That's essentially how it's done. But sometimes there are a few "complications" that must be taken into account. If you've done what's described immediately below, then that's good.
Depending on the paper used for the target, the actual bullet hole on the target may be smaller than the bullet's diameter. Measuring the outside width of the group using the outside edge of the holes in the paper doesn't produce the correct measurement. To obtain the outside-to-outside measurement it's necessary to include the grey coloured smear or smudge from the lead bullet. If there is no smear visible, it would be appropriate to deduct the diameter of an actual bullet hole in the paper used.
A lot of shooters on this thread use .22" as the size to deduct and that need not be an issue. I use it myself, although I shoot at 57 yards, which is my club range's version of 50.
When any group is sufficiently wide to have room for three bullet holes side-by-side there is a minimum diameter to such a group. If the figure being deducted is .22", such a group would have to be at least .44". On your target, see, for example, the group in the middle and on the bottom left. When two side-by-side bullet holes are far enough apart to have paper between them, such as the group on the bottom right, the group they are in can never be less than .22" if .22" or more is used as the bullet diameter to deduct from the outside size.
