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Operating margin is the percentage of profit your company makes on every dollar of sales after you account for the costs of your core business. Operating margin is one of three metrics called profitability ratios. The other two are gross profit margin and net profit margin.

In general, margin metrics measure a company's efficiency: the way it spends money to earn money. Taken together, the metrics paint a portrait of a company’s operational strengths and weaknesses, how it measures up against its competitors, and how it has performed over time.