Determining the proportional change in rental costs involves a simple calculation. The difference between the new rental rate and the original rental rate is divided by the original rental rate. The resulting quotient is then multiplied by 100 to express the change as a percentage. For instance, if a rental rate increases from $1000 to $1100, the difference ($100) is divided by the original rate ($1000), yielding 0.1. Multiplying 0.1 by 100 expresses the increment as a 10% rise in cost.
Understanding the measure of cost increases is crucial for both landlords and tenants. For landlords, it informs decisions regarding property investment and market competitiveness. For tenants, it aids in financial planning and negotiation. Historically, methods for measuring proportional changes have been essential in economics and finance, providing a standardized way to quantify and compare fluctuations in value.