How to Calculate the Revenue Growth Rate

Revenue Growth Rate Calculator

Your Revenue Growth Rate is:

function calculateRevenueGrowth() { var prev = parseFloat(document.getElementById('prevRevenue').value); var curr = parseFloat(document.getElementById('currRevenue').value); var resultWrapper = document.getElementById('resultWrapper'); var growthResult = document.getElementById('growthResult'); var growthStatus = document.getElementById('growthStatus'); if (isNaN(prev) || isNaN(curr) || prev === 0) { alert("Please enter valid numbers. Previous revenue cannot be zero."); return; } var growthRate = ((curr – prev) / prev) * 100; var formattedRate = growthRate.toFixed(2); resultWrapper.style.display = "block"; growthResult.innerHTML = formattedRate + "%"; if (growthRate > 0) { growthStatus.innerHTML = "Positive Growth! 📈"; growthStatus.style.color = "#38a169"; } else if (growthRate < 0) { growthStatus.innerHTML = "Negative Growth 📉"; growthStatus.style.color = "#e53e3e"; } else { growthStatus.innerHTML = "No Change"; growthStatus.style.color = "#718096"; } }

Revenue growth rate is one of the most critical Key Performance Indicators (KPIs) for any business, whether it's a startup or an established corporation. It measures the increase (or decrease) in a company's sales over a specific period, typically monthly, quarterly, or annually.

How to Calculate Revenue Growth Rate Manually

The formula for calculating revenue growth is straightforward. It compares the revenue from the current period against the revenue from a previous period to determine the percentage change.

Growth Rate = ((Current Period Revenue – Previous Period Revenue) / Previous Period Revenue) x 100

Step-by-Step Example

Imagine your SaaS company generated $100,000 in revenue in 2022. In 2023, your revenue increased to $125,000. Here is how you would calculate the growth:

1. Subtract the old revenue from the new revenue: $125,000 – $100,000 = $25,000.
2. Divide that number by the old revenue: $25,000 / $100,000 = 0.25.
3. Multiply by 100 to get the percentage: 0.25 x 100 = 25%.

Why Revenue Growth Rate Matters

Monitoring this metric provides several insights into the health of your business:

• Market Demand: Consistent growth indicates that there is a strong demand for your products or services.
• Investor Interest: Investors often look at the "top-line growth" to determine if a company is scalable and worth funding.
• Benchmarking: Comparing your growth rate against industry averages helps you understand your competitive position.
• Scalability: It helps management decide when to hire more staff or expand operations.

Common Growth Metrics

Metric	Description
Month-over-Month (MoM)	Best for early-stage startups to track immediate momentum.
Year-over-Year (YoY)	Accounts for seasonality and provides a long-term view.
CAGR	Compound Annual Growth Rate, used for smoothing out growth over several years.

Frequently Asked Questions

What is a "good" revenue growth rate?
A "good" rate depends heavily on the industry. For a mature retail business, 5-10% might be excellent. For a venture-backed tech startup, 100% (doubling) year-over-year is often expected.

Can a growth rate be negative?
Yes. If the current period's revenue is lower than the previous period's, the result will be a negative percentage, indicating a decline in sales.

Does high revenue growth mean high profit?
Not necessarily. Many high-growth companies spend more on marketing and expansion than they earn, resulting in a net loss despite high revenue growth.