There's no single healthy number. It depends on your industry, and anyone who quotes you one universal figure is guessing. A 10% net margin might be excellent for a restaurant and worrying for a consultancy. The more useful skill is knowing your industry's rough range, then watching your own margin against your own history, because your trend tells you more than any benchmark.
Gross margin vs. net margin
Gross margin is what's left of each revenue dollar after the direct costs of delivering the work, before overhead. Net margin is what's left after everything: rent, admin, insurance, all of it. Net margin is the one people usually mean when they ask this question.
What is a healthy margin for my industry?
These are broad patterns, not targets, and you should verify current figures for your specific industry before you lean on them.
| Business type | Typical net margin (illustrative range) |
|---|---|
| Service (agencies, consultancies, professional practices) | ~10–20%, higher when well run |
| Restaurants and food | low to high single digits |
| Retail | ~2–10%, varies widely between e-commerce and brick-and-mortar |
| Construction and trades | mid single digits to low teens, depending on project mix |
Illustrative ranges only, as of this writing, and they age. If your number sits below your industry's range, treat it as a flag worth investigating, not a verdict.
To pin down a current, trustworthy benchmark for your own business, check your trade association's data or public industry-margin datasets by NAICS code, and always compare against businesses your size rather than the giants in your field.
Why your trend beats the benchmark
A benchmark can't see your business. Your history can. A net margin of 14% means one thing if it was 11% a year ago and something very different if it was 19%. Direction and speed of change are the real signals. A margin sliding two points a year is quietly telling you that costs are climbing faster than prices, and it will keep whispering that until the number gets uncomfortable. Compare this month to last month, to the same month last year, and to your twelve-month average. Those three comparisons will teach you more than any industry table.
The one caution: your own pay
Owner pay muddies this number in small businesses. An owner who underpays herself inflates the margin. One who takes large draws can make a healthy business look thin. If you pay yourself below what the role is worth, add back what a manager doing your job would cost before you compare to any benchmark, or the comparison is telling you nothing.