Calculate Percentage Increase

Knowing how to calculate percentage increase or percentage decrease is very useful in real life. We will discuss how to determine percentage of increase and even the formula for percentage increase. A percentage increase calculation is easy, however, many people do make mistakes when calculating percentage increases.

Why do we need to calculate percentage increase?

Knowing how to calculate percentage increase has helped many business owners calculate his or her profit from business. More importantly, calculating percentage increases put things in perspective. For example, if you take three businesses. All three businesses had a profit increase of $1,000 this month. But, the first business says that's negligible, the second says that's so-so and the third is overwhelming with joy. Why do they react so differently?

That's because to Business A with a million dollar sales that month, a $1,000 in profit is shameful. To business B, a $1,000 profit is not too bad but not good either. However, to the Home Business C with sales of $1,000 and no cost of good sold, a $1,000 profit is more than can hoped for.

So, the amount $1,000 in profit cannot be compared between the three companies. What we need is a percentage comparison. So, how to calculate percentage increase?

How to calculate percentage increase?

The formula for percentage increase is given by:

To use this formula for percentage increase, let's do an example of how to calculate percentage increase.

Take Business B with sales of $10,000 this month. Last month, the company had sales of $9,000. So, what is the percentage increase of this company's sales?

In order to use the formula for percentage increase, we need to know the amount of increase and the base amount. The amount of increase is $10,000 (this month's sales) less $9,000 (last month's sales) which is $1,000. Now the base amount is where many people go wrong when calculating percentage increases. People are not sure if to use $9,000 or $10,000. The answer is you have to use $9,000 because you are calculating the percentage increase from last month's sales, not from this month's sales. So, your percentage increase is:

The dot above 1 in 11.1 % means the number is recurring. In another word the percentage increase is 11.1111....on going. That's it. Now you know how to calculate percentage increase.