When we buy and sell things, we often want to determine our financial outcome, which involves understanding profit and loss. This includes calculating the profit percentage and evaluating any loss percentage or percentage decrease in value that may have occurred during the transaction.
What Is Profit?
Profit is the money you make when you sell something for more than you paid for it. For example:
You buy a toy for $10. You sell it to your friend for $15. Your profit is $15 - $10 = $5.
But how much profit did you make as a percentage? That’s called the profit percentage.
Profit Percentage Formula
Profit Percentage = (Profit / Cost Price) × 100
Example:
Cost Price (how much you bought it for): $10
Selling Price (how much you sold it for): $15
Profit = $15 - $10 = $5
Profit Percentage = ($5 / $10) × 100 = 0.5 × 100 = 50%
So you made a profit of 50%!
What Is Loss?
Loss means you sell something for less than you paid for it.
You buy a T-shirt for $12. You sell it for $9. Your loss is $12 - $9 = $3.
Let’s see how to find the loss percentage.
Loss Percentage Formula
Loss Percentage = (Loss / Cost Price) × 100
Example:
Cost Price: $12
Selling Price: $9
Loss = $12 - $9 = $3
Loss Percentage = ($3 / $12) × 100 ≈ 25%
So you lost about 25% of your money.
When Prices Drop: Using Percentage Decrease
Sometimes the selling price drops (goes lower) compared to the cost price. This is just like a percentage decrease! Online tools like a percentage reduction calculator can help you check how much lower the price is quickly and easily. This makes it simpler to understand your loss.
More Examples for Practice
Example 1: Profit
Cost Price: $50
Selling Price: $65
Profit = $65 - $50 = $15
Profit Percentage = ($15 / $50) × 100 = 30%
You made a 30% profit!
Example 2: Loss
Cost Price: $30
Selling Price: $24
Loss = $30 - $24 = $6
Loss Percentage = ($6 / $30) × 100 = 20%
You lost 20%.
Why Use Percentage for Profit and Loss?
Using percentage helps you compare profits and losses easily, no matter what prices you are working with. A $5 profit on a $10 item is a bigger deal than a $5 profit on a $100 item! Percentages make everything fair and simple to compare.
Key Takeaways
Profit happens when selling price is more than buying price. Loss happens when selling price is less than buying price. Use the formulas to find profit or loss percentage. If you have a loss, you can also use a percentage decrease calculator to check your answers. Percentages help you understand your profits and losses quickly!
With these easy formulas and examples, you can become a smart shopper or businessperson—even if you’re just selling snacks at school!
Check out this great video to understand the concepts of loss percentage, how to calculate percentage decrease, and improve your overall profit percentage.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.