Profit percentage on cost or revenue

The idea

Profit percentage on the cost price tells how much profit was made compared to the money invested in buying the goods; profit percentage on revenue tells how much profit was made on the sales amount.

One bag, two percentages

Manisha sells fertiliser. She buys a 50 kg bag for ₹500 and sells it for ₹750. Her profit is ₹250.

What is her percentage profit on the bag?

• 50%
• 33.3%
• It depends on what the profit is compared with

One profit, two wholes

The top bar takes the cost as the whole. The bottom bar takes the sales as the whole. Move the selling price and watch the two percentages of the same profit.

Compared with what?

Profit percentage on the cost price tells how much profit was made compared to the money invested in buying the goods; profit percentage on revenue tells how much profit was made on the sales amount.

On the cost price: "How much profit did I make compared with what I invested in buying the goods?" 250/500 × 100 = 50%

On the revenue (the sales amount): "How much of the money I received is profit?" 250/750 × 100 ≈ 33.3% The cost is the smaller whole, so on the same profit the percentage on the cost is the bigger one.

In one month Manisha's sales (revenue) were ₹1,50,000. Her net profit was ₹45,000. Net profit as a percentage of the revenue: 45,000 ÷ 1,50,000 × 100 = 30%

Notes

Profit percentage on the cost price tells how much profit was made compared to the money invested in buying the goods; profit percentage on revenue tells how much profit was made on the sales amount.

Check yourself

A shopkeeper buys a bag for ₹200 and sells it for ₹250. What is his profit percentage on the cost price?

Answer: 25 %

The profit is 250 − 200 = 50. 50/200 × 100 = 25%

For the same sale (cost ₹200, sold for ₹250), what is the profit percentage on the revenue?

Answer: 20 %

The revenue is ₹250. 50/250 × 100 = 20%

Which question does the profit percentage on the cost price answer?

A shop's sales (revenue) in a month were ₹60,000. Its net profit was ₹9,000. What percentage of the revenue is the net profit?

Answer: 15 %

9,000 ÷ 60,000 × 100 = 15%, so the net profit is 15% of the revenue.

• How much profit did I make compared with what I paid for the goods? — correct. Yes! The cost price is the money invested in buying the goods, so it is the whole.
• How much of the money I received is profit?. That is the profit percentage on the revenue (the sales amount), not on the cost price.
• How much did I pay for the goods?. A percentage profit tells about the profit, not the price paid for the goods.