpEx (salaries, rent, tools) |
$25,000 |
25% |
| = Operating profit |
$15,000 |
15% |
| − Tax (25%) |
$3,750 |
3.75% |
| = Net profit |
$11,250 |
11.25% |
This brand keeps 11.25 cents of every revenue dollar. At $100K/month revenue, net profit is $11,250. If the owner wants to take home $100K/year, they need ~$890K in annual revenue at this margin — or improve margin by cutting OpEx, raising prices, or reducing ad spend as a % of revenue.
How to use net profit
Compare net margin to industry benchmarks. Track it over time — is margin improving or eroding? Use it to set revenue targets: "I want $X in net profit → at Y% net margin → need $Z revenue." Pair with the break-even calculator for volume targets and the marketing budget calculator to set ad spend within the margin framework.
Frequently asked questions
How do you calculate net profit?
Start with revenue, subtract COGS to get gross profit, then subtract all operating expenses (marketing, salaries, rent, etc.), interest, and taxes. The remainder is net profit. Net profit margin = net profit ÷ revenue × 100.
What is the difference between gross profit and net profit?
Gross profit subtracts only direct product costs (COGS). Net profit subtracts everything — COGS, marketing, salaries, rent, interest, and taxes. Gross profit measures product viability; net profit measures whole-business viability.
What is a good net profit margin?
It varies by industry. SaaS companies often run 15–25% net margins; ecommerce 5–10%; retail 2–5%. A good net margin is one that meets your personal income goals and allows reinvestment in growth.
How is net profit different from operating profit?
Operating profit (EBIT) subtracts COGS and operating expenses but not interest and taxes. Net profit subtracts everything. The gap between them is your tax and financing cost.
How can I improve net profit?
Raise prices (flows directly to bottom line), lower COGS through supplier negotiation, cut marketing waste using ROAS analysis, reduce fixed costs, or optimize tax strategy. Small improvements in multiple line items compound.
How does net profit connect to marketing metrics?
Marketing spend is one of the biggest line items between gross and net profit. Use ROAS to ensure ad spend is efficient, CAC to keep acquisition costs in check, and marketing ROI to prove marketing contribution to the bottom line.