Profit and Loss Formula: Concepts, Tricks, and Examples
Chandni 5 Jul, 2025
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Profit and loss are the terms we often use in our daily lives to identify whether we have gained or lost something from a deal. While they have a broader sense and implications, they originate from some simple mathematical concepts.
Whenever an item is bought and sold, there is profit and loss associated with it. In this blog, you will learn the profit and loss formula, explore some profit and loss questions, and see examples to understand them better. Let’s dive in and become smart little mathematicians.
What is Profit and Loss Formula?
Profit and Loss Formula Basic Terms
Profit and loss formulas apply to transactions in our daily lives. It involves the use of two main terms, as given below:- Cost Price: It refers to the price at which an item is bought from the market. The symbol CP denotes it.
- Selling price: The price at which the item is sold to the consumer. The symbol SP expresses it.
- Profit (P): The financial gain achieved when a product is sold for more than its cost price.
- Loss (L): The financial loss incurred when a product is sold for less than its cost price.
Profit Formula
The profit formula is used when the selling price exceeds the cost price. The profit formula is expressed as:Profit (P) = Selling Price (SP) – Cost Price (CP)
Example 1:
A fruit seller buys 1 kg of apples at Rs. 85 and sells them for Rs. 100. What is the profit?
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Profit = SP - CP = 100 - 85 = Rs. 15
Loss Formula
The loss formula is used when the cost exceeds the selling price. The loss formula is expressed as:Loss (L) = Cost Price (CP) - Selling Price (SP)
Let's understand the concept better with a n example below: Example 1: If a vendor buys 1 kg of apples at Rs. 85 per kg and sells them at Rs. 100 per kg, what is the profit earned? Solution: The selling price is Rs. 100 and the cost price is Rs. 85. So, the profit is P = SP - CP= 100 - 85 = 15 The profit earned is Rs. 15.Example 2: Rishi bought a mobile phone for Rs. 12,000 and sold it for Rs. 10500. What is the loss incurred?
Solution:
The selling price is Rs. 10,500, and the cost price is Rs. 12,000. So, the loss is L = CP-SP = 12000 – 10500 = Rs. 1500. The loss is Rs. 1500.Selling Price Formula
If the profit or loss percentage and the cost price (CP) are known, we can calculate the selling price (SP) using the following formula:- SP = {(100 + Profit%) / 100} × CP (if SP > CP)
- SP = {(100 – Loss%) / 100} × CP (if SP < CP)
Solution:
Cost price = Rs 12,000 Loss percentage = 15% So, the selling price SP= {(100 – 15) / 100} × 12000 = (85/100) X 12000 = 10,200 So, the selling price is Rs. 10,200.Cost Price Formula
If the profit or loss percentage and the selling price (SP) is given, we can calculate the cost price (CP) using the following formula:- CP = {100 / (100 + Profit%)} × SP (if SP > CP)
- CP = {100 / (100 – Loss%)} × SP (if SP < CP)
Profit and Loss Percentage Formula
In many cases, profit and loss are expressed as a percentage of the cost price. This means we calculate the profit and loss amount by considering the cost price to be $100. The formula for the same is given as follows:- Profit percentage = (P%) = (Profit/Cost Price) X 100
- Loss percentage = (L%) = (Loss/Cost Price) X 100
These formulas help in understanding the loss percentage formula and how to calculate profit better.
Example:
If a book was bought for Rs. 80 and sold for Rs. 100:
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Profit = 100 - 80 = Rs. 20
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Profit % = (20 / 80) × 100 = 25%
Profit and Loss Percentage Formula Examples
Here are a few examples that use the profit and loss percentage formula for calculations.Example 1: A shopkeeper buys oranges in bulk at Rs. 8 each and sells the same quantity at Rs. 10 each. Calculate the profit percentage.
Solution:
Profit = Selling price - Cost price = Rs. 10 - Rs. 8 = Rs. 2 Profit % = (Profit/Cost price) X 100 = (2/8) x 100 = 25%Example 2: A vendor sells fruits at Rs. 76 per kg when the cost is Rs. 80 per kg. What is the loss percentage?
Solution:
Loss = Selling price - Cost price = Rs. 80 -- Rs. 76 = Rs. 4 Loss % = (Loss/Cost price) X 100 = (4/80) X 100 = 5%Profit and Loss Questions for Practice
Let’s solve some simple profit and loss questions together:
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A boy sells his old cycle for Rs. 600 after buying it at Rs. 700. Find the loss.
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A pen is bought for Rs. 10 and sold at Rs. 15. What is the profit?
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A chocolate costs Rs. 50, and is sold at Rs. 60. What is the profit percentage?
Use the formula of profit and loss to solve each.
Discount Formula
Discounting is related to another term, the Marked Price (MP). It is the printed price of the product. Sometimes, the seller offers the product to the customer at a lower cost than the market price to attract more customers. In that case, a discount is given on the item. The discount formula is shown as follows:
Discount = Marked Price (MP) – Selling Price (SP)
For example, a dress is sold at Rs. 1500 when the marked price is Rs. 1800. We can calculate the discount as follows: Discount = Rs. 1800 - Rs. 1500 = Rs. 300Discount Percentage Formula
The discount percentage is calculated based on the market price, and the formula for the same is as follows: Discount (%) = (Discount/Marked Price) X 100D iscount Percentage Formula Example
The following example explains how the discount percentage is calculated. A retailer sells a particular oil brand at Rs. 135, whereas the labeled price is Rs. 150. In this case, the discount given on the product is: Discount = Rs. 150 - Rs. 135 = Rs. 15 To calculate the discount percentage, we will use the following formula: Discount % = (Discount/Marked price) x 100 = (15/150) X 100 = 10 So, the discount percentage is 10%.Application of Profit and Loss Formula in Everyday Life
The profit as well as loss formula is useful within everyday activities whether you plan a school fundraiser, compare discounts during sales, or trade stationery among friends. A base for financial concepts can be gained by students later. It is something that can be gained by learning how to apply such a profit loss formula for a greater understanding.
Profit and Loss Formula Tricks
Here’s a table summarizing some useful tricks to solve profit and loss problems efficiently:| Concept | Formula/Explanation | ||
|---|---|---|---|
| Profit (P) | P=SP−CP (If SP > CP) | ||
| Loss (L) | L=CP−SPL (If CP > SP) | ||
| Profit Percentage (P%) | P% = (P/CP) ×100 | ||
|
L%=(L/CP)×100L | ||
| Selling Price (SP) with Profit | SP=(100+P%/100)×CP | ||
| Selling Price (SP) with Loss | SP=(100−L%/ 100)×CP | ||
| Cost Price (CP) with Profit | CP = ( 100 + P %/ 100 ) × SP | ||
| Cost Price (CP) with Loss | CP = ( 100 − L % / 100 ) × SP | ||
| Discount | Discount=Marked Price − Selling Price | ||
| Selling Price with Discount | Selling Price= Marked Price + Discount | ||
| Net Percentage of Profit (Two Profits) | Net Profit= x %+ y %+ ( x × y / 100) | ||
| Net Percentage of Profit or Loss (Profit and Loss) | Net= x %- y %- ( x × y / 100) | ||
| Cost Price with Two Profits | CP=100×100×P/ (100+x)(100+y) | ||
| Cost Price with Two Losses | CP=100×100×L/ (100−x)(100−y) | ||
| Profit = Loss (Same Percentage) | If P=L, then Loss Profit=P 2 100 |
Profit and Loss Formula Examples
1. Mrs. Roy purchased a gadget for Rs. 1750 after getting a discount of Rs. 250. What was the item's market price, and what was the discount percentage?
Solution:
Discount = MP – SP Or, MP = Discount + SP = Rs. 250 + Rs. 1750 = Rs. 2000. So, the marked price is Rs. 2000. Now, the Discount% is = (Discount/MP) X 100 = (250/2000) x 100 = 12.5%2. A company bought equipment for Rs. 18,000 and spent Rs. 2000 on maintenance. Then, they sold it for Rs. 16,000. What is the profit or loss amount and percentage?
Solution:
Purchase price of the equipment = Rs. 18000 and maintenance cost = Rs. 2000. So, the total cost price is Rs. 18000 + Rs. 2000 = Rs. 20,000. Loss = cost price – selling price = Rs. 20000 - Rs. 16000 = Rs. 4000 So, the loss amount is Rs. 4000. Now, loss % = (loss/cost price) X 100 = (4000/20000) X 100 = 20%| Related Articles | |
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Profit and Loss Formula FAQs
Can the profit percentage be higher than 100?
Is the discount percentage calculated on the marked price or selling price?
When there is subsequent profit and loss on a product selling, what will be the net percentage of profit or loss?
When is a no-profit and no-loss situation?
What is the purpose of giving a discount on products?
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