The arithmetic difference between two percentages, as distinct from the percentage change between them.
A percentage point is the unit for the difference between two percentages. When a margin, a rate or a share moves, the change can be stated two ways: in percentage points, by subtracting one percentage from the other, or as a percentage change, relative to the starting value. They answer different questions and are often confused.
Change in percentage points = new percentage − old percentage. Percentage change = (new − old) ÷ old. In Excel, with the rates in B2 and C2: =C2-B2 formatted as a number for points, =(C2-B2)/B2 for the relative change.
Gross margin rises from 20% to 25%. That is an increase of 5 percentage points, and a percentage increase of 25%, because 5 ÷ 20 = 0.25.
Writing "margin up 5%" when it rose 5 points, which a reader takes to mean 20% to 21%. Formatting a point difference as a percentage in a spreadsheet, so 0.05 displays as 5% and looks like a relative change. The full guide is percentage change in Excel.