Calculating Profit Percent from Marked Price and Discount: A Comprehensive Guide

Understanding and calculating profit percentages for items sold at a discount is crucial for both consumers and businesses. This article explains how to determine the profit percent when the marked price and cost price are given, using various calculation methods.

Introduction

Marked price is the price displayed on the product, while the cost price is the price at which the product is obtained. When a product is sold at a discount, the selling price is less than the marked price. We will explore a practical example to determine the profit percent in such a scenario.

Example: Calculating Profit Percent

Let's consider an example where the marked price (M.P) of an article is Rs 2800, which is 40% above the cost price (C.P). The article is sold by allowing a 20% discount.

Step 1: Calculate the Cost Price (C.P)

The marked price is 40% above the cost price. Therefore, we can write the relationship as:

1.4 times; C.P 2800

Solving for C.P:

C.P 2800 / 1.4

C.P 2000 Rs

Step 2: Calculate the Selling Price (S.P)

The selling price is the marked price reduced by the discount. A 20% discount means the selling price is 80% of the marked price.

S.P M.P times; (1 - Discount Percentage / 100)

S.P 2800 times; (1 - 20 / 100)

S.P 2800 times; 0.8

S.P 2240 Rs

Step 3: Calculate the Profit

The profit is the difference between the selling price and the cost price.

Profit S.P - C.P

Profit 2240 - 2000

Profit 240 Rs

Step 4: Calculate the Profit Percent

The profit percent is calculated as the profit divided by the cost price, multiplied by 100.

Profit Percent (Profit / C.P) times; 100

Profit Percent (240 / 2000) times; 100

Profit Percent 12%

Therefore, the seller makes a 12% profit on the sale.

Conclusion

This example demonstrates the step-by-step calculation of profit percent from marked price and cost price. Understanding these calculations can help businesses optimize pricing strategies and manage their finances effectively.

Frequently Asked Questions

What is the marked price?

The marked price is the price displayed on a product, usually higher than the cost price, to account for taxes and profit margins.

What is the cost price?

The cost price is the price at which a product is purchased or produced, including all expenses incurred in the process.

How do I calculate the profit percent?

To calculate the profit percent, subtract the cost price from the selling price, divide the difference by the cost price, and multiply by 100: (Profit / C.P) times; 100.