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I look at the average, which is about 10% for the sp500. https://insight.factset.com/sp-500-reporting-net-profit-margin-above-10-for-second-straight-quarter ht

• lotsofpulp 5y ago
  What is the relationship between the mean average net profit margin of the 500 companies in the SP500 index at this point in time and an "acceptable profit margin"? It seems like an arbitrary metric to use. I would think focusing on barriers to entry, economies of scale, and legislative barriers to be more relevant factors in determining whether or not a profit margin is "acceptable".
• France_is_bacon 5y ago
  Yes, that is correct, but that is only an average, of course. There are many ways to break things down. When you look at industries, we find that in 2016, for example, beverage manufacturing has a .8% profit margin, grocery stores have 2.5%, auto dealers are 3.2%. Beer wine and liquor store industry is 3.4%. On the other hand, we have high profit industries: accounting, tax prep, bookkeeping is 18.3%, legal is 17.4%, leasing real estate is 17.4%. And again, that's average. You can have one CPA charging $50/hour, and another charging $500 per hour. Costs are pretty much the same, if they both are sole proprietors, but the one charging $500/hour is probably 500% plus profit margin, or whatever it is.