Engagement rate shows whether a post made people do something, not only see it. Because it is a ratio, it lets you compare a post seen by 500 people with one seen by 50,000.
There is more than one formula. Some tools divide by followers, some by impressions, some by reach. Pick one and keep it, as the same post can score very differently under each.
How it is counted
Engagement rate = (likes + comments + shares + saves) ÷ reach × 100%
Example
A post reached 2,000 people and got 90 likes, 12 comments and 18 saves. Its engagement rate by reach is 120 ÷ 2,000 = 6%.