Percentages are one of the most common mathematical tools used in daily life. From calculating sales tax, tips, and discounts at the store, to projecting profit margins, markups, and growth rates in business, percentages help us understand ratios and proportional changes quickly.
The Basic Percentage Formula
A percentage is a fraction of 100. To find the percentage value of a number:
Value = Base × (Percentage / 100)
Percentage Change (Increase & Decrease)
To measure the proportional change between an old value and a new value:
% Change = [ (New Value - Old Value) / Old Value ] × 100
Markup vs. Profit Margin
In business retail, understanding the difference between markup and margin is critical for pricing products correctly:
- Markup Percentage: The percentage added to the cost price to determine the sale price.
Markup % = [ (Sell Price - Cost Price) / Cost Price ] × 100 - Profit Margin Percentage: The share of the selling price that is profit.
Margin % = [ (Sell Price - Cost Price) / Sell Price ] × 100
For example, if an item costs $100 and you sell it for $150, your markup is 50%, but your profit margin is 33.3%.
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