Financial education
How to Calculate Percentages
Percentages describe a part relative to a base and are useful in finance, business, shopping, and everyday comparisons.
How the math works
A percentage is a part divided by a whole, multiplied by 100. The most common mistake isn't the formula itself — it's identifying the wrong 'whole': percentage change uses the original value as the base, not the new one.
Worked example
If a price rises from $80 to $100, the increase is $20/$80 = 25%. But if it then falls back from $100 to $80, that's a $20/$100 = 20% decrease — the same $20 move is a different percentage depending on which number is the base.
What to watch for
- Percentage increase and percentage decrease use different bases even for the same dollar change
- 'Percentage points' and 'percent' aren't interchangeable — going from 5% to 10% is a 5 percentage-point rise but a 100% increase
- Rounding intermediate percentages before a final calculation can compound small errors
Practical takeaway
Before calculating a percentage change, confirm which number is meant to be the base (100%) — it's almost always the original or starting value.