Formula of the Day: Profit Formula with Examples

Profit Formula: Doing business is no easy task. From negotiating the right price to selling a product at the best possible value, every step is aimed at maximizing profit. Whether you are a seller or working in a corporate sales team, understanding the profit formula is essential. Many of us may have hated mathematics in school, but knowing how to calculate profit and loss is a fundamental skill in the real world.

The profit formula offers a simple way to determine how much you earn from a particular transaction. In this article, you will be introduced to the basics of calculating profit and the concept behind making successful sales.

Profit Formula

Profile formula is a method to calculate the amount of profit made per sale. In simple language, it is a formula used to know how much profit has been made by selling or buying a particular product. The selling price should always be greater than the buying price to make a reasonable profit. Here, we will explain the Profit Formula and its percentage in detail to help you estimate the profit or loss you can make from a particular deal.

What is Profit Formula?

The profile formula is as follows:

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

Where, 

• The cost price of the product is the price at which it was bought by the shopkeeper from the vendor.

• The selling price of the product is the price at which the shopkeeper sold it.

Profit Formula Examples

Example 1: A seller buys a mobile cover for Rs 80 and sells it for Rs 100. What is the profit?

Solution:

Profit = Selling Price − Cost Price

= 100 − 80

= Rs 20

Example 2: A vendor buys cookies for Rs 300 and sells them for Rs 360. How much profit does he make?

Solution:

Profit = 360 − 300

= Rs 60

What is Profit Percentage Formula?

It is a method to calculate the amount of profit in a percentage. The formula is:

Profit Percentage: (Profit/Cost Price) × 100

Examples Using Profit Percentage Formula

Example 1: A shopkeeper earns 20% profit by selling an item for ₹240. Find its cost price.

Solution:

Selling Price (SP) = Rs 240

Profit % = 20%

Formula of Profit Percentage: Profit % = (Profit / Cost Price) × 100

Let the Cost Price (CP) be x.

Profit = SP − CP = 240 − x

So,

20 = [(240 − x) / x] × 100

20/100 = (240 − x) / x

1/5 = (240 − x) / x

Cross-multiply:

x = 5(240 − x)

x = 1200 − 5x

x + 5x = 1200

6x = 1200

x = Rs 200

Hence, the cost price is Rs 200

Example 2: A man bought a book for 100 rupees and sold it for 120 rupees. What is his profit percentage?

Solution:

Profit = Selling Price - Cost Price

= 120 - 100 = 20 

Profit percentage = (Profit / Cost Price) × 100

= (20/100) × 100 = 20%

The Profit Percentage is 20%

Example 3: A shopkeeper buys a dress for Rs 400 and sells it for Rs 480. Find the profit percentage.

Solution:

Profit = SP − CP

= 480 − 400

Profit = Rs 80

Profit % = (Profit / CP) × 100

= (80 / 400) × 100

= 20%