How to Calculate Profit
Profit is the money left over once you have paid for what you sell. This guide explains the profit formula in plain English, walks through real examples, and shows how to use the profit calculator to check your numbers in seconds.
What is profit?
Profit is the money you keep after taking away the cost of what you sold from the money you took in. If you buy a batch of candles for £6 each and sell them for £10 each, the £4 left over is your profit. It is always an amount in pounds — distinct from margin and markup, which express that profit as a percentage.
Working out profit matters for almost every business decision: setting prices, comparing products, deciding what to stock, and knowing whether a busy period actually made you money. The good news is that the maths is straightforward once you know the formula.
The profit formula
Profit = Selling Price − Cost Price
To find the profit on a single item, subtract what it cost you from what you sold it for. For multiple units, multiply the profit per unit by the quantity sold:
Total Profit = (Selling Price − Cost Price) × Quantity
You can also express profit as a percentage of the cost price, which is useful for comparing products:
Profit Percentage = (Profit ÷ Cost Price) × 100
Worked examples
Buying low and selling high
You buy candles for £6 each and sell them for £10 each. Profit per unit = £10 − £6 = £4. Your profit percentage on cost is (4 ÷ 6) × 100 = 66.7%.
Total profit across many units
You sell 120 units that cost £5 each to make and sell for £8.50. Profit per unit = £8.50 − £5 = £3.50. Total profit = £3.50 × 120 = £420.
When a price is below cost
If you buy for £30 and sell for £25, profit = £25 − £30 = −£5. A negative result is a loss — a clear signal to review your pricing or costs before selling at that price.
Profit, revenue and cost — keeping them straight
These three are easy to confuse. Revenue is everything you take in from sales (selling price × quantity). Cost is what you pay to buy or make what you sell. Profit is what is left when you subtract cost from revenue. A business can have high revenue and still make a loss if its costs are too high.
Profit is also different from profit margin, which is profit expressed as a percentage of the selling price rather than the cost. A £8 profit on a £20 sale is a 40% margin — see our profit margin calculator to work that out.
Practical use cases
- Setting prices: start from your cost and the profit you need per unit, then check the price feels right for your market.
- Comparing products: two products may sell for the same price but have very different costs — and therefore very different profit.
- Reviewing a period: multiply profit per unit by units sold to see whether a busy month or season actually paid off.
- Spotting losses early: a negative profit per unit is a warning to act before you sell many more.
Should overheads be included?
For unit profit, use the direct cost of the item — what you paid for it or spent making it. Overheads such as rent, software and marketing are not part of the unit cost. To account for those as well, use the gross profit calculator or the break-even calculator, which factors in fixed costs.
Check your numbers with the calculator
Rather than work the maths by hand, enter your cost price, selling price and quantity into the profit calculator — it shows profit per unit, total profit and profit percentage instantly, with the full working underneath.
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