What is a percentage change? How to calculate it?

Percent change is a mathematical term that is often used to calculate the magnitude of change that a value has over time. It is usually used mostly for financial purposes, revealing the change in a price or percentage as days, months or years go by.

If you have a company, sell a service or product, you will surely need to calculate the percentage change at some point. If you are interested in knowing the fastest way to calculate it, then you have come to the right place to learn about it.

How to calculate a percentage change?

Taking into account the concept of percentage change, we understand that the percentage that increases the value of a product must be calculated. For this, a specific formula must be used, which would be to divide the total value by the original and then multiply it by the total percentage.

There are two ways to calculate this change, when we want to know the percentage increase and when we look for how much percentage has decreased. It seems a bit complicated, but here we will explain it in the best way:

  • Use the following formula to calculate the percentage increase:
    • Current value – previous value / previous value x 100%.
  • Use this to calculate the percent decrease:
    • Previous value – current value / previous value x 100%.

We will use the following example to explain this calculation:

  • Let’s suppose that a television had a value of $100 a year ago, currently this value increased to $125, to know the percentage of increase the formula is applied as follows: 25 – 100 / 100 x 100%    |   25 / 100 = 0.25   |  0.25 x 100% = 25%

After the calculation we can find that the percentage increase of the TV from last year is 25%. If you do not understand how this formula works, you could also use a program or web page with a percent change calculator.

How to calculate a percentage difference?

These types of calculations are used to know the value of a product compared to another similar one. To calculate it, you must use a formula like this:

  • V1 (value of the first product) – V2 (value of the second product) / (V1 + V2 /2) and multiply the result by one hundred percent.

In an example, suppose a product cost $30 a year ago and a similar product is worth $40 this year. The formula would look like this:

  • 40 – 30 / (30 + 40 / 2) =

10 / 35 = 0.285

Finally, the result is multiplied by 100%:

  • 285 x 100 = 28.5.

As a result we have that the current product is 28.5% more expensive compared to the previous year. If you want to know the percentage value of a number, you could also use a percent of a number calculator like this one.

Knowing these simple calculation methods will help you in various financial situations if you have a company that sells a product or service. In this way you can make a percentage increase or decrease correctly to any product.


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