Percentage change explanation

Question

When I want to calculate the percentage change between two values over time.. I use this formula:

((customers2014 - customers2013) / (customers2013) * 100)

What's the difference between divide the difference between 2014 and 2013 by the newest value instead of oldest value?

Answer 1

The difference is in what the baseline for comparison is.

If an apple costs 1 dollar on monday and it costs $1.2$ dollars on tuesday, then the apple costs $20\%$ more on tuesday than it did on monday. The term "than it did on monday" is important, because it tells you relative to what you are calculating. So, in my example:

• I can say that the apple costs $20\%$ more on tuesday than it does on monday
• Or I can say that the apple cost $16.7\%$ less on monday than it does on tuesday.

The number you are dividing by, basically, is your "unit of comparison".