Enter the profits before the damaging event and the profits after the damaging event into the calculator to determine the lost profits.

Lost Profits Formula

The following equation is used to calculate the Lost Profits.

LP = PB – PA

  • Where LP are the lost profits ($)
  • PB are the profits before the incident ($)
  • PA are the profits after the incident ($)

The profits before and after should be in the same length of time. For example, if it’s been 10 days since the incident the time period for the before and after profits should be 10 days.

This is known as the before and after method.

What are Lost Profits?

Definition:

Lost Profits are those profits that are foregone due to the inability of a party to perform (typically because it has become insolvent). In most legal jurisdictions, lost profits are recoverable, provided that the claimant can prove a causative link between his or her loss and the actions of the defendant.

The term is commonly used in tort law, especially in relation to breaches of contract and negligence, but also in relation to criminal law. In some legal systems, specific rules govern the recovery of lost profits.

In contract law one may seek recovery of lost profits where one’s performance is prevented by the breach of another party.

For example, if a contracting party cannot complete their side of the contract because they have been injured by another’s negligence, they may be able to claim compensation for their loss of business. This type of claim falls under Contract Law and is known as a Quasi-Contractual claim.