Profit Formula - Profit Percentage Formula and Examples (2024)

Profit is defined as the amount obtained by selling a product that is greater than the cost price of the product. It is the amount gained from any type of commercial activity. In summary, if the selling price (SP) of a product is greater than the cost price (CP), it is deemed a gain or profit. It explains the financial gain achieved when the revenue from a commercial activity surpasses the taxes, costs, and so on that are involved in the maintenance of a firm.

Profit Formula

Profit is better described in terms of cost price and selling price. The cost price of a product or commodity is its real price, whereas the selling price is the amount at which the object is sold. So, if the selling price of the product exceeds the cost price, the firm has made a profit.

As a result, the profit calculation formula is as follows,

Profit = S.P. – C.P.

where,

C.P. is the cost price of the goods
S.P. is the selling price of the goods

Formulas to Calculate Profit

The various formulas to calculate Profit Formulas are:

• Formula for Profit Percentage is dependent on Profit and C.P.

Profit Percent Formula = (Profit × 100)/ C.P.

• Gross Profit Formula is the profit on the total sales of goods

Gross Profit = Total Revenue – Total Cost of Goods Sold

• Net Profit is the profit that is incurred after excluding all expenses and other costs.

Net Profit = Gross profit – Expenses

Profit Percentage

Profit percentage (%) is the amount of profit represented as a percentage of the total. Because this profit is dependent on the cost price.

Profit percentage = (Profit / Cost price ) × 100

Solved Examples on Profit Formula

Example 1: A shopkeeper buys pens in bulk for Rs. 20 each. He sells each of them for Rs. 45. What will be the profit and the profit percentage?

Solution:

Given: Selling price of the Pen (S.P) = Rs. 45

See Also

Profit formula: How to calculate profit easily | QuickBooksCalculate your profit margins | nibusinessinfo.co.uk

Cost price of the Pen (C.P) = Rs. 20

Now, As per the profit formula,

Profit = Selling Price – Cost Price

So, profit = 45 – 20

Profit = Rs. 25

Now, Using the formula for profit percentage,

Profit % = (Profit / Cost Price ) × 100

So, the profit percentage = (25 / 20) × 100

= 1.25 × 100

Profit percentage = 125%.

Example 2: If a shopkeeper sells fruits at Rs.250 per kg, whose cost price is Rs.150/- per kg. What will be the profit gained by the shopkeeper?

Solution:

Given, Cost Price = Rs.150/-

Selling Price = Rs.250/-

From the formula of profit, we know,

Profit = Selling Price – Cost Price

Profit = 250 – 150

Profit = 100

Therefore, the shopkeeper earn profit Rs. 100/- .

Example 3: Find the gain percentage if the profit is Rs 100 and the cost price is Rs 150.

Solution:

As we know,

The profit percentage formula is

Profit percentage % = (Profit / Cost Price ) × 100

Since, Profit = Rs 100 and Cost Price = Rs 150

Therefore, Profit % = (100/150) × 100

Profit % = 10000/150

= 66.66

Hence, the gain percentage is 66.66%.

Example 4: Sanju sold a digital watch for Rs. 6,000, on which he gains 25%. What is the cost price of the digital watch?

Solution:

For the digital watch Gain = 25%.

Let cost price of watch (C.P.) = Rs.100.

Therefore, selling price (S.P.) of digital watch = (100 + 25) = 125

When selling price (S.P.) is Rs.125, cost price (C.P.) is Rs.100.

Therefore, when selling price (S.P.) is Rs.6000,

Cost price (C.P.) = {100 / (100 + gain )} × 6000

= 100/125 × 6000

= (100 × 6000)/125

= 600000/125

= 4800

Therefore, cost price (C.P.) of the digital watch = Rs. 4800.

Example 5: A cost price for the bag is Rs. 350 and the selling price is Rs. 400. Find the profit percentage he earned.

Solution:

Cost price = Rs 350

Selling price = Rs 400

Profit = SP – CP

= 400 – 350

= 50.

Gain% = (Profit / Cost price ) x 100

= (50/350) × 100

= 14.28 %

Example 6: What will be the selling price if the profit is Rs 100 and the cost price is Rs 350?

Solution:

Let selling price = x

Given cost price = Rs 350

And profit = Rs 100

Profit = Selling Price (S.P) – Cost Price (C.P)

100 = x – 350

or x = 100 + 350

x = 450

So the selling price is Rs 450.

Related Articles:

• Selling Price Formula
• Percent Decrease Formula
• Percentage Increase Formula

Practical Questions

1. If a company sells a product for $150 and the total cost of producing it is $90 what is the profit?
2. A store buys an item for $45 and sells it for $75. What is the profit margin?
3. Calculate the profit if the total revenue is $12,000 and the total cost is $8,500.
4. If a business has a total revenue of $50,000 and expenses of $32,000 what is the profit?
5. Determine the profit if a manufacturer’s revenue is $20,000 and the cost of goods sold is $14,000.
6. A company’s profit is $3,000 and its total revenue is $15,000. What is the profit percentage?
7. What is the profit if a product is sold for $250 and the production cost is $180?
8. A business earns $60,000 in revenue and incurs $45,000 in costs. What is the net profit?
9. Find the profit if the selling price of an item is $400 and the cost price is $320.
10. Calculate the profit percentage if the total revenue from sales is $22,000 and the total cost is $18,000.

Conclusion

The profit formula is a fundamental tool in business and finance used to the determine the financial gain from the operations. By calculating the difference between the total revenue and total costs businesses can assess their profitability and make informed decisions. The formula helps in the evaluating the success of business strategies, pricing and cost management. Understanding and applying the profit formula enables better financial planning and optimization contributing to a business’s long-term success.

FAQs on Profit Formula

What is the formula to calculate the profit?

Formula for calculating the profit is given by, Profit = Selling Price – Cost Price.

What is the formula to calculate the loss?

Formula for calculating the loss is given by, Loss = Cost Price – Selling Price.

What is the Profit Percentage Formula?

Formula for calculating the profit percentage is given by Profit Percentage = (Profit / C.P.) × 100

What is Profit Formula?

If a product is sold at a higher price than its cost price a profit is earned. The profit earned is calculated by the profit formula. The profit formula is given as, Profit = S.P. – C. P.

What is the Profit Percentage Formula using the Selling Price?

Steps for finding profit percentage if S.P. and Profit are given:

Step 1: Calculate C.P. by formula C.P. = S.P. – Profit

Step 2: Using C.P. and Profit calculate the profit percentage by the formula

Profit Percentage = (Profit / C.P.) × 100

Thus, the profit percentage is calculated.