How to calculate profit and loss percentage
By the FreeAllTool team · Updated October 28, 2026
Whether you run a small shop, resell products online or are solving maths problems for an exam, profit and loss percentages follow a few simple formulas. The key is knowing which price to use as the base.
The basic terms
- Cost price (CP): what you paid for the item.
- Selling price (SP): what you sold it for.
- Profit: SP − CP, when SP is higher.
- Loss: CP − SP, when SP is lower.
Profit and loss percentage
Both are normally calculated on the cost price:
Profit % = Profit ÷ CP × 100
Loss % = Loss ÷ CP × 100
Example: you buy a bag for ₹800 and sell it for ₹1,000. Profit is ₹200, and profit percentage is 200 ÷ 800 × 100 = 25%.
If you sell it for ₹680 instead, loss is ₹120, and loss percentage is 120 ÷ 800 × 100 = 15%.
Finding the selling price for a target profit
To earn 30% profit on an item costing ₹1,200, multiply the cost by 1.30: 1,200 × 1.30 = ₹1,560.
Markup vs margin
Businesses often talk about margin, which is profit as a percentage of the selling price, not the cost price. In the bag example, profit of ₹200 on a selling price of ₹1,000 is a 20% margin, even though it is a 25% markup on cost. Mixing up the two is a common reason for pricing mistakes. If you need a 25% margin, the selling price must be CP ÷ 0.75, not CP × 1.25.
Discounts and profit
When you offer a discount, it is taken off the marked price, which reduces your selling price and therefore your profit. A 10% discount on an item marked ₹1,000 brings the price to ₹900. If it cost you ₹800, your profit falls from ₹200 to ₹100.
Check your numbers
Use the “percentage change” option in our percentage calculator: enter the cost price as “From” and the selling price as “To” to see your profit or loss percentage instantly.