# How to Calculate Percentage Reduction

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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.

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The formula for finding the percentage of reduction is:

P​ = ​a​/​b​ × 100

Where ​P​ is the percentage of reduction, ​a​ is the amount of the reduction and ​b​ is the original amount that was reduced.

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 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

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

0.0508 × 100 = 5.08 \text{ percent}