From NCERTAsked by Anonymous from Paris, France24 Oct 2026, 7:42 AM ISTUpdated
In one line
Profit is the extra money you get after selling something for more than it cost you.
The rule
Profit is the money a business makes after subtracting its costs. It shows how much money is earned from selling goods or services.
The formula is: Profit = Selling Price - Cost Price
Selling Price (SP): the amount you sell the item for
Cost Price (CP): the amount you paid to buy or make the item
The formula
Profit = Selling Price - Cost Price
Profitextra money earned
Selling Priceprice at which item is sold
Cost Priceprice paid to buy or make item
Let's understand it simply
Imagine you buy a cricket bat for ₹500 from the market. Later, you sell it to your friend for ₹600. The extra ₹100 you get is your profit. It is like when you buy mangoes for ₹40 per kg and sell them at ₹50 per kg in the market. The difference is your gain.
Profit is just the extra money you make after covering what you spent. If you spend less and sell for more, you make a profit.
How it works
Find out how much you spent to buy or make the item (Cost Price).
Find out how much you sold it for (Selling Price).
Subtract Cost Price from Selling Price.
If the answer is positive, it is a profit.
The bigger the difference, the more profit you make.
The story behind it
People have been buying and selling goods for thousands of years. The idea of profit became important when people started trading in markets. Merchants wanted to know if they were making money or losing it. Profit calculation helps everyone from small shopkeepers to big companies understand if their business is working well.
Where you see it in real life
Vegetable seller: Buys potatoes at ₹10 per kg, sells at ₹15 per kg. Profit is ₹5 per kg.
Bookshop: Buys a book for ₹80, sells for ₹100. Profit is ₹20.
Cycle repair shop: Buys a spare part for ₹50, charges ₹70 for repair. Profit is ₹20.
Diwali stall: Buys crackers for ₹500, sells for ₹700. Profit is ₹200.
Online seller: Buys a mobile cover for ₹100, sells for ₹150. Profit is ₹50.
Why it matters
Helps shopkeepers and businesses know if they are earning or losing money.
Important for deciding prices of goods and services.
Used in exams and real life to solve money problems.
Helps you plan and save money when you buy and sell things.
Worked example
Given: Cost Price (CP) = ₹50, Selling Price (SP) = ₹70
Step 1: Write the rule Profit = SP - CP
Step 2: Put in the numbers Profit = 70 - 50
Step 3: Answer Profit = ₹20
Common mistakes
Mixing up Cost Price and Selling Price. Remember: CP is what you pay, SP is what you get when you sell.
Forgetting to subtract the smaller number from the bigger one. Always do SP - CP for profit.
Thinking you always make a profit. If SP is less than CP, it is a loss, not profit.
Remember it
Profit is what you get extra: Profit = Selling Price minus Cost Price.
Check yourself
If you buy a pen for ₹10 and sell it for ₹15, what is your profit?
₹5, because Profit = 15 - 10 = ₹5.
Why do shopkeepers want to make a profit?
To earn extra money and keep their business running.
If Selling Price is less than Cost Price, do you make a profit or a loss?
A loss, because you sold for less than you spent.
Quick recap
Profit is the extra money earned after selling an item for more than its cost.
Formula: Profit = Selling Price - Cost Price.
If Selling Price is more than Cost Price, you make a profit.
Profit calculation is used in shops, markets, and businesses every day.
Mixing up cost and selling price is a common mistake—always subtract cost from selling price.
