What is Profit Margin?
The percentage of revenue that remains as profit after deducting all business expenses — a core measure of freelance business health.
What Is Profit Margin for Freelancers?
Profit margin measures how much of your revenue becomes actual profit after expenses. Two key types:
Gross Profit Margin: Revenue minus direct costs (e.g., subcontractors, project-specific expenses)
Gross Margin = (Revenue - COGS) ÷ Revenue × 100
Net Profit Margin: Revenue minus all expenses including overhead
Net Margin = (Revenue - All Expenses) ÷ Revenue × 100
What Is a Good Profit Margin for Freelancers?
Because most freelancers have low overhead compared to product businesses, healthy margins are higher:
Why Low Margins Are Dangerous
A freelancer with a 15% net margin earning $100,000 gross keeps only $15,000 in profit. After taxes and personal drawings, there's almost nothing for business investment or emergencies. Raising rates or cutting unnecessary expenses is critical.
Improving Your Profit Margin
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