Enter the total profit ($) and the total revenue ($) into the calculator to determine the Percent Profit. 

Percent Profit Formula

The following formula is used to calculate the Percent Profit. 

PP = TP / TR * 100
  • Where PP is the Percent Profit (%)
  • TP is the total profit ($)
    • Profit = revenue – costs
  • TR is the total revenue ($) 

To calculate the percentage profit, divide the total profit by the total revenue, then multiply by 100.

How to Calculate Percent Profit?

The following example problems outline how to calculate Percent Profit.

Example Problem #1:

  1. First, determine the total profit ($). In this example, the total profit ($) is given as 1000.
  2. Next, determine the total revenue ($). For this problem, the total revenue ($) is given as 2000.
  3. Finally, calculate the Percent Profit using the equation above: 

PP = TP / TR * 100

The values given above are inserted into the equation below:

PP = 1000 / 2000 * 100 = 50 (%)

FAQ

What factors can affect the Percent Profit of a business?

Several factors can affect the Percent Profit, including changes in revenue, costs of goods sold, operating expenses, and market conditions. Efficiency improvements or cost-cutting measures can increase profit margins, while increased competition or higher material costs can decrease them.

How can a business improve its Percent Profit?

A business can improve its Percent Profit by increasing revenue through sales growth or pricing strategies, reducing costs by optimizing operations and supply chain management, and focusing on high-margin products or services. Regularly reviewing financial statements and adjusting strategies accordingly is also crucial.

Is a higher Percent Profit always indicative of a successful business?

While a higher Percent Profit generally indicates a healthy margin between the cost of goods sold and the sales price, it’s not the sole indicator of business success. Other factors such as cash flow, market share, and sustainable growth are also important. A business must balance profitability with other aspects of its operations to ensure long-term success.