Sales are not the same as profit. Enter what you sold and what it cost you, and see exactly what your business kept — and whether that's healthy for a business like yours.
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Net profit margin is: (Sales − Cost of goods − Running costs − Tax) ÷ Sales × 100
Gross profit margin is: (Sales − Cost of goods) ÷ Sales × 100
Gross margin tells you whether your pricing works. Net margin tells you whether the business made money. These are the exact formulas used by the calculator above.
Your net profit margin is the share of every sale that stays with the business after everything is paid — stock, rent, staff, transport, tax, all of it.
If your margin is 6%, then for every 100 you sell, 6 stays. That is the number that matters. A business doing huge sales on a 1% margin is working far harder than a business doing modest sales on 15%.
The business paid to trade. You sold, but the costs of selling were higher than the money that came in. One bad month is survivable. A pattern is not — and it usually has one or two specific causes worth finding.
You made money, but with no cushion. A slow week, one customer who doesn't pay, or a price rise from a supplier can turn the month negative. Thin margins aren't a failure — they're a warning that the business has no room for surprises.
The business is working as it should for its type. The question changes from “am I making money” to “does this hold month after month” — which is a much better question to have.
There are two margins worth knowing, and they answer different questions.
Gross profit = Sales − Cost of what you sold. Gross margin % = (Gross profit ÷ Sales) × 100
This only counts the cost of the goods themselves: the stock, the ingredients, the materials. It tells you whether there is enough room between what you buy for and what you sell for. If gross margin is weak, the problem is pricing or supplier cost — nothing further down will fix it.
Net profit = Sales − Cost of goods − Running costs − Tax. Net margin % = (Net profit ÷ Sales) × 100
This counts everything: rent, staff, transport, fuel, data, levies, tax. It's the honest number.
A shop sells 900,000 in a month. Stock cost 585,000 → Gross profit 315,000, a gross margin of 35%. Rent, staff, transport, power: 285,000 → Profit before tax 30,000. Tax: 12,000 → Net profit 18,000. Net margin: 18,000 ÷ 900,000 = 2%.
Healthy pricing, tight net margin. The 35% gross margin says the shop buys and sells well. But at 2% net it's sitting at the bottom of the healthy range for a shop — running costs are eating almost everything the pricing earns, so that's where the attention belongs, not on prices.
There is no single good margin. A market trader turning stock over daily and a salon selling skilled hours are different businesses with different economics, and comparing them is meaningless. These are broad guides for net margin — after all costs and tax.
Sources: net-margin bands derived from Statistics South Africa quarterly financial statistics — net profit after tax by sector (2019) and the Food and Beverages Industry report, No. 64-20-01 (2022); the Small Firm Diaries (Nigeria and Kenya, 2021–22); Kremer, Lee, Robinson and Rostapshova, "The Return to Capital for Small Retailers in Kenya" (Federal Reserve Bank of San Francisco); and country studies for agriculture (Ethiopia, Côte d'Ivoire, Guinea and Cameroon). All figures are net margin after every cost, including the owner's own pay. Benchmarks are continental, not country-specific — credible margin data exists for only about half of Africa's 54 countries, concentrated in Nigeria, Kenya and South Africa — and are indicative guides, not targets. Your currency is local; the benchmark isn't. Full references are listed at the foot of this page. Compiled July 2026; reviewed annually.
Read these as a direction, not a verdict. Your rent, your market, your season and your stage all move the number. A new business investing in growth may sit below the range on purpose. What matters more than hitting a range is knowing your number and watching which way it moves.
This is the part that catches most owners out: profit and cash are not the same thing. You can finish a month genuinely profitable and still not have money in hand. It happens for a few ordinary reasons.
You bought inventory that hasn't sold yet. On paper it's an asset. In practice you can't pay rent with it.
The sale is counted, the work is done, the cash hasn't arrived. Every day of delay is a day you're funding someone else's business.
Suppliers want paying now; customers pay later. The month works out fine — the middle of it doesn't.
If a single buyer is a large share of your sales, you don't have a business with a cash flow problem. You have a business with a concentration problem that shows up as a cash flow problem.
This is why margin alone can't tell you if a business is healthy. It tells you whether the month worked. It can't tell you whether next month will.
How to know if your business is actually making money →There's only one way to know. Your Business Health Check looks at cash flow stability, profit margin, customer concentration and risk together — then tells you which one to fix first.
Free. About 10 minutes. No accounting knowledge needed.
Not sure what to fix first? It looks at your profit, your cash, how exposed you are to one big customer, and how much the business depends on you — then tells you where to start.
Take your free Business Health CheckReady to work on it? Monyvo keeps these numbers in front of you day to day — what you’ve sold, what you’re owed, and what needs doing today. Free plan available.
Get the Monyvo appA healthy margin can still leave you short of cash — money trapped in stock, customers who owe you, costs that fall due before your income arrives. This is the "busy but broke" gap above, worked out on your own numbers.
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Your net margin starts from your gross margin, and your gross margin starts from how you price. If the gross figure above looked thin, the fix is upstream.
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The healthy-margin ranges above are compiled from public data on African and comparable small-business margins. They are stated on one consistent basis — net margin after every cost, including the owner's own pay — and are continental guides rather than country-specific figures, because credible margin data exists for only about half of Africa's 54 countries.
— Additional agricultural figures for Côte d'Ivoire (maize), Guinea (rice) and Cameroon (cocoa) are drawn from country-level production studies compiled in Monyvo's internal benchmark dataset (July 2026).
These figures are estimates for learning and planning, not financial, accounting or tax advice. Check them against your own records.