How to calculate your revenue growth rate
Your revenue growth rate shows how fast your revenue (Umsatz) is rising or falling between two periods. Here is the formula, two worked examples in euros and the mistakes to avoid.
The revenue growth formula
Revenue growth rate (%) = (revenue this period − revenue last period) ÷ revenue last period × 100
A positive result means revenue grew. A negative result means it fell. Use the same basis for both periods, for example net of VAT (Umsatzsteuer), as in your monthly BWA.
Worked examples
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month on month | €40,000 | €44,000 | 10% |
| Year on year | €500,000 | €450,000 | −10% |
In the first example, the monthly revenue of a Munich consultancy rose by €4,000 on a base of €40,000. That is a growth rate of 10%. In the second example, the annual revenue of a Hamburg online shop fell by €50,000 on a base of €500,000. That is a growth rate of −10%.
Common mistakes
- Comparing unequal periods. Comparing a 31-day month with a 28-day month can distort monthly growth.
- Ignoring seasonality. For seasonal businesses, such as online shops with strong Christmas trading, compare a period with the same period a year earlier.
- Mixing one-off revenue with recurring revenue. A single large order can make growth look stronger than it is.
Frequently asked questions
What is the difference between month-on-month and year-on-year growth?
Month-on-month growth compares one month with the month before it. Year-on-year growth (year-over-year, YoY) compares a period with the same period a year earlier. This removes most seasonal effects.
Can the revenue growth rate be negative?
Yes. A negative growth rate means revenue fell between the two periods.