Revenue Growth Rate Calculator

How to use the revenue growth rate calculator

1. Starting revenue: enter revenue for the first period you want to compare, for example everything you invoiced in January.
2. Ending revenue: enter revenue for the last period, counted the same way. If the first number is one month of sales, this one must be one month of sales too.
3. Number of periods in between: count the steps from the first period to the last. January to July is 6 months, not 7. Enter 1 if you are comparing this month with last month.
4. Each period is one: choose week, month or year. Early products with fast feedback are often tracked weekly. Most small businesses track monthly.

The headline figure is total growth across the whole stretch. The rows below it show the dollar change, the compound rate per period, that rate turned into a yearly figure, the revenue you would reach a year from now if the pace held, and how long it takes to double.

The revenue growth rate formula

The first formula is the plain percentage change. The second is the compound monthly growth rate, often shortened to CMGR when the period is a month, or CAGR (compound annual growth rate) when the period is a year. Compounding means each month's growth builds on the month before, the same way interest builds on interest. The calculator uses 12 months or 52 weeks in a year for the annualized figure.

Time to double uses the same compound rate: the natural logarithm of 2 divided by the natural logarithm of 1 plus the rate. If revenue is flat or falling, there is no doubling time and the calculator says so.

A worked example

Say your online course business took in $10,000 in January and $16,000 in July. That is 6 months apart.

Notice that 60% divided by 6 months is 10% a month, yet the compound rate is 8.1%. The simple average is too high because it ignores that each month grows from a bigger base. If you put 10% a month in a forecast, you would project about $17,700 for July instead of the $16,000 you really made.

How to read your growth rate

There is no single good number, because the rate depends heavily on how big you already are. Going from $500 to $1,000 is 100% growth and one extra customer might explain all of it. Going from $50,000 to $60,000 is only 20% and is much harder. So read the percentage and the dollar change together.

• Check where the growth came from. New customers, price rises and existing customers buying more are three different stories. If you sell subscriptions, split it out with the MRR calculator.
• Check what it cost. Growth bought with heavy ad spend can lose money on every sale. Compare it with your customer acquisition cost.
• Check what leaks out. Fast sign-ups hide cancellations for a while. Your churn rate shows how much of last month's revenue you have to replace before you grow at all.
• Use more than two data points. One strong month, a seasonal peak or a single large order can distort a two-point comparison. Run the calculator on a few different start and end months and see if the story holds.

Investors look at revenue growth as the clearest sign of traction, so this number usually earns a slide in your pitch deck. State the period and the base when you quote it. "8% a month for six months, from $10,000 to $16,000" is believable. "156% annual growth" on its own invites questions.

What the calculator leaves out

• The path between the two points. It only sees the first and last number. Two businesses with the same result can have very different months in between, including a recent decline.
• Seasonality. Comparing December with June for a gift shop says more about the calendar than the business. For seasonal revenue, compare the same month a year apart.
• Growth from zero. If starting revenue is 0 the percentage is undefined, so the calculator shows n/a. Start from your first month with real sales.
• Profit and cash. Revenue can grow while you lose more money each month. Pair this with the burn rate calculator and the runway calculator.
• The future. The one-year figure and the doubling time assume today's pace continues unchanged. Growth rates usually slow as revenue gets larger, so treat both as an upper guide, not a forecast.

If you are writing financial projections, build them from drivers you can defend (visitors, conversion, price, repeat purchases) and use the growth rate as a check on the result. The Business plan step in Fonda writes that chapter with you, and you can read example plans at the business plan generator.