On This Page
- Two answers for the same sale
- The formulas side by side
- Using the calculator
- Which basis to use where
- Five sales, worked
- Profit %, gross profit % and net profit %
- How the calculator is verified
- FAQ
Two Answers for the Same Sale
Buy for $80, sell for $100, and you make $20. As a percentage of what you paid, that is 25%. As a percentage of the sale price, it is 20%. Both are correct; they divide the same $20 by a different base. When people say "profit percentage" in retail, trading or school math, they almost always mean the first, profit on cost. Profit on selling price is what accountants call margin.
The Formulas Side by Side
| You want | Formula | $80 cost, $100 sale |
|---|---|---|
| Profit % on cost | (SP − CP) ÷ CP × 100 | 25% |
| Profit % on selling price | (SP − CP) ÷ SP × 100 | 20% |
| Loss % (when SP < CP) | (CP − SP) ÷ CP × 100 | $80 sold at $65 = 18.75% loss |
| Selling price for a target % on cost | CP × (1 + target ÷ 100) | 25% target → $100 |
| Selling price for a target % on SP | CP ÷ (1 − target ÷ 100) | 20% target → $100 |
The two targets reach the same $100 here because 25% on cost and 20% on price describe the same $20. Losses are nearly always measured against cost, the money you put at risk.
Using the Calculator
Enter cost price and selling price. The calculator labels the result as a profit or a loss, gives the amount, and shows the percentage on both bases, with the cost basis as the main figure. The bars make the gap between the two percentages visible. To price something, enter a target percentage, choose which basis it is measured on, and read off the selling price you need.
Which Basis to Use Where
- Reselling and retail: profit on cost, as in "I bought it for $80 and made 25%."
- Stocks and crypto: also on cost, with fees included in both prices. $40 in and $55 out is a 37.5% return.
- Jobs and contracts: the invoice against total job cost (materials, labor, subcontractors), to check a quote leaves enough margin.
- Pricing policies and financial reports: on selling price, which is margin.
Five Sales, Worked
- Reseller: $45 in, $63 out. $18 profit is 40% on cost but only 28.57% on price.
- Forced sale: $200 in, $170 out. $30 lost is a 15% loss.
- Shares: $2,500 in, $3,100 out. $600 is a 24% return.
- Maker pricing: $35 of cost with 50% profit on cost needs $52.50. Wanting 50% of the price to be profit needs $70, so the basis you choose changes the price a lot.
- Comparing deals: $50 to $75 is 50% on cost with $25 profit. $200 to $260 is 30% with $60 profit. The first uses capital more efficiently and the second makes more money, so look at both numbers.
In Excel, with cost in B2 and selling price in C2: =(C2-B2)/B2 gives profit on cost and =(C2-B2)/C2 gives profit on price, both formatted as percentages. =B2*(1+target/100) returns the price for a target on cost.
Profit %, Gross Profit % and Net Profit %
For a single item with no overhead, profit percentage and gross profit percentage are the same calculation. The Gross Profit Calculator runs it on a whole period's revenue and cost of goods sold. Once a business has rent, salaries, interest and tax, its overall profit percentage becomes net profit ÷ revenue, which is a different number; the Net Profit Calculator handles that. The Profit Margin Calculator shows gross, operating and net margin side by side.
How the Calculator Is Verified
Profit or loss is calculated once, as selling price minus cost price, and that same dollar figure then gets divided by two different bases: cost price for "percent on cost" and selling price for "percent on selling price." A $20 profit on a $100 cost price works out to 20% on cost but only 16.67% on the $120 selling price, since the denominator changed while the numerator did not. The target-price fields solve the inverse: choosing a cost-price target back-solves as cost times (1 plus target percent ÷ 100), while a selling-price-basis target divides cost by (1 minus target percent ÷ 100).
Frequently Asked Questions
How do you calculate profit and loss percentage?
Use the same base formula for both: if selling price is higher than cost price, the result is a profit percentage; if lower, treat the difference as positive and label it a loss percentage. Profit/Loss % = |Selling Price − Cost Price| ÷ Cost Price × 100, with the profit/loss label determined by which price was higher.
What is a good profit percentage?
It depends entirely on the industry and what is being measured. Retail resale often targets 20-50% on cost. Wholesale and distribution often run much thinner, 5-15%. Investment returns vary widely by asset class and time horizon. There is no universal "good" number; compare against typical margins for your specific product category or asset class.
References
- Investopedia: Profit Margin: Definition and formula context for profit measured as a percentage of price or cost.
- AccountingTools: Gross Profit Percentage: Accounting treatment of profit percentage at the business/revenue scale.
- Corporate Finance Institute: Profit Margin: Comparison of profit percentage bases and how they are used in financial analysis.