Finance & Funding

Calculating and Monitoring Your Margin

Updated: 2026-05-27 Holdwise editorial team Margin Profit Finance

Your margin is the part of each euro of revenue that is left after the direct costs of delivery. With a healthy margin, you can invest, absorb mistakes and pay yourself. With a thin margin, your business is vulnerable, even when revenue looks strong. At Holdwise, we updated this answer on 27 May 2026 and change it when the rules change.

Two margins to know

Gross margin: revenue minus the direct cost of delivering (materials, subcontractors, payment fees). The rest is available for overhead and profit.
Net margin: what is left after all costs, including overhead. This is your final profit.

How to calculate gross margin

For each product or service, divide (selling price minus direct costs) by selling price. A service sold for €1,000 with €200 of direct costs has a gross margin of 80%. Track this for each product or service as well as for the business as a whole. You then see which parts of your business make money.

What is a healthy margin?

It depends heavily on the industry. Service businesses often have high gross margins (60% to 90%) but high overhead. Product businesses often have lower gross margins (20% to 50%) but lower overhead. Compare your margin with similar businesses. The number on its own is less important.

The warning signs of thin margins

You are busy but profit barely grows.
One small client problem, such as a refund or a delay, costs you a month's profit.
Every euro is already spent, so investing or hiring is impossible.

Three ways to improve margin

Raise prices, if your value justifies it.
Reduce direct costs, by renegotiating suppliers or removing waste.
Drop low-margin work, so your time goes to the profitable parts.

Measure regularly

Calculate your gross margin at least every quarter, and preferably every month. If you follow your margin over time, you see problems long before they show up in your cash flow. When you notice that your margin is too low, the problem has often been growing for months.

Tip: some clients and products bring in much more than others. Some of your work is profitable, and some costs you money while you are unaware of it. Find out which work is which. It is one of the most useful things you can learn about your business.

Frequently asked questions

What is the difference between margin and profit? +

Margin is a percentage (what proportion of revenue is left after costs). Profit is the absolute amount. Two businesses with the same profit can have very different margins and very different resilience.

How do I improve my margin? +

Raise prices, cut direct costs, or drop low-margin work. Often the fastest gains come from declining the worst-margin clients or products.

How often should I check margin? +

At least every quarter, and preferably every month. If you follow your margin over time, you see problems long before they show up in your cash flow.

Sources Belastingdienst · KVK · wetten.overheid.nl Last updated: 2026-05-27