How to calculate your revenue growth rate
Revenue growth rate (売上高成長率) shows how fast your sales are rising or falling between two periods. Here is the formula, two worked examples in yen 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. In Japan, many people call it the sales growth rate.
Worked examples in yen
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month-on-month (前月比) | ¥4,000,000 | ¥4,400,000 | 10% |
| Year-on-year (前年同期比) | ¥50,000,000 | ¥45,000,000 | −10% |
In the first example, revenue rose by ¥400,000 on a base of ¥4,000,000. This is a growth rate of 10%. In the second example, revenue fell by ¥5,000,000 on a base of ¥50,000,000. This is a growth rate of −10%. These could be two April–March fiscal years.
Common mistakes
- Comparing unequal periods. A 31-day month against a 28-day month can distort monthly growth.
- Ignoring seasonality. For seasonal businesses (Golden Week, Obon, New Year), compare a period with the same period a year earlier.
- Mixing one-off revenue with recurring revenue. A single large export 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 compares one month with the month before it. Year-on-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.