Cost Price: The price at which an article is bought or purchased is called its cost price. (C.P.)
Selling Price: The price at which an article is sold is called its selling price. (S.P.)
Profit: When an article is sold for more than what it costs, we say that there is a ‘profit’ or gain.
Loss: When an article is sold for less than what it costs , we say that there is a ‘loss’.
When the selling price is equal to the cost price, then there is neither profit nor loss.
We recall a few important facts below:
Caution: Profit or loss per cent is never calculated on the number of items sold, but on the cost prices of the items.
In calculating any percentage change, the increase or decrease is expressed as a percentage of the first value. Buying comes before selling , thus, profit or loss is expressed as a percentage of the buying price ( i.e., the cost price ) and not of the selling price.
Overheads – If there are some additional expenses incurred on the transportation , repair etc of an article purchased, they are included in the C.P. of the article and are called ‘overheads’.
3 Major Type of Profit and Loss Problems
Type 1 : Find Profit or Loss Percent.
Example 1: What is the profit per cent if a table bought for is sold for ?
Solution: A table is bought for and sold for .
Example 2: Arun buys a T.V. for . The transportation charges are and the installation charges are . He then sells it to his friend for . Find the loss per cent.
Here transportation and installation charges fall under overhead costs.
More results on S.P. and C.P.:
1. If there is a profit of then,
2. If there is a loss of then,
From 1 and 2 , we derive that :
3. , when there is a profit of
4. , when there is a loss of
Type 2 : Find S.P. when C.P. and Profit (or loss) Percent Given
Example 1: A man bought a T.V. set for and he sold it at a profit of . Find the selling price.
Solution: Let the cost price be
Then, S.P. at a profit of
When C.P. is S.P. is
Example 2: A man buys a cycle for and sells it at a loss of . Find the selling price of the cycle.
Solution: Let the C.P. be
Then, S.P. at a loss of
where loss and
Type 3 : Find Cost Price.
Example 1: Find the cost price of an article which is sold at a profit of for .
Solution: , Profit %
If , then
If , then
If , then
A few harder problems on profit and loss:
Example 1: By selling a plot of land for a person loses . At what price should he sell it so as to gain ?
Solution: On selling the plot for , he loses
He now wants a profit of of
Example 2: A man sells two watches at each. On one he gains and on the other he loses . What is his gain or loss per cent on the whole transaction ?
Solution: S.P. of the first watch , gain
C.P. of first watch
Similarly, C.P. of the second watch on which he loses
total C.P. of the two watches
And total S.P. of the two watches
Marked Price: The price printed on an article or on a tag tied to it or the advertised price or the listed price is called the marked price , or, M.P. of the article.
Sometimes to dispose of the old , damaged or perishable goods the retailers offer these goods at reduced prices. The retailers also reduce prices to increase the sale by reducing the marked prices of the articles. The amount deducted from the original marked prices is called ‘Retailer’s discount’ or simply ‘retail discount’ which is generally expressed as per cent or a fraction of the marked or original price.
Net Price (Selling Price): The price of an article after deducting discount from the marked price is called the net price of the article.
NOTE: Discount is always calculated on the marked price.
In solving the problems on discount, the following formula are generally used:
3. If discount is , then,
Example 1: The marked price of a pair of shoes is . The shopkeeper allows an off season discount of on it. Calculate – i) the discount and ii) the selling price.
Example 2: The marked price of an article is marked above the C.P. and then it is sold at a discount of . What is the net gain per cent ?
Solution: Let the of the article be
more than the