How the Revenue Growth Calculator works

Revenue growth answers a simple question: “Compared with the last period, are we earning more or less?” The basic growth calculation is a percent change:

• Revenue growth % = (Current revenue − Previous revenue) ÷ Previous revenue × 100

If you also provide a time period, the calculator computes CAGR (Compound Annual Growth Rate). CAGR is an annualized rate that represents the “smooth” growth trajectory between your starting and ending numbers. It’s especially useful when revenue is volatile across months or quarters.

• CAGR = (Current ÷ Previous)^{(1 / years)} − 1

Because many businesses track monthly revenue (MRR) or quarterly revenue (QoQ), the calculator also shows an average growth per month (based on compounding) when the period is supplied in months or quarters:

• Avg monthly growth = (Current ÷ Previous)^{(1 / months)} − 1

• Negative growth: revenue decline — investigate churn, conversion, pricing, or seasonality.
• 0–5%: flat-ish — steady, but may be slow if you’re aiming for aggressive scale.
• 5–20%+: strong period growth — context matters (new product launch, expansion, etc.).
• High growth off a tiny base: can be real, but treat it cautiously (base effects).

Revenue growth examples (with interpretation)

• Example 1: Month-over-month growth (MRR)

  Previous MRR = $50,000 and current MRR = $57,500. Growth % = (57,500 − 50,000) ÷ 50,000 = 15%. That’s a strong month — but check if it came from one big customer or many smaller wins.

• Example 2: Year-over-year growth (annual revenue)

  Last year revenue = $1,200,000 and this year revenue = $1,500,000. Growth % = (1,500,000 − 1,200,000) ÷ 1,200,000 = 25% YoY. That’s healthy and often “investor-friendly” if margins are stable.

• Example 3: CAGR over 3 years

  Revenue grew from $400,000 to $900,000 over 3 years. CAGR = (900,000 ÷ 400,000)^(1/3) − 1 ≈ 31.1% per year. CAGR helps you compare growth vs other businesses even when the path was bumpy.

• Example 4: Revenue decline

  Previous revenue = $80,000, current revenue = $72,000. Growth % = (72,000 − 80,000) ÷ 80,000 = −10%. A single down period doesn’t always mean disaster — validate if it’s seasonal, cyclical, or churn-driven.

How to use this calculator for planning (not just reporting)

Revenue growth isn’t only a scoreboard — it’s a steering wheel. Here are high-signal ways to use the outputs:

• Forecasting: Use average monthly growth to rough-estimate next quarter revenue (then sanity-check with pipeline/churn).
• Pricing experiments: Track revenue growth before/after a pricing change to see if you improved ARPU without hurting conversion.
• Marketing ROI: Pair growth with CAC and gross margin. Growth that’s “bought” with unprofitable ad spend can be fragile.
• Investor storytelling: CAGR is an easy way to summarize momentum across multiple years in one clean number.
• Operations: If growth accelerates, plan cash, headcount, and inventory early (growth can break systems).

One more viral tip: screenshot the result box and share it with your team like a mini “growth scoreboard” — it turns boring finance into a weekly game.

Frequently Asked Questions

• What if previous revenue is $0?

  Percent growth is undefined when the starting value is zero (division by zero). In that case, focus on absolute change (current − previous), or use a different baseline.

• Is CAGR the same as average growth?

  Not exactly. CAGR is a compound rate that assumes steady growth each year. A simple average can hide volatility. CAGR is usually preferred for comparisons.

• Should I use gross revenue or net revenue?

  Either works — just be consistent. Most teams use gross revenue for top-line growth and then separately track margins and net profit.

• Does this work for MRR/ARR?

  Yes. Put your MRR (monthly recurring revenue) or ARR (annual recurring revenue) into previous/current. If you provide a period in months, the calculator also estimates average monthly growth.

• How do I calculate “YoY” growth?

  Use the same month from last year as “previous” and the current month as “current”, then set period to 12 months. The growth % is YoY change, and CAGR will match the annualized rate.