Back to Tools

Economic Profit Calculator

Go beyond accounting profit by subtracting opportunity costs to reveal whether a business truly creates value above its next-best alternative.

Total Revenue ($)

Explicit Costs ($)

Opportunity Costs ($)

Cost Breakdown

Explicit Costs

Materials & Supplies

Labor Costs

Rent & Utilities

Other Operating Costs

Opportunity Costs

Foregone Salary

Investment Returns

Alternative Business

Other Opportunities

Economic Profit Analysis

Total Revenue

Total Costs

Accounting Profit

Economic Profit

Profit Analysis

Explicit Costs:

Opportunity Costs:

Profit Margin:

ROI:

Interpretation

Understanding Economic Profit

Formula

Economic Profit = Total Revenue - Total Costs

Total Costs = Explicit Costs + Opportunity Costs

Key Concepts

Explicit Costs: Direct, out-of-pocket expenses
Opportunity Costs: Value of next best alternative
Accounting Profit: Revenue minus explicit costs only
Economic Profit: Revenue minus all costs

Interpretation Guide

Positive Economic Profit: Business is earning above-normal returns
Zero Economic Profit: Business is earning normal returns
Negative Economic Profit: Resources could be better used elsewhere

Common Applications

Business investment decisions
Performance evaluation
Resource allocation
Strategic planning