Full explanation
Profit margins vary dramatically by industry. Software/SaaS: gross margin 70–90% (intangible product). Retail: gross margin 20–40%, net 2–5% (thin margins, high volume). Restaurants: gross margin 60–70%, net 5–10% (after high labour and real estate). Manufacturing: gross 30–50%, net 5–15%. For a small Indian business: gross margin above 40% indicates pricing power. Net margin above 10% is healthy. Track all three: gross (pricing efficiency), operating (operational efficiency), net (overall profitability after financing and taxes). Declining margins with growing revenue is a red flag.