Profit and loss percentages are always taken on the COST price. That single convention decides every answer in this unit.
The three quantities
| Name | What it is | Short form |
|---|---|---|
| Cost price | What the seller paid to get the item | CP |
| Selling price | What the buyer actually handed over | SP |
| Profit or loss | The difference between them | SP − CP |
Profit percentage is profit over CP times 100. Loss percentage is loss over CP times 100.
Dividing by 600 gives 16.7%, which is not what anyone in business means. CP is what the seller put at risk, so it goes underneath.
Working forwards
A 20 per cent profit means selling at 120 per cent of cost, so 1.2 × 500 gives 600 in one step. For a loss, the multiplier is less than 1.
At a 20% profit, SP 600 is 120% of the cost price. So 1% is 5, and CP was 500. Taking 20% off 600 gives the wrong answer.
Discount is a different thing
Discount comes off the MARKED price, not the cost price. A shop can offer a discount and still make a profit.
Two shirts sold at 900 each, one at 20% profit and one at 20% loss, is not break even. The trader loses 75 rupees.
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