# What is my economic profit?

Computes economic profit, total revenue minus explicit and implicit costs, and accounting profit, total revenue minus explicit costs.

- Page: https://www.acalculator.org/finance/economic-profit-calculator
- JSON spec: https://www.acalculator.org/finance/economic-profit-calculator.json
- Version: e3a96e183e22

## Default answer

Example with the default inputs (Total revenue $200,000.00, Explicit costs $85,000.00, Implicit costs $125,000.00): Economic profit is −$10,000.00; accounting profit, before implicit costs, is $115,000.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| rev | Total revenue | All the money the business takes in from sales: price × quantity sold. |
| exp | Explicit costs | Out-of-pocket costs actually paid, such as wages, rent, materials and interest. |
| imp | Implicit costs | The opportunity cost of resources the owner already has, such as the salary given up to run the business. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| economic | Economic profit | Total revenue − explicit costs − implicit costs. |
| accounting | Accounting profit | Total revenue − explicit costs. |
| cost | Total economic cost | Explicit costs + implicit costs. |

## Method

Economic profit = total revenue − explicit costs − implicit costs. Accounting profit = total revenue − explicit costs. Total economic cost = explicit costs + implicit costs.

## Assumptions

- Implicit costs are opportunity costs: what the owner’s own time, money and property would earn in their next best use.
- All amounts are for the same period, such as one year.
- Arithmetic is exact on the typed decimals; money shows to the cent, halves up.

## Worked examples

1. rev = $200,000.00, exp = $85,000.00, imp = $125,000.00 gives economic = -$10,000.00, accounting = $115,000.00, cost = $210,000.00. Source: OpenStax, Principles of Microeconomics 3e, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit (accounting profit = total revenue − explicit costs; economic profit = total revenues − explicit costs − implicit costs; Eryn’s law practice: revenue $200,000, rent $50,000, clerk $35,000, forgone salary $125,000, economic profit −$10,000). https://openstax.org/books/principles-microeconomics-3e/pages/7-1-explicit-and-implicit-costs-and-accounting-and-economic-profit: 200,000 − 85,000 − 125,000 = −10,000.
2. rev = $480,000.00, exp = $310,000.00, imp = $90,000.00 gives economic = $80,000.00, accounting = $170,000.00, cost = $400,000.00. Source: OpenStax, Principles of Microeconomics 3e, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit (accounting profit = total revenue − explicit costs; economic profit = total revenues − explicit costs − implicit costs; Eryn’s law practice: revenue $200,000, rent $50,000, clerk $35,000, forgone salary $125,000, economic profit −$10,000). https://openstax.org/books/principles-microeconomics-3e/pages/7-1-explicit-and-implicit-costs-and-accounting-and-economic-profit.
3. rev = $150,000.00, exp = $100,000.00, imp = $50,000.00 gives economic = $0.00, accounting = $50,000.00. Source: OpenStax, Principles of Microeconomics 3e, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit (accounting profit = total revenue − explicit costs; economic profit = total revenues − explicit costs − implicit costs; Eryn’s law practice: revenue $200,000, rent $50,000, clerk $35,000, forgone salary $125,000, economic profit −$10,000). https://openstax.org/books/principles-microeconomics-3e/pages/7-1-explicit-and-implicit-costs-and-accounting-and-economic-profit.
4. rev = $98,765.43, exp = $45,678.90, imp = $12,345.67 gives economic = $40,740.86, accounting = $53,086.53, cost = $58,024.57. Source: OpenStax, Principles of Microeconomics 3e, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit (accounting profit = total revenue − explicit costs; economic profit = total revenues − explicit costs − implicit costs; Eryn’s law practice: revenue $200,000, rent $50,000, clerk $35,000, forgone salary $125,000, economic profit −$10,000). https://openstax.org/books/principles-microeconomics-3e/pages/7-1-explicit-and-implicit-costs-and-accounting-and-economic-profit.

## FAQ

### What is economic profit?

Economic profit is total revenue minus all costs, including implicit costs: the income the owner gives up by not using their time, money and property in the next best way. A positive economic profit means the business earns more than the alternatives would.

### How do I calculate economic profit?

Subtract explicit costs and implicit costs from total revenue. Eryn expects $200,000 a year from her own law practice, pays $85,000 for an office and a clerk, and gives up a $125,000 salary: 200,000 − 85,000 − 125,000 = −$10,000.

### What is the difference between accounting profit and economic profit?

Accounting profit subtracts only explicit costs, the cash a business pays out. Economic profit also subtracts implicit costs. Eryn’s accounting profit is $115,000, but her economic profit is −$10,000, because she would earn $10,000 more staying at the firm.

### What are implicit costs?

Implicit costs are opportunity costs of resources the business already owns. Common ones are the salary an owner gives up to run the business, the interest the owner’s own money could earn elsewhere, and the rent the owner’s building could earn.

### What does zero economic profit mean?

Revenue just covers the explicit costs and the implicit costs, so the owner earns exactly what the next best use of their resources would pay. The business is still worth running; it is not losing money in the accounting sense.

### Can accounting profit be positive while economic profit is negative?

Yes. Whenever implicit costs are larger than the accounting profit, economic profit is negative. That is a sign the owner’s time and money would earn more elsewhere.

## Sources

- OpenStax, Principles of Microeconomics 3e, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit: explicit costs are out-of-pocket costs; implicit costs are the opportunity cost of resources the firm already owns; accounting profit = total revenue − explicit costs; economic profit = total revenues − explicit costs − implicit costs; Eryn’s law practice (revenue $200,000, office rent $50,000, clerk $35,000, forgone salary $125,000; accounting profit $115,000, economic profit −$10,000). https://openstax.org/books/principles-microeconomics-3e/pages/7-1-explicit-and-implicit-costs-and-accounting-and-economic-profit (retrieved 2026-10-19)