📊 Economic Profit Calculator
Calculate economic profit
Actual monetary expenses (wages, rent, materials, etc.)
Opportunity costs (foregone income, owner's salary opportunity, etc.)
How to Use This Calculator
Enter Total Revenue
Input the total revenue - all income from sales, services, or other business activities.
Enter Explicit Costs
Enter all explicit costs - actual monetary expenses like wages, rent, materials, utilities, taxes, etc. These are actual cash payments.
Enter Implicit Costs
Enter implicit costs (opportunity costs) - the value of resources used in the business that could have been used elsewhere, such as owner's salary opportunity, foregone interest, etc.
Review Economic Profit
See the economic profit (revenue minus explicit and implicit costs) and compare it to accounting profit. Economic profit accounts for opportunity costs, providing a more complete view of profitability.
Formula
Accounting Profit = Total Revenue - Explicit Costs
Economic Profit = Total Revenue - Explicit Costs - Implicit Costs
Example Calculation:
If revenue $100,000, explicit costs $60,000, implicit costs $20,000:
• Accounting profit = $100,000 - $60,000 = $40,000
• Economic profit = $100,000 - $60,000 - $20,000 = $20,000
• Economic profit accounts for opportunity costs
About Economic Profit Calculator
An economic profit calculator helps you calculate economic profit from total revenue, explicit costs, and implicit costs (opportunity costs). Economic profit = Total Revenue - Explicit Costs - Implicit Costs. Economic profit accounts for opportunity costs, providing a more complete view of profitability than accounting profit. Economic profit considers what could have been earned if resources were used elsewhere, making it useful for economic analysis and decision-making. Economic profit is typically lower than accounting profit because it includes implicit costs.
When to Use This Calculator
- Economic Analysis: Calculate economic profit for economic analysis
- Decision Making: Make informed business decisions
- Profitability Analysis: Understand true profitability including opportunity costs
- Business Planning: Plan for economic profit goals
Understanding Economic Profit
- Explicit Costs: Actual monetary expenses (included in both accounting and economic profit)
- Implicit Costs: Opportunity costs (only included in economic profit)
- Economic Profit: Accounts for both explicit and implicit costs
- Accounting Profit: Only accounts for explicit costs
Why Use Our Calculator?
- ✅ Economic Analysis: Calculate economic profit accurately
- ✅ Decision Making: Make informed business decisions
- ✅ Profitability Analysis: Understand true profitability
- ✅ Business Planning: Plan for economic profit goals
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is economic profit?
Economic profit is the profit calculated using both explicit costs (actual monetary expenses) and implicit costs (opportunity costs). Economic Profit = Total Revenue - Explicit Costs - Implicit Costs. Economic profit accounts for opportunity costs, providing a more complete view of profitability than accounting profit. Economic profit considers what could have been earned if resources were used elsewhere, making it useful for economic analysis and decision-making.
What's the difference between economic profit and accounting profit?
Economic profit includes both explicit costs (actual monetary expenses) and implicit costs (opportunity costs), while accounting profit only includes explicit costs. For example, if revenue is $100,000, explicit costs are $60,000, and implicit costs (like owner's salary opportunity) are $20,000: Accounting Profit = $40,000, Economic Profit = $20,000. Economic profit is typically lower because it accounts for opportunity costs.
What are implicit costs (opportunity costs)?
Implicit costs are opportunity costs - the value of resources used in the business that could have been used elsewhere. Examples include: (1) Owner's salary opportunity - salary the owner could earn elsewhere, (2) Foregone interest - interest that could be earned on invested capital, (3) Foregone rent - rent that could be earned on owned property, (4) Other opportunity costs. Implicit costs are not actual cash payments but represent the value of foregone alternatives.
Why is economic profit important?
Economic profit is important because it provides a more complete view of profitability by accounting for opportunity costs. It helps: (1) Make informed decisions - understand true profitability including opportunity costs, (2) Economic analysis - analyze economic performance, (3) Resource allocation - understand the true cost of using resources, (4) Business planning - plan for economic profit goals. Economic profit shows whether a business is truly profitable when considering all costs, including opportunity costs.