The percentage change formula is one of the most fundamental calculations in business and finance.
Step-by-Step Examples
Example 1: Revenue increase Revenue grew from $800,000 to $1,000,000. - Change = $1,000,000 − $800,000 = $200,000 - Percentage change = $200,000 ÷ $800,000 × 100 = +25%
Example 2: Cost reduction Marketing spend dropped from $50,000 to $38,000. - Change = $38,000 − $50,000 = −$12,000 - Percentage change = −$12,000 ÷ $50,000 × 100 = −24%
Example 3: Price increase Product price raised from $49 to $69. - Change = $69 − $49 = $20 - Percentage change = $20 ÷ $49 × 100 = +40.8%
Using Absolute Value in the Denominator
The formula uses |Old Value| (absolute value) in the denominator. This is important when the old value is negative: if last year's profit was −$100k and this year it's −$60k, the percentage improvement is (−60k − (−100k)) ÷ 100k = +40%, not −40%.
Percentage Change vs Percentage Points
These are not the same: - Conversion rate moved from 4% to 5% — that's a 1 percentage point increase but a 25% relative increase - Always clarify which you mean to avoid misinterpretation in reporting