Is there a specific limit on profit in buying and selling?
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The questioner : Is there a specific limit on profit in buying and selling?
The Shaykh : There is no specific limit on profit in buying and selling, as long as the price has risen across the entire market. A person might buy an item for one hundred, for example, and then the price suddenly jumps to two hundred, so he sells it for two hundred; in that case, his profit is one hundred percent. However, if he increases the profit while the market is stagnant, or if he does so intending to harm people, or if he raises the price because the buyer is naive and does not know the prices, then it is forbidden for him, and it is not permissible for him to sell for more than what other people are selling for. Some sellers might say, "If I state the fixed price, the buyer will haggle with me to lower the price." We say there is no harm in raising the price if you think he will haggle with you. But if he does not haggle, you must tell him the price that was in the market. For example, if a man comes to you to buy an item worth one hundred, and you say one hundred and twenty because you think he will haggle with you until you lower it to one hundred, but the man does not haggle and accepts it for one hundred and twenty, then in this case, you must tell him: "Wait, I said one hundred and twenty because I thought you were like many people who haggle to lower the price. Since you did not haggle, the true value is one hundred." In that case, there is no harm, and this serves as evidence of the truthfulness of his dealings with people and his clarity in stating the reality. It is established from the Prophet (peace and blessings be upon him) that he said:Sahih Muslim 1532a.
The questioner : May Allah reward you with good.
The Shaykh : There is no specific limit on profit in buying and selling, as long as the price has risen across the entire market. A person might buy an item for one hundred, for example, and then the price suddenly jumps to two hundred, so he sells it for two hundred; in that case, his profit is one hundred percent. However, if he increases the profit while the market is stagnant, or if he does so intending to harm people, or if he raises the price because the buyer is naive and does not know the prices, then it is forbidden for him, and it is not permissible for him to sell for more than what other people are selling for. Some sellers might say, "If I state the fixed price, the buyer will haggle with me to lower the price." We say there is no harm in raising the price if you think he will haggle with you. But if he does not haggle, you must tell him the price that was in the market. For example, if a man comes to you to buy an item worth one hundred, and you say one hundred and twenty because you think he will haggle with you until you lower it to one hundred, but the man does not haggle and accepts it for one hundred and twenty, then in this case, you must tell him: "Wait, I said one hundred and twenty because I thought you were like many people who haggle to lower the price. Since you did not haggle, the true value is one hundred." In that case, there is no harm, and this serves as evidence of the truthfulness of his dealings with people and his clarity in stating the reality. It is established from the Prophet (peace and blessings be upon him) that he said:
Both parties in a business transaction have the right to annul it so long as they have not separated; and if they speak the truth and make everything clear they will be blessed in their transaction; but if they tell a lie and conceal anything the blessing on their transaction will be blotted out.
البيعان بالخيار، فإن صدقا وبينا بورك لهما في بيعهما، وإن كذبا وكتما محقت بركة بيعهماThe questioner : May Allah reward you with good.