Net Profit Margin by Industry

Net margin only means something compared to its industry — 5% is impressive for a grocer and thin for a software company. This table shows the typical range, median, and what the number means for 20 industries, and the box below benchmarks any ticker against its own sector in one click.

By Basis Report Editorial DeskReviewed by Basis Report Methodology TeamMethodology

Benchmark a ticker against its industry

Net profit margin by industry (2024). Highlighted row = the ticker you looked up.
Sector	Typical Range	Median	What It Means
Technology	18-25%	21.0%	High margins from software, licensing, and IP — scale drives profitability.
Healthcare	8-15%	11.0%	Solid margins, but heavy R&D and regulation cap the upside.
Financial Services	20-30%	24.0%	Reported revenue is a net spread, which inflates margin ratios.
Consumer Discretionary	3-8%	5.0%	Cyclical demand and competitive pricing keep margins modest.
Consumer Staples	4-8%	6.0%	Steady but thin — volume and brand loyalty matter more than price.
Energy	5-12%	8.0%	Commodity-driven; margins swing hard with oil and gas prices.
Industrials	6-10%	8.0%	Capital-heavy manufacturing keeps net margins in single digits.
Materials	6-10%	8.0%	Cyclical commodity pricing limits sustained margin expansion.
Utilities	8-12%	10.0%	Regulated returns produce stable, predictable margins.
Real Estate	15-25%	19.0%	REIT accounting and rental income lift reported margins.
Communication Services	12-20%	15.0%	Platform and media businesses earn healthy double-digit margins.
Retail	1-4%	2.5%	Razor-thin margins; profit depends on volume and inventory turnover.
Food and Beverage	5-10%	7.0%	Brand strength supports margins a step above general retail.
Pharmaceuticals	15-25%	19.0%	Patent-protected drugs command premium, high-margin pricing.
Aerospace and Defense	6-10%	8.0%	Long-cycle contracts yield steady mid-single-digit margins.
Automotive	3-6%	4.0%	Heavy capital costs and intense competition compress margins.
Software	18-28%	22.0%	Near-zero marginal cost delivers the highest net margins of any group.
Banking	18-28%	22.0%	Net-interest revenue reporting produces high headline margins.
Insurance	10-15%	12.0%	Underwriting discipline and investment float drive solid margins.
Mining	8-15%	11.0%	Commodity cycles make margins volatile but often robust at the peak.

Source: 2024 sector estimates (trailing twelve months). Ranges vary with the business cycle and the exact company set. Banks and financials report revenue net of interest, which inflates their margins.

Compare with other profitability benchmarks: the Gross Margin by Industry table shows profitability before overhead, the ROE by Industry table measures returns on shareholder equity, and the P/E Ratio by Industry table shows how the market prices each sector's earnings.

Frequently Asked Questions

What is a good net profit margin by industry?

There is no universal threshold — a good net profit margin by industry depends entirely on the sector. Software, banking, and financial services routinely post 18–30% net margins because their cost structures are light, while retailers, automakers, and consumer-discretionary businesses operate profitably at 2–8%. Use the table above to find the industry median, then judge whether a company sits above or below its peers. A 10% net margin is exceptional for a supermarket and underwhelming for a SaaS business.

How is net margin different from gross or operating margin?

Gross margin strips out only the direct cost of goods sold. Operating margin adds back SG&A and R&D. Net margin is the bottom line — it deducts interest expense, taxes, and any one-time items, so it reflects what shareholders actually keep from every dollar of revenue. Net margin is the most complete profitability signal, but it can be distorted by leverage (a highly indebted company's net margin looks worse than its operational efficiency warrants) and by one-time charges. Reading all three together — gross, operating, and net — tells a fuller story.

Why do banks and financial companies show high net margins?

Banks and financial-services companies report revenue net of interest expense rather than gross, which mechanically inflates their reported margin ratios. A bank earning $25 billion of net income on $80 billion of reported revenue shows a 31% net margin, but that revenue figure is already a spread — not a gross top-line. This makes direct comparisons between financials and other sectors misleading. Within the sector the benchmark is still useful; across sectors, prefer metrics like return on equity or return on assets that normalize for the different business model.

Which industries have the highest and lowest net profit margins?

The highest net margins cluster in asset-light, IP-heavy, or spread-based businesses: software (18–28%), banking and financial services (18–30%), pharmaceuticals (15–25%), and real estate (15–25%). The lowest sit in high-volume, price-competitive sectors: retail (1–4%), automotive (3–6%), and consumer discretionary (3–8%). The pattern is intuitive — where marginal cost is near zero or pricing power is strong, more of each revenue dollar survives to the bottom line.

How to Use Net Margin Benchmarks

Net profit margin — net income divided by revenue — is the most comprehensive profitability measure. Unlike gross margin (which ignores overhead) or operating margin (which ignores interest and taxes), net margin reflects what shareholders actually keep from every dollar of revenue after every cost has been paid. A company that can consistently deliver a double-digit net margin is usually doing something right competitively, operationally, or both.

The key mistake is comparing net margins across sectors. A 9% net margin is solid for an industrial manufacturer and thin for a software company. Capital-intensive sectors like utilities and energy run at 8–12% because their assets are expensive to maintain; software and financial services can reach 20–35% because their marginal unit costs are low. Start with the sector median to establish what's normal, then judge whether the company is above or below it — and whether that gap is widening or narrowing over time.

Net margin is a starting point, not the whole story. High debt can crush net margin through interest expense even when the underlying business is healthy; a one-time asset sale or tax benefit can inflate it for a single quarter. Always read net margin alongside the Profit Margin Calculator (which shows gross, operating, and net in context) and the ROIC Calculator to see whether the profits earned are generating adequate returns on the capital deployed.

More tools & guides

Profit Margin Calculator

Gross, operating, and net margin for any ticker, each against its sector

Gross Margin by Industry

Low, median, and high gross margins for all 11 GICS sectors

Operating Margin by Industry

Operating efficiency benchmarks across all 11 sectors — before interest and taxes