My children bought lambs from me with their birthday money some years ago so now a fair proportion of the flock is theirs. They take their profit every year but I work out the cost of raising each lamb that gets to weaning and subtract it from the sale price. I include vet costs, wormer, vaccine, disposal of fallen stock, lick buckets, haymaking and feed. I don't include straw because this is shared by all the stock, or capital items like buckets or hayracks, which will last for ages. Last year profit was down because we had to feed the ewes for several weeks after lambing because the grass was so slow to start growing. I don't factor in labour as we work together as a team all year. If one of our hire rams is theirs they get the full amount.
I'm with Tim on profit - if you raise a small number of high quality stock on a small acreage and find the right markets you can make more profit than someone with a lot of stock on a big area.