Key takeaways
- Profit/Loss % = ((Selling Price − Cost Price) ÷ Cost Price) × 100.
- The percentage is always measured against the cost price, never the selling price.
- A positive result is a profit; a negative result is a loss.
- The same profit dollar amount can be a big or small percentage depending on the cost.
In this guide
What is profit and loss?
Cost price is what something cost to buy or make. Selling price is what it was sold for. If the selling price is higher, you made a profit; if it's lower, you made a loss. Expressing that difference as a percentage of the cost price lets you compare deals of very different sizes fairly.
Why does profit and loss percentage matter?
A $12 profit sounds small on its own, but it's a very different story on a $40 item than on a $4,000 item. The percentage strips away the size of the deal and tells you how well it actually performed.
Buy a used bicycle for $40, sell it for $52, and you've made a $12 profit — a 30% return on what you spent, regardless of how small the dollar amount looks.
The formula
| Symbol | What it means | Example |
|---|---|---|
| Cost Price | Amount originally paid for the item | $40 |
| Selling Price | Amount it was sold for | $52 |
| Profit/Loss % | Positive for profit, negative for loss | 30% |
How to calculate profit or loss percentage step by step
- 1Subtract the cost price from the selling price. This gives the raw profit or loss amount.
- 2Divide that amount by the cost price. This puts the result on the same scale, no matter the size of the deal.
- 3Multiply by 100. This turns the result into a percentage.
- 4Read the sign. A positive result is a profit percentage; a negative result is a loss percentage.
Try your own cost and selling price in the calculator below.
Try it yourself
Pre-filled with the example — change any value.
Common mistakes to avoid
- Forgetting the sign. A negative result means a loss, not an error — don't drop the minus sign when reporting it.
- Mixing this up with markup. Profit percentage on cost is one way to measure a sale; the related profit margin calculator measures profit against selling price (revenue) instead, which gives a different number.
- Ignoring extra costs. Shipping, repairs, or fees paid on top of the purchase price should usually be added to the cost price for an honest figure.
Tips and tricks
- Comparing several sales? Look at the percentage, not just the dollar amount — it accounts for how much was originally spent.
- For a running business rather than a single sale, the break-even point calculator shows how many units need to be sold before any profit begins.
- Setting prices going forward? The profit margin calculator is the flip side of this formula, measured against revenue instead of cost.
Where you'll use it in real life
- Reselling: anyone flipping items, from bicycles to collectibles, uses this to check if a sale was worthwhile.
- Small business sales: shop owners track profit percentage on individual products.
- Investing in physical goods: comparing the percentage return on different purchases, not just the dollar gain.
- Everyday bargain hunting: confirming that a "good deal" resale actually paid off.
Quick summary
Profit or loss percentage is ((Selling Price − Cost Price) ÷ Cost Price) × 100 — subtract, divide by the cost, then multiply by 100. A positive answer means profit, a negative one means loss. Use the calculator above to check your own numbers instantly.
Worked example
A reseller buys a used bicycle for $40 and later sells it for $52 after cleaning it up.
- 01Profit = $52 - $40 = $12
- 02Profit % = ($12 ÷ $40) × 100
- 03Profit % = 0.300 × 100 = 30%
These numbers are pre-filled in the calculator above.
Frequently asked questions
How do I know if I made a profit or a loss?
If the selling price is higher than the cost price, the result is positive — a profit. If the selling price is lower, the result is negative — a loss.
What's the difference between profit percentage and profit margin?
Profit percentage here is measured against the cost price (what you paid). Profit margin is measured against the selling price (what you received). They use the same profit amount but divide it differently, so the two percentages are not equal.
How do I find the selling price needed for a target profit percentage?
Multiply the cost price by (1 + target percentage ÷ 100). For a $40 item and a target 30% profit, that's 40 × 1.30 = $52.
Can the loss percentage be more than 100%?
No, a loss percentage on the cost price can approach 100% only if the selling price is zero. A loss can't exceed the full cost price using this formula.
