How to calculate your revenue growth rate
Revenue growth rate shows how fast your sales are rising or falling between two periods. Here is the formula, two worked examples and the mistakes to avoid.
The revenue growth formula
Revenue growth rate (%) = (revenue this period − revenue last period) ÷ revenue last period × 100
Many Indonesian SME owners call this the sales growth formula. A positive result means revenue grew; a negative result means it fell.
Worked examples in IDR
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month-on-month (MoM) | IDR 400,000,000 | IDR 440,000,000 | 10% |
| Year-on-year (YoY) | IDR 6,000,000,000 | IDR 5,400,000,000 | −10% |
In the first example, a Jakarta SaaS start-up's revenue rose by IDR 40,000,000 on a base of IDR 400,000,000: a growth rate of 10%. In the second, a Surabaya manufacturer's revenue fell by IDR 600,000,000 on a base of IDR 6,000,000,000: a growth rate of −10%.
Common mistakes
- Comparing unequal periods. A 31-day month against a 28-day month can distort month-on-month growth.
- Ignoring seasonality. For seasonal businesses, compare a period with the same period a year earlier. Lebaran moves about 11 days earlier each year, so check that both periods include it.
- 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 (MoM) compares one month with the month before it. Year-on-year (YoY) compares a period with the same period a year earlier, which removes most seasonal effects.
Can the revenue growth rate be negative?
Yes. A negative growth rate means revenue fell between the two periods.