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.

TL;DR (Too Long; Didn't Read)

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.

  1. Subtract to Find the Amount of the Reduction

  2. 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
  3. Divide the Reduction by the Original Amount

  4. 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
  5. Convert the Rate of Reduction to a Percentage

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

    0.0508 × 100 = 5.08 \text{ percent}


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."