# How to calculate percentage change price

Learn how to calculate percentage change price with this step-by-step guide. Understand the formula and the different scenarios where it can be applied.

percentage change price, formula, calculation, scenarios, examples

## Introduction

Calculating percentage change price is a common task in many fields, from business to economics. It refers to the increase or decrease in the price of an item or product over a period of time. The percentage change formula is a simple calculation that can be done by anyone. In this article, we will explain the formula and provide different scenarios where it can be applied. We will also provide examples to help you understand the concept better.

## Formula

The percentage change formula is:

``````Percentage Change = (Final Price - Initial Price) / Initial Price x 100%
``````

## Step-by-Step Guide

To calculate percentage change price, follow these steps:

### Step 1: Determine the initial price

The initial price is the original amount of the item or product. For example, if the item cost \$100 initially, then this is the initial price.

### Step 2: Determine the final price

The final price is the amount of the item or product after a certain period of time. For example, if the item now costs \$120, then this is the final price.

### Step 3: Subtract the initial price from the final price

To calculate the difference between the two prices, subtract the initial price from the final price. Using the example above, \$120 - \$100 = \$20.

### Step 4: Divide the difference by the initial price

Divide the difference between the two prices by the initial price. Using the example above, \$20/\$100 = 0.2.

### Step 5: Multiply by 100

To convert the result to a percentage, multiply the quotient from step 4 by 100. Using the example above, 0.2 x 100 = 20%.

### Step 6: Interpret the result

The result of the calculation represents the percentage change in the price of the item or product. In the example above, there was a 20% increase in the price of the item.

## Scenarios

The percentage change formula can be applied to different scenarios. Here are some examples:

### Scenario 1: Percentage decrease in price

If the final price is lower than the initial price, then there is a percentage decrease in the price of the item. The formula for calculating the percentage decrease is the same, except that the difference between the final price and the initial price is now negative.

### Scenario 2: Comparison of different periods

The percentage change formula can also be applied to compare the price of an item or product over different periods. For example, if the initial price of an item was \$100 in January and \$120 in June, the percentage change would be calculated based on the two prices.

### Scenario 3: Comparison of different products

The percentage change formula can also be applied to compare the price of different products. For example, if the price of Product A was \$100 and Product B was \$120, the percentage change would be calculated based on the two prices.

### Scenario 4: Inflation rate

The percentage change formula is also used to calculate inflation rate. Inflation rate is the percentage change in the price of goods and services over time. For example, if the price of a basket of goods and services was \$100 in 2020 and \$105 in 2021, the inflation rate would be calculated based on the two prices.

## Examples

Here are some examples of how to calculate percentage change price:

### Example 1: Percentage increase in price

Suppose the price of a shirt was \$50 last month and is now \$60. To calculate the percentage increase in price, first subtract the initial price from the final price: \$60 - \$50 = \$10. Then, divide the difference by the initial price: \$10 / \$50 = 0.2. Finally, multiply by 100 to convert the result to a percentage: 0.2 x 100 = 20%. Therefore, the price of the shirt increased by 20%.

### Example 2: Percentage decrease in price

Suppose the price of a laptop was \$1000 last month and is now \$900. To calculate the percentage decrease in price, first subtract the final price from the initial price: \$900 - \$1000 = -\$100. Then, divide the difference by the initial price: -\$100 / \$1000 = -0.1. Finally, multiply by 100 to convert the result to a percentage: -0.1 x 100 = -10%. Therefore, the price of the laptop decreased by 10%.

### Example 3: Comparison of different periods

Suppose the price of a car was \$20,000 in 2019 and is now \$22,000 in 2021. To calculate the percentage increase in price, first subtract the initial price from the final price: \$22,000 - \$20,000 = \$2,000. Then, divide the difference by the initial price: \$2,000 / \$20,000 = 0.1. Finally, multiply by 100 to convert the result to a percentage: 0.1 x 100 = 10%. Therefore, the price of the car increased by 10% between 2019 and 2021.

### Example 4: Comparison of different products

Suppose the price of a laptop is \$1000 and the price of a tablet is \$500. To calculate the percentage difference in price, first subtract the initial price from the final price: \$1000 - \$500 = \$500. Then, divide the difference by the initial price of one of the products (in this case, the tablet): \$500 / \$500 = 1. Finally, multiply by 100 to convert the result to a percentage: 1 x 100 = 100%. Therefore, the price of the laptop is 100% higher than that of the tablet.

### Example 5: Inflation rate

Suppose the price of a basket of goods and services was \$100 in 2020 and is now \$105 in 2021. To calculate the inflation rate, first subtract the initial price from the final price: \$105 - \$100 = \$5. Then, divide the difference by the initial price: \$5 / \$100 = 0.05. Finally, multiply by 100 to convert the result to a percentage: 0.05 x 100 = 5%. Therefore, the inflation rate is 5%.

## Conclusion

Calculating percentage change price is a useful skill that can be applied in many situations. It is a simple calculation that can be done with the formula presented in this article. By understanding the different scenarios where it can be applied and practicing with examples, you will be able to apply this concept in your field of work or personal life.

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