Percentage Change Formula: Examples, Uses & Common Mistakes
Percentage change is one of the most used calculations in business, finance, and science — and one of the most often confused. This guide clarifies the formula, when to use it, and how to avoid common errors.
The Percentage Change Formula
% Change = ((New Value − Old Value) / |Old Value|) × 100| | = absolute value. Positive result = increase. Negative result = decrease.
Percentage Increase Example
A product was priced at $80 and now costs $100:
% Change = (100 − 80) / 80 × 100 = 20 / 80 × 100 = +25% increase
Percentage Decrease Example
Stock price fell from $150 to $120:
% Change = (120 − 150) / 150 × 100 = −30 / 150 × 100 = −20% decrease
Why Use |Old Value| (Absolute Value)?
The absolute value matters when the old value is negative (e.g., a company moving from a $−50 loss to a $+100 profit). Without the absolute value, the sign of the percentage change could be misleading.
Percentage Change vs. Percentage Point Change
If interest rates go from 4% to 5%, that is a 1 percentage point increase, but a 25% relative change. Context determines which is appropriate to report.
Business Applications
- Revenue growth — "Revenue grew 32% year-over-year"
- Price increases — "Prices rose 8.5% due to inflation"
- Market share — "Market share decreased by 3%"
- Investment returns — "The stock returned 18% this year"
- Budget variance — "Costs came in 12% under budget"