Sales Growth Rate Calculator
Enter your revenue figures below to calculate the percentage growth between two periods.
How to Calculate Normal Sales Growth Rate
Understanding your company's sales growth rate is fundamental to assessing business health. Whether you are a startup looking for traction or an established enterprise monitoring quarterly performance, calculating the normal sales growth rate allows you to measure how quickly your revenue is increasing (or decreasing) over a specific period.
What is Sales Growth Rate?
The sales growth rate is a percentage that represents the increase or decrease in sales revenue over a specific timeframe. This metric helps business owners and investors understand the trend of the business. "Normal" sales growth varies significantly by industry, business stage, and economic conditions, but tracking your own historical data is the best way to establish a baseline.
The Sales Growth Formula
To calculate the growth rate, you need two key figures: the sales revenue from an earlier period (Prior Period) and the sales revenue from the current period (Current Period). The mathematical formula is:
Step-by-Step Calculation Example
Let's look at a realistic example of a retail business to understand how the calculation works in practice:
- Prior Period Sales (Last Year): $500,000
- Current Period Sales (This Year): $575,000
Step 1: Find the absolute difference.
$575,000 – $500,000 = $75,000 (This is the monetary increase).
Step 2: Divide by the prior period sales.
$75,000 / $500,000 = 0.15
Step 3: Convert to a percentage.
0.15 * 100 = 15% Growth Rate
Interpreting the Results
- Positive Percentage: Indicates revenue expansion. A consistent double-digit growth rate is often considered strong for small to mid-sized businesses.
- Negative Percentage: Indicates a contraction in sales. This requires immediate investigation into market conditions, pricing strategies, or customer retention issues.
- Flat (Near 0%): Indicates stagnation. While stability can be good, businesses usually aim for growth to outpace inflation and rising costs.
Why "Normal" Growth Matters
Calculating your growth rate helps in inventory planning, resource allocation, and attracting investors. By monitoring this metric monthly, quarterly, or annually, you can identify seasonal trends and separate "normal" fluctuations from genuine performance issues.