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Income calculator

Avoid mistakes when calculating Income using Cost & Required Profit %.

Updated 17-04-2022

Twitter:

Marc Fletcher⁠

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Insert your Cost and Required Profit in the table below.

The correct Income will be calculated for you

Cost

Required Profit

Income

0.00

0.00%

0.00

There are no rows in this table

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What’s the point of this?

Lots of people calculate Income incorrectly because they base the Required Profit % on Cost. Like this:

Say Cost = 50 & Required Profit = 12%

Profit calculation: 50 x 0.12 = 6

Income calculation: 50 + 6 = 56

To prove this is wrong, we use the correct way to calculate Profit %. The formula is Profit % = Profit / Income

Profit % calculation: 6 / 56 = 11%

The correct way to calculate Income when you know a Cost and Required Profit % is like this:

Say Cost = 50 & Required Profit = 12%

Income calculation: 50 / (1-0.12)

Income calculation: 50 / 0.88 = 56.82

We’re saying 50 is 88% of Income and therefore 56.82 is 100% of Income. Lets prove it:

Profit calculation: 56.82 - 50 = 6.82

Profit % calculation: 6.82 / 56.82 = 12%

Notes.

- We use percentages as decimals in the calculations. 100% is 1. 50% is 0.5. 35% is 0.35 etc.

- This table compares Profit to Income. 99% is the maximum Profit because Profit can’t be greater than Income.

A Coda Doc formula for this calculation can be found in the

Business formulas Pack⁠

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Example using the formula GetIncome(50,0.12):

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56.82

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