Betting markets are all about percentages. Odds are just a representation of someone's opinion of an event occurring. That opinion can be expressed as odds or as a percentage - as most non-gamblers would be familiar with.
There are 'true' odds which represent the exact probability of an event occurring (e.g. even money on Heads in a coin toss) and there are bookmakers' odds (e.g. 1.9 on either side in a coin toss). A bookmaker adds percentage to his markets in order to turn a profit - this means his prices should be lower than the actual price of an event happening.
Bear in mind that only certain events can have their true odds calculated - the chance of heads on a coin toss, rolling a six or an Ace appearing on the river in poker.
Calculating the exact odds in a horse race or sporting contest is impossible - there are far too many variables involved, thus it comes down to peoples' opinions.
Think of a match odds market in football. A high-profile market on Betfair will always trade very close to 100%, the point where all the money going into the market equals all the money being paid out. Bookmakers run a business - they need to turn a profit, so they will price up a football match odds market to around 110%.
This means for every £110 they take from punters as bets, they aim to only pay out £100. It doesn't work quite that simply, they need to leave room for price movement and deal with taking more bets on one team - a 4% profit margin over a season on football match odds markets would usually be seen as a good year.
This means little to most Betfair customers as they are concerned with one or two runners, not the whole market.
To work out the percentage of a Betfair price, just divide the number into 100.
e.g.
The back price of He's No Pie Eater is 100/8.4 = 11.9%
To calculate the percentage of the entire market, just add the percentages for each runner. A quicker way to do it is use the % Book setting.
Market Percentages
As explained above, a bookmaker will always set his markets to over 100%, allowing for a profit margin and to manage his risk as the prices change.
When a market stands at 100%, it means every penny going into the market is being paid back to punters - like in a coin toss situation.
This is often described as an efficient market - all the money in equals all the money going out, and there is no leakage such as profit margin taken.
The closer the Back market gets to 100%, it means the prices are more and more competitive. When a market first opens, the first people to post offers can ask for whatever price they like.
Think of it like having the only shop in a town - you can charge any price you can get away with (it doesn't mean people will buy from you though) until someone else comes along and undercuts your price.
As the market becomes more competitive, margins (market percentages) are reduced and more customers are willing to get involved.
If the market % on the Back side goes below 100%, it means every selection in the market could be backed to guarantee a profit regardless of the result.
You would need to adjust your stakes so that each bet results in the same payout otherwise you would be left with profit on some and not others. This type of market anomaly does happen daily but you'll need to be lightning quick to get in before everyone else.
So if the bookies want a market above 100% to make a profit, it stands to reason that backers want a market under 100% for their profit.
The lay side of the market is backers queuing up to bet - waiting for layers. This side of the market will remain below 100% except on rare occasions. When it does go above 100%, you could theoretically lay all runners to land a profit, but again, this type of market anomaly will be corrected by other customers so quick you probably won't have had a chance to pull out the calculator.