1. What is Profit Percentage?

Profit Percentage is a financial metric that shows what percentage of the cost price has been earned as profit. It helps businesses understand their profitability relative to their costs.

2. How Does the Calculator Work?

The calculator uses the profit percentage formula:

Where:

• \( \text{Profit} \) — Selling Price minus Cost Price (in currency)
• \( \text{Cost} \) — Original Cost Price (in currency)

Explanation: The formula calculates what portion of the cost has been converted to profit, expressed as a percentage.

3. Importance of Profit Percentage

Details: Profit percentage is crucial for businesses to evaluate pricing strategies, compare performance across different products or time periods, and make informed financial decisions.

4. Using the Calculator

Tips: Enter the profit amount and cost price in any currency (values must be positive). The calculator will automatically compute the profit percentage.

5. Frequently Asked Questions (FAQ)

Q1: What's a good profit percentage?
A: This varies by industry. Generally, 10-20% is considered good, but some industries regularly achieve higher percentages.

Q2: How is this different from markup?
A: Markup is calculated on cost, while profit percentage is profit relative to cost. A 50% markup equals a 33.3% profit percentage.

Q3: Can profit percentage be over 100%?
A: Yes, if the profit exceeds the cost. For example, selling for $300 what cost $100 gives 200% profit percentage.

Q4: What if my cost is zero?
A: The calculation becomes undefined (division by zero). In practice, cost should always be positive.

Q5: How often should I calculate profit percentage?
A: Regular calculation (monthly/quarterly) helps track business performance and identify trends.