Profit Margin

Profit margin is the percentage of revenue you keep as profit after all costs are paid. Where gross margin only subtracts delivery costs, net profit margin subtracts everything, salaries, software, marketing, tax, leaving the share of each euro of revenue that is genuinely yours. A 15% net margin means 15 cents of every euro survives the journey to the bottom line.

Margin matters more than raw revenue for a lean founder, because it measures the quality of the business, not just its size. A company doing 1M EUR at 5% margin keeps less than one doing 300,000 EUR at 25%. Healthy margins give you a buffer against bad months, cash to reinvest, and the freedom to weather a price war or a lost client. Track it over time, not just once: a margin that shrinks as you grow signals costs are scaling faster than revenue, which is a fixable problem if you catch it early.

A few ways this shows up in practice:

• Say you're running your books in Moneybird. Your revenue and your costs already sit there, so net margin isn't a guess, it's last month's profit divided by last month's revenue. Pull that figure every month and watch the trend, not the single number.
• Say you're a service business and the cost you keep underestimating is your own time. Track hours per client in Toggl, multiply by a real hourly rate, and you'll often find a "profitable" client is actually dragging your margin down once labour is counted properly.
• Say you've got the headline number but no idea which costs are eating it. Build a simple margin breakdown in Airtable, one row per cost category as a share of revenue, and the culprit, usually software sprawl or a bloated marketing line, stops hiding.