Revenue growth rate formula: how to calculate it, with examples
Revenue growth rate shows how fast your revenue, sales or turnover is rising or falling between two periods. Here is the formula, two worked examples and the mistakes to avoid.
The revenue growth rate 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.
Worked examples
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month on month | ₹4,00,000 | ₹4,40,000 | 10% |
| Year on year | ₹50,00,000 | ₹45,00,000 | −10% |
In the first example, revenue rose by ₹40,000 on a base of ₹4,00,000, which is a growth rate of 10%. In the second, revenue fell by ₹5,00,000 on a base of ₹50,00,000 (₹50 lakh), which is a growth rate of −10%.
Common mistakes when calculating growth
- Comparing unequal periods. Comparing a 31-day March with a 28-day February can distort month on month growth.
- Ignoring seasonality. If your business peaks in the festive season, compare a period with the same period a year earlier.
- Mixing one-off revenue with recurring revenue. A single large order, such as one placed in the March year-end rush, 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.