Sorry but stuck on stupid on this one.
If I have a random number – let’s say 545 and I reduce it by 20%. It’s reduced by 109 making it 436.
But if I want to increase it back to 545 I have to add 25%
Edit: Ahhhh Thank you all for this! Makes perfect sense now!
In: Mathematics
This reminds me of when I first got into sales and was confused by gross profit margin. I learned a neat little trick that works with many of these situations including the one you just mentioned. If you reduce by 20% (1/5) then you need to increase the result by 25% (1/4) to get back to the same number. By the same token reducing by 1/3 you’d need to increase by one half. The Delta is always the denominator plus or minus one.
Btw, to clarify how gross profit margin comes into this, if you want 20% gross profit margin then you need to increase your sales price 25% over your cost.
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