# Net margin

Profit as a share of revenue, which compares unlike businesses.

For an owner-run business the useful version is [SDE](https://searchspheresource.com/glossary/sde) over revenue, since the owner's own pay sits inside the profit. Before spending anything on diligence, check whether a listing's margin is even believable for its trade. The IRS publishes totals by industry. A margin far above what profitable filers in that trade actually keep is really a claim about [add-backs](https://searchspheresource.com/glossary/add-backs).

In numbers: A business with $3.6M of revenue and $540k of SDE runs a 15% SDE margin; if the trade's profitable filers average 12%, the extra three points are the add-backs you have to defend line by line.

Source: https://searchspheresource.com/glossary/net-margin
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt