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It looks like a histiocytoma, which is a benign skin tumor. My Clyde had one that my vet suggested we just watch, as they generally disappear on their own without treatment. Sure enough, in about three weeks, it was gone. To be safe, I would have your vet take a look at it.
Thanks for the input, everyone. It is perfectly round and slightly raised. It was less red yesterday but today turned bright red after some playtime with her pitbull friend.