The percentage of revenue left as profit after costs, found by dividing profit by revenue — a measure of how efficiently a business earns.
Profit margin is the share of your revenue that survives as profit, written as a percentage: profit divided by revenue. If you earn $100,000 and keep $30,000 after costs, your margin is 30%. It measures efficiency, not size — a small business can have a far healthier margin than a large one.
For sellers, margin tells you whether working harder is actually paying off. Rising revenue with a shrinking margin means your costs (or your unpaid hours) are growing faster than your income. Service businesses often have high margins because their main “cost” is time — which makes protecting your rate and your hours the whole game. For buyers, a professional’s margin explains why undercutting on price isn’t sustainable; there’s less room than product businesses have.
The number to watch is the trend, not a single snapshot. Compare your margin quarter over quarter. If it’s slipping, the fix is usually pricing or scope, not volume — our guide on pricing mistakes covers the common leaks.