Sale Price, Gross Margin determination – Simple Trick

I am going to share with you one trick which one great teacher, Mr S.K. Jha taught me. Simple arithmetical problems of

Finding out selling price, when cost price and margin (percentage of profit on Sale) are given. Or,

Finding out cost price when Sale price is given and percentage of profit on cost is given.

Finding out the mark-up when cost price and Sale price are given.

We all have seen occurrence of such problems in our academic life and day-to-day life. All the time we need a paper – pen or a calculator. But now with the process given below I believe we can solve any such problem in our mind.

To keep it simple, I will use the same language used by Mr. Jha (Sir) to explain me when I was kid.

Relation between Cost Price and Sale Price

If profit =  ½  of cost = 1/3 of sales

If profit =  1/3  of cost = 1/4 of sales

If profit =  1/4  of cost = 1/5 of sales

If profit =  1/5  of cost = 1/6 of sales

If profit = 1/49 of cost = 1/50 of sales

and so on

Generalization of above method

1/x of cost  = 1/(x+1) of sales.

i.e. adding 1 to the denominator if you are moving from cost to sales .

subtracting 1 from the denominator if you are moving from sales to cost

Sir asked me, “isn’t it very simple. You just have to convert any percentage into fraction and apply the above method.”

I was amazed by the simplicity of the concept, but a question cropped up in my mind. What if the numerator is not equal to 1?

He had the answer ready, “You can convert any numerator into 1. Say for example you need to earn 60% margin on an article worth (costing) Rs. 40

Now, Profit = 60 % of sales = 60/100 of sales = 3/5 of sales = 1/(5/3) of sales

Now, Profit = 1/(5/3) of sales = 1/(5/3 – 1) of cost = 1/(2/3) of sales  = 3/2 of cost

Now since,  cost price = 40, Profit = 40 * 3/2 = 60 , sale price = 40+60 = 100

Alternative method,

Add the numerator to the denominator, when moving from cost to sales.

150 % of cost = 3/2 of cost = 3/(2+3) of sales = 3/5 of sales = 60 % of sales

Deduct the numerator from the denominator, when moving from sales to cost.

For example take the above case, 60/100 of sales = 60/40 of cost = 3/2 of cost

If you want to share such simple tricks with other via, send them across to me @

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19 thoughts to “Sale Price, Gross Margin determination – Simple Trick”

  1. Thanx a lot vineeth it held me a lot I had a confusion always with this prblm how much on cost thn sales……..thanx for sharing ur knowledge

  2. What will happen if I have 125% profit on sales? What is the profit on cost then? I guess this trick doesn’t work where profit on sales exceeds 100%

      1. Please tell what aur how to do if profit percentage is on selling price. Example if I say profit percentage is 10% then we say that CP would be 100 and selling price would be 110. But what if I say profit percentage is on selling price then profit percentage is 10% what about cp and sp

  3. well…i already knew this trick my friend told me a year ago…jst refreshed my memory,,…very useful trick,,,100% full proof…

  4. I have buying price,selling price and profit margin.I need to calculate my profit in percentage.I created two formulas for that.But confused that which is right.
    (1) profit x 100 /selling price
    (2) profit x 100 /buying price.
    Which is right?

    1. profit margin has selling price as denominator.

      profit percentage in mathematics has cost or buying price has denominator.

      In your case, option (2) is correct.

  5. how is that poss?
    if u want to earn 60% profit on Rs.40 and selling it for 100. Then profit % will be (100-40)/40 x 100=150% not 60%

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