Profit percentage helps businesses understand how much profit they generate relative to a chosen base, such as cost.
One common calculation is profit as a percentage of cost.
Profit Percentage Formula
First calculate profit:
Profit = Selling Price − Cost Price
Then:
Profit Percentage on Cost = (Profit ÷ Cost Price) × 100
Suppose a product costs $80 and sells for $100.
Profit:
100 − 80 = $20
Profit percentage on cost:
(20 ÷ 80) × 100 = 25%
The profit is 25% of the product’s cost.
For quick percentage calculations, try the Percentage Calculator.
Profit Percentage vs Profit Margin
These terms can refer to different calculations.
Profit percentage based on cost divides profit by cost, while profit margin commonly divides profit by revenue.
Using the correct denominator is important when analyzing business performance.