How To Calculate Percentage Change (With Examples)

Mastering the calculation of percentage change is an essential skill for professionals across all industries. In today’s fast-paced job market, whether you’re analyzing market trends, evaluating financial performance, or assessing project outcomes, the ability to compute percentage changes can significantly enhance your decision-making capabilities.

This article will guide you through the process of calculating percentage change, complete with practical examples to solidify your understanding.

Key Takeaways:

• A percentage change measures the difference between two values over time, expressed as a percentage.

• To calculate percentage change, determine the difference between the two values, divide it by the initial value, and multiply by 100.

• Understanding percentage changes is crucial for analyzing growth rates, inflation rates, and interest rates in today’s economy.

What is Percentage Change?

Percentage change is a mathematical concept that illustrates a change over time. This can apply to various metrics, including prices, time spent, and more. Positive values indicate an increase (e.g., a price hike), while negative values signify a decrease (e.g., a price drop).

In the financial sector, percentage change serves as a critical indicator of asset performance. It allows investors to track the price fluctuations of securities such as stocks, bonds, and currencies.

Overall, mastering percentage change is invaluable for both businesses and individuals!

Percentage Change Formula

The formula for calculating percentage change is straightforward. First, identify the difference between the two values you wish to compare. Next, divide that difference by the initial value. Finally, multiply the result by 100 to convert it to a percentage.

Here’s the formula for percentage increase:

Here’s the formula for percentage decrease:

How to Calculate Percentage Step-by-Step

To gain a deeper understanding of calculating percentage change, follow these step-by-step instructions:

Percentage Increase

1. First, calculate the difference between the initial and final values to determine the increase. (Increase = final value − initial value)

2. Next, divide the increase by the initial value to get a decimal. (Decimal = increase ÷ initial value)

3. Multiply the decimal by 100 to express it as a percentage. (% Increase = decimal × 100)

If the result is negative, it indicates a percentage decrease.

Percentage Decrease

1. Start by calculating the difference between the initial and final values, but in reverse. (Decrease = initial value − final value)

2. Next, divide the decrease by the initial value to obtain a decimal. (Decimal = decrease ÷ initial value)

3. Multiply the decimal by 100 for the percentage. (% Decrease = decimal × 100)

If the outcome is negative, it indicates a percentage increase.

Real-Life Examples of Percentage Change

1. Consider the following example:

   Percentage Change in Price Example Calculation

   James wanted to buy a $22 bowl set but didn’t have the funds at the moment. When he returns, he finds the price has risen to $26. Curious about the percentage increase, he calculates it as follows:

   1. Calculate the difference: $26 − $22 = $4.

   2. Divide the increase by the initial value: $4 ÷ $22 = 0.18.

   3. Multiply by 100 to get the percentage: 0.18 × 100 = 18%.

   Since the increase is under 20%, James decides to purchase the bowls.

2. Next, let’s look at calculating the percentage change of time as a resource.

   Percentage Change in Time Spent Example Calculation

   Paul is developing a new product for his small business and wishes to price it appropriately. He assesses the time spent on a previous similar product versus the new one.

   The old product took 5 hours, while the new product takes 7 hours. Here’s how he calculates the percentage increase:

   1. Calculate the difference: 7 − 5 = 2 hours.

   2. Divide by the initial time: 2 ÷ 5 = 0.40.

   3. Multiply by 100 for the percentage: 0.40 × 100 = 40%.

   Paul should increase the price of his new product by 40%.

3. Next, we’ll examine the real-world impact on currency value over time.

   Percentage Change in Inflation Example Calculation

   The U.S. dollar has experienced significant inflation over the past decade. For example, $100 in 2010 is equivalent to $124.60 today. How much has the dollar’s value inflated?

   1. Calculate the difference: $124.60 − $100 = $24.60.

   2. Divide by the initial value: $24.60 ÷ $100 = 0.246.

   3. Multiply by 100 for the percentage: 0.246 × 100 = 24.6%.

   This calculation indicates that the dollar has inflated by 24.6% over the past decade.

4. Lastly, we’ll calculate the percentage change in your net income over five years.

   Percentage Change in Net Income Example Calculation

   Five years ago, you earned a net income of $56,000. This year, your net income is $73,000. To find the percentage change:

   1. Calculate the difference: $73,000 − $56,000 = $17,000.

   2. Divide by the initial value: $17,000 ÷ $56,000 = 0.30.

   3. Multiply by 100 for the percentage: 0.30 × 100 = 30%.

   Your net income has increased by 30% over the past five years.

The Financial Value of Percentages

As demonstrated, percentage change is a powerful tool for assessing the value of products, time, currency, and more. Its simplicity makes it invaluable for both businesses and individuals.

Furthermore, percentages play a critical role in various financial contexts. Here are some common applications:

• Growth Rate

• Inflation Rate

• Marginal Utility

• Interest

• Variable Cost

• Fixed Cost

• APR

The versatility of percentages showcases their importance in various financial decisions, providing valuable insights and aiding in strategic planning.

How to Calculate Percent Change FAQ

1. How do I calculate the percentage change between two numbers?

   To calculate the percentage change between two numbers, find the difference, divide that by the initial value, and multiply by 100.

   For example, to calculate the percentage change between 360 and 700, first find the difference (700 − 360 = 340). Then divide 340 by 360 (the initial value) to get approximately 0.94. Multiply by 100 to convert this to a percentage, resulting in a 94% increase.

2. What is the percent change when 25 is increased to 45?

   The percent change when 25 is increased to 45 is 80%. To calculate this, find the difference (45 − 25 = 20). Then divide 20 by the initial value (25) to get 0.8. Finally, multiply by 100 to find the percentage: 80%.

References

1. U.S. Bureau of Labor Statistics – Calculating Percent Changes

2. The University of Texas at Tyler – How Do I Calculate Percent Change?

Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.