How To Calculate Percentage Reduction

Reductions refer to the amount of a decrease, such as a decrease in salary or a decrease in budget. Using a percentage to represent a reduction measures the amount of the reduction in relation to the original amount, rather than just a raw number. For example, a $5,000 decrease in salary for a president of a large company would be a lot less significant than a $5,000 decrease in salary for someone making $25,000 or $30,000 per year. Calculating such losses in terms of percentages helps put them in perspective.

1. Subtract to Find the Amount of the Reduction

Subtract the final amount from the initial amount to find the amount of the reduction. For example, if your salary was $59,000 and it was reduced to $56,000, you'd have:

\(\$59,000 – \$56,000 = \$3,000\)

2. Divide the Reduction by the Original Amount

Divide the amount of the reduction by the original amount to find the rate of reduction. In this example, you have:

\(\frac{\$3,000}{\$59,000} = 0.0508\)

3. Convert the Rate of Reduction to a Percentage

Multiply the rate of reduction by 100 to find the percentage reduction. In this example, you have:

\(0.0508 × 100 = 5.08 \text{ percent}\)