1. What is Profit Percentage?

Profit percentage is a financial metric that shows what percentage of the cost price has been gained as profit. It's a key indicator of business performance and pricing strategy effectiveness.

2. How Does the Calculator Work?

The calculator uses the profit percentage formula:

Where:

• Selling Price — Final price at which goods/services are sold
• Cost Price — Original price of goods/services

Explanation: The formula calculates the relative profit as a percentage of the cost price, showing how much profit is made per unit of cost.

3. Importance of Profit Calculation

Details: Profit percentage helps businesses evaluate pricing strategies, compare performance across products, and make informed financial decisions.

4. Using the Calculator

Tips: Enter both selling price and cost price in the same currency units. Cost price must be greater than zero for valid calculation.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between profit amount and profit percentage?
A: Profit amount shows absolute money gained, while profit percentage shows relative gain compared to cost.

Q2: Can profit percentage be negative?
A: Yes, negative percentage indicates a loss (when selling price is less than cost price).

Q3: What is a good profit percentage?
A: This varies by industry, but generally 10-20% is considered healthy for most businesses.

Q4: How is this different from markup percentage?
A: Markup is calculated on cost price, while profit percentage shows profit relative to cost.

Q5: Should I include all expenses in cost price?
A: Yes, cost price should include all direct and indirect costs associated with the product/service.