Profit Margin: Is Your Business Model Actually Working?

Everyone focuses on revenue. But revenue is a vanity metric.

Your profit margin tells you the truth: is your business actually sustainable?

What is Profit Margin?

Profit margin is simple: (Profit ÷ Revenue) × 100

It answers one question: Of every dollar you make, how much do you actually keep?

If you invoice $100,000 and spend $92,000 to deliver that work, you have an 8% profit margin. You're keeping 8 cents of every dollar.

Why This Matters

An 8% margin sounds like you're making money. And technically, you are. But one unexpected expense, one slow month, or one client who doesn't pay on time, and that margin disappears.

The Healthy Range

Real Example

A service business invoices $100,000 in a month. After paying team, contractors, and software, they spend $92,000. That's an 8% margin. They're making money, but one bad month or unexpected expense wipes out their buffer.

How to Improve Your Margin

You have two levers: increase revenue or reduce expenses. Usually, the answer is both.

Your profit margin isn't just a number. It's a reflection of whether your business model works.