Industry benchmark · 2026
Average profit margin in Software (System & Application)
The average net profit margin in the Software (System & Application) industry is about 25.5%, across 309 U.S. companies in this group. That's well above the all-industry average of about 9.7%, marking Software (System & Application) as a relatively high-margin business.
Software (System & Application): margins vs the whole market
| Margin | Software (System & Application) | All industries |
|---|---|---|
| Gross margin | 71.7% | 37.8% |
| Operating margin | 33% | 12.8% |
| EBITDA margin | 35.9% | 16.6% |
| Net profit margin | 25.5% | 9.7% |
2026 data, Aswath Damodaran (NYU Stern). "All industries" is the U.S. total-market average for reference.
How to read these margins
- Gross (71.7%): revenue left after the direct cost of goods sold.
- Operating (33%): after operating expenses — roughly EBIT ÷ revenue.
- Net (25.5%): the bottom line, after all costs, interest, and tax.
Want to check your own business against these benchmarks? Use the profit margin calculator.
A note on benchmarks
These are averages across many companies, so an individual business can land far above or below. Margins also vary with scale, business model, and accounting choices — use them as a sanity check, not a target.
Frequently asked questions
What is the average profit margin in the Software (System & Application) industry?
The average net profit margin in the Software (System & Application) industry is about 25.5%, based on 309 U.S. companies in this group. Its average gross margin is about 71.7% and operating margin about 33% (2026 data).
What's the difference between gross, operating, and net margin?
Gross margin is revenue minus the direct cost of goods, as a percent of revenue. Operating margin subtracts operating expenses (it's roughly EBIT ÷ revenue). Net margin is the bottom line — what's left after all expenses, interest, and taxes.
Where does this data come from?
From Professor Aswath Damodaran of NYU Stern, who compiles average margins by industry from U.S. company financials and refreshes the dataset every January (2026 edition).
Last reviewed June 20, 2026. Figures based on the NYU Stern (Damodaran) industry margin dataset. Estimates for general education, not financial advice.