How to Calculate Percentage Increase
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What is the formula to calculate percentage increase?
The formula to calculate percentage increase is: ((New Value - Old Value) / |Old Value|) * 100. First, subtract the initial value from the new value to find the absolute difference. Next, divide that difference by the original value. Finally, multiply the result by 100 to get the percentage increase.
The Standard Percentage Increase Formula
Whether you are calculating a job raise, analyzing retail markup on an e-commerce product, or evaluating quarter-over-quarter revenue growth, the mathematical formula for percentage increase is:
Step-by-Step Worked Example
Let's say your monthly software subscription price increased from $40 to $50:
- Step 1: Calculate the absolute difference:
$50 - $40 = $10 - Step 2: Divide the difference by the original baseline value:
$10 ÷ $40 = 0.25 - Step 3: Multiply by 100 to convert to a percentage:
0.25 × 100 = 25%
The price increased by exactly 25%.
Percentage Increase vs. Percentage Points: Common Confusion
One of the most frequent mistakes in business and media is confusing a percentage change with a percentage point change:
- If an interest rate rises from 5% to 6%, it has increased by 1 percentage point.
- However, as a relative percentage increase:
((6 - 5) / 5) * 100 = 20%. The interest rate actually increased by 20%!
The Most Common Calculation Error
The single most widespread calculation error is dividing the difference by the new value instead of the original starting value. Always remember: change is always measured relative to where you started, never where you arrived.
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